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297. Intelligence Assessment Prepared in the Central Intelligence Agency1

ER 78–10476

Latin American Arms Market: Changing Patterns of Supply

Key Judgments

Latin American countries, closely tied to the United States after World War II for military security assistance, began shifting arms procurement to Western Europe in the late 1960s to refurbish their outdated arsenals and to adjust to a more restrictive US sales policy.

Latin America, one of the last of the Third World regions to acquire modern weaponry, procured $4 billion worth of arms in 1974–77. West European suppliers garnered $2.3 billion of this total, or about three times the US figure. While the United States remained the single largest supplier, its sales slumped badly toward the end of the period. The USSR signed major contracts with one client—Peru.

In the past four years, Argentina, Ecuador, and Peru together placed nearly two-thirds of the equipment orders and Venezuela, Brazil, and Chile another 30 percent.

We expect a substantial drop in sales in 1978–79, as Latin American countries absorb deliveries of their recent large purchases and ponder the requirements of their upcoming new equipment cycles.

Latin America: Arms Suppliers2

Million US $

United States Western Europe Other Non-Communist USSR Total
1974 240 265 55 5 565
1975 205 700 145 55 1,105
1976 145 315 35 340 835
1977 130 1,035 140 110 1,415
1st half, 1978 NA 55 30 0 NA

Military sales to Latin America in 1980–83 could reach $3 billion to $4 billion (in 1976 prices), with West European suppliers increasing [Page 737]their share of the market even further. We expect market developments in this four-year period to follow this general pattern:

US sales will be largely made up of spare parts and electronics equipment.

France will have excellent prospects for sales of jet aircraft and air defense systems.

West Germany should be able to market missiles, ground force equipment, and submarines.

Italy should be building new surface combatants for several Latin American states.

British sales will tend to lag behind the sales of other West European producers.

Israel can be expected to replace the United States in a growing number of technical assistance programs in the region, including the training of local personnel and sales of certain types of advanced military equipment.

Brazil and Argentina, which are the first arms producers of any consequence to emerge in the region, should more than double their combined $105 million sales of 1974–77.

The USSR will continue to play a restricted role in the market.

[Omitted here is the body of the assessment.]

  1. Source: Carter Library, National Security Affairs, Staff Material, Freedom of Information/Legal, Kimmitt, Arms Transfer File, Box 25: Latin America, 2–12/78. Secret; Noforn.
  2. For more detailed tables, see the appendix. [Footnote is in the original.]