1. “An Arms Race in South America?”
by
Kevin Casas-Zamora
Senior Fellow, Foreign Policy
Latin America Initiative
The Brookings Institution
Washington, D.C.
November 23, 2010
__________________
Introduction
In absolute terms, South America is spending much more in military pursuits than two
decades ago.1
According to the Stockholm International Peace Research Institute
(SIPRI), in 2009, military expenses in the region reached nearly $52 billion, more than
twice the 1990 figure.2
Moreover, a number of recent acquisitions—ranging from
Venezuela‘s repeated purchases of Russian military hardware, worth more than $4.4
billion since 2005, to Brazil‘s decision to buy a nuclear-powered submarine from
France—have raised eyebrows.
Yet, as a proportion of GDP, military outlays in the region have remained fairly stable
over the past two decades, and actually went down slightly in 2008 (Graph 1).
1
In this text, South America means the 10 Spanish and Portuguese-speaking countries on that continental mass.
Suriname, Guyana and French Guiana are not considered in the analysis.
2
Data from SIPRI Yearbook (1993-2008) and Military Expenditure Database. Available at:
www.sipri.org/databases/milex
Perspectives on the Americas
A Series of Opinion Pieces by Leading Commentators on the Region

2. 2
Graph 1. Military Expenditure in South America
as proportion of GDP, 1991-2008
1.3
2.6
1.2
3.9
1.8
1.8
1.7
1.2
2.1
1.8
1.9
1.3
1.9
1.8
3.7
3.3
1.7
1.1
1.7
1.5
1.5
2.0
1
1.8
1.5
3.6
3.9
2.6
0.8
1.5
1.4
1.4
2.0
0.8
1.5
1.5
3.5
3.7
2.8
0.8
1.1
1.3
1.4
1.8
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Argentina
Bolivia
Brazil
C
hile
C
olom
bia
Ecuador
Paraguay
Peru
U
ruguay
Venezuela
South
Am
erica
(average)
1991 2000 2005 2008
Source: SIPRI.
Is this good news, bad news or, simply, no news for the region? After all, many analysts
have warned, correctly, against the facile use of the notion of ―arms race‖ to describe
what is happening in South America. Even General Douglas Fraser, Commander of the
U.S. Southern Command, has described the trend as ―a modernization of fairly old,
difficult-to-maintain capability.‖3
Perhaps the absolute increase in military expenditure is
simply the natural consequence of the efforts by the region‘s armed forces to catch up
with new technologies and, as such, we should not worry too much about it. Or should
we?
Bad News
I will venture that, regardless of whether we are witnessing an arms race or not, what is
happening with military expenditure in South America is not good news for the region.
This is not because of the risk that the new military toys might increase the likelihood
that the region‘s rulers might stir up trouble or become trigger happy. This risk exists
even without the new military acquisitions and, in any case, appears to lack popular
support, especially in South America, where the population profoundly dislikes the idea
3
―Exclusive interview: General Fraser on Security in the Americas.‖ Available at: www.as-
coa/print.php?type=article&id=2214

3. 3
of going to war with neighbors.4
The real problem is different. The absolute increase in
military expenditure, and of acquisitions in particular, hinders the region‘s economic and
political development. Even the security benefits of such expenditures are debatable at
best.
It is true that, comparatively speaking, military outlays in South America are not high.
For instance, in 2007, military disbursements in the typical South American country
were at roughly the same level as in Sub-Saharan Africa, Asia and the developed West.
They were well below the level exhibited by North Africa and the Middle East (Table 1).
However, this figure starts to look less benign when put in a broader development
context. Why not compare it, for example, to the levels of taxation that sustain the
provision of public goods by the state? Why not compare it to the society‘s investment in
education? When we do so, the picture in South America is less rosy.
Table 1. Military expenditure in South America in context, 2007
Region
Average
military
expenditure as
% GDP
Military
expenditure
as % of tax
revenue
Military
expenditure
as % of public
expenditure in
education (*)
South America 1.9 12.4 45.2
Middle East + North
Africa 4.4 14.0 98.3
South Asia + East Asia 2.0 11.8 57.3
Sub-Saharan Africa 1.9 11.1 41.5
North America + EU 1.7 4.6 32.6
Notes: (*) 2006.
Sources: Own elaboration with figures from: SIPRI (military expenditure); OECD and ECLAC (tax
revenue); World Bank and UN Data (education expenditure). Detailed notes about sources and method
may be obtained from the author: kcasaszamora@brookings.edu
It turns out that military expenditure in South America is a higher proportion of tax
revenue and of education expenditure than almost anywhere else in the world, with the
predictable exception of North Africa and the Middle East. Even Sub-Saharan Africa
fares better when we place military spending in this context. Simply put, amid pervasive
low taxation in Latin America, military expenditure does compete with scarce resources
for development. This was the conclusion of a series of econometric studies carried out
by, among others, Nobel Economics Laureate Lawrence R. Klein in Guatemala, Bolivia
4
For instance, even after repeated episodes of tension between Venezuela and Colombia, 80% of Venezuelans
reject the idea of going to war with Colombia, according to a September 2009 opinion poll. See:
http://www.semana.com/noticias-america-latina/segun-encuesta-mayoria-venezolanos-rechaza-guerra-
colombia/131200.aspx. With the exception of the Chaco War (1932-35) between Bolivia and Paraguay, and the bouts
of border conflict between Peru and Ecuador (1941-42 and 1995), South America has seen no interstate armed
conflicts since the late XIXth century.

4. 4
and the Southern Cone. Analyzing data from 1968-94 in Guatemala, Klein, et al.,
concluded that ―the trimming of the military and its demands on scarce resources can
result in both short- and long-run gains. In the long run, the gains can be seen in the
broadest economic measures, such as GDP, while both short- and long-run gains are
expected to occur in household consumption.‖5
In Latin America, butter continues to be
a far wiser economic choice than guns.
In addition, increased military expenditure negatively affects the already endemic
corruption in South America. The purchase of military equipment typically involves big
international transactions and some exemption from normal transparency rules. If this is
a dangerous cocktail anywhere, it is a truly frightening one in Latin America. Recent
weapons acquisitions in Ecuador and Peru have been affected by as yet unproven
corruption allegations.6
This is not new, of course. The list of corruption scandals linked
to arms procurement in the region—a list that includes former Argentine president,
Carlos Menem, and Vladimiro Montesinos, the infamous head of Peru‘s intelligence
service during the presidency of Alberto Fujimori—is serious enough to warn against the
likely effects that the current trend of military expenditures could have on the integrity of
governments throughout Latin America.
Are these troubling implications justified by the security benefits provided by the new
weapons that South America is purchasing? Hardly. In order to justify their military
expenses, some of the region‘s governments have come up with all kinds of far-fetched
threats to sovereignty, including U.S. invasions to take control of valuable natural
resources.7
While the latter remains a most unlikely occurrence, other security concerns
are not. One of them is the lack of effective control over their territory that characterizes
quite a few of South American states. It is in those ungoverned spaces that organized
crime thrives, to the point of threatening the viability of the state, as Colombians know
very well. Yet, a large proportion of the new weapons systems that have been
purchased recently in South America—including tanks, missile launchers, nuclear
submarines or even fighter jets—have little to do with the battle with criminal gangs for
territorial control.
Hence, the effects of South America‘s current level of military expenditures on the
region‘s economic development, democratic consolidation and security are debatable at
best, and negative at worst. This is the same assertion that Peru‘s President Alan
García, in particular, has repeatedly made in the recent past.8
His words have not
5
Kanta Marwah, Lawrence R. Klein & Thomas Scheetz, ―The military-civilian trade-off in Guatemala: An econometric
analysis,‖ ECAAR Papers, 1999. See also: Kanta Marwah, Lawrence R. Klein & Thomas Scheetz, "Growth and
Productivity Costs of Military Expenditure in Bolivia," Peace Economics, Peace Science and Public Policy, Berkeley
Electronic Press, vol. 6(3), 2000; Kanta Marwah & Lawrence R. Klein, "Lost Productivity and Defense Burden of the
Southern Cone of Latin America," Carleton Economic Papers 04-01, Carleton University, Department of Economics,
2004.
6
See, for instance: www.larepublica.pe/controversias/11/04/2010/cuentos-y-coimas-chinas;
www.hoy.com.ec/noticias-ecuador/bohorquez-conocia-informe-para-no-comprar-helicopteros-375850.html
7
One of the most conspicuous cases of this is to be found in Brazil‘s recently unveiled National Defense Strategy,
which contemplates the possibility of deflecting an attack from extra-regional powers to take over natural resources in
the Amazonia and Brazil‘s territorial sea.
8
―Peru slates ‗needless‘ arms spending in Latin America,‖ UPI.com, May 19, 2010. At the 40
th
OAS General
Assembly in Lima, Peru, the host government scored a significant diplomatic success by drawing attention to the

5. 5
always been backed by his actions, but his general point is well taken and he should be
commended for raising it.
Remedies
There is no obvious policy remedy to these military expenditures. To begin with, the
recent hike in weapons acquisitions by different countries in South America has no
single cause. To the extent that such causes can be ascertained, the motives behind
Brazil‘s military purchases are very different from those of, say, Colombia. In the
Brazilian case, the decision to buy new, advanced weapons seems to be underpinned
by the country‘s aspiration to play a significant global role, as well as its quest for
international prestige. In the Colombian case, the purchase of new weapons is mostly
linked to the country‘s internal conflict and its role in the forefront of counter-narcotics
efforts. In these and other cases, the protection of natural resources, seen as strategic,
may also be an important consideration.
Even with these multiple rationales, it seems clear that the charged political atmosphere
in South America, and the distrust that pervades relations among neighbors in the
region, are important factors behind the current trends. In the recent past, such distrust
has been most visible between Colombia and Venezuela (although it has significantly
receded in the past few months), but it has also affected the relationship between
Colombia and Ecuador, Chile and Peru, and even Argentina and Uruguay. To the extent
that mutual suspicion is a factor in decisions regarding military expenditures, it is crucial
that all the countries in the region make an effort to implement measures to improve
confidence among their militaries and to enhance the transparency of military
acquisitions.
Good News
The good news is that the institutional framework to secure transparency and build
confidence need not be created from scratch. One of its most valuable components is
the Inter-American Convention on Transparency in Conventional Weapons Acquisition,
signed by all South American countries in 1999 in Guatemala.9
This is a very good
instrument that requires signatories to report periodically to the Organization of
American States (OAS) all weapons acquisitions that have stirred controversy in Latin
America in the recent past. At this point, eight of the ten South American countries
(Bolivia and Colombia are the exceptions), have ratified this treaty, which nonetheless
languishes underappreciated and underused. For example, the date for the first review
issue of military expenditure in the region. The meeting‘s final declaration stated ―(t)he importance of continuing to
promote in the Hemisphere a climate conducive to arms control, limitation of conventional weapons, and the
nonproliferation of weapons of mass destruction, making it possible for each member state to devote more resources
to its economic and social development, taking into account compliance with international commitments, as well as its
legitimate defense and security needs.‖ The final declaration also highlighted the OAS member states‘ ―firm
commitment to promote transparency in arms acquisitions in keeping with pertinent United Nations and OAS
resolutions on the matter.‖ See: OAS, Declaration of Lima: Peace, Security, and Cooperation in the Americas;
AG/DEC. 63 (XL-O/10), 8/June/2010. Available at: http://www.oas.org/en/40ga/docs/dec_lima_eng.doc
9
See: www.oas.org/juridico/english/treaties/a-64.html

6. 6
of its implementation, seven years after its entry into force in 2002, passed without any
country even paying attention to it.
A second key piece of this transparency and confidence-building framework is the
South American Defense Council (SADC), a regional body created in 2008 as part of
the Union of South American Nations (UNASUR), which is led by Brazil. The new
institution has the avowed purpose of nurturing cooperation among the region‘s armed
forces. So far, however, the Council‘s role has been modest at best. Most notably, it
was sidelined during UNASUR‘s acrimonious debates earlier this year on the creation of
a security agreement between Colombia and the United States, which was eventually
struck down by the Colombian Constitutional Court. When it comes to fulfilling its
mission to facilitate information sharing among the region‘s armed forces, the Council
has done little more than put up a website to share information and make suggestions
about defense issues. Nonetheless, it has the potential to be a useful instrument of
cooperation if taken seriously and given the institutional resources that South American
integration institutions currently lack.
The Council could be a clearinghouse to implement a program of notification and
observance of military exercises in the region. It could also schedule combined
exercises among the region‘s armed forces; encourage and coordinate the exchange of
civilian and military personnel for both regular and advanced training among all South
American countries; coordinate activities that develop regional peacekeeping skills and
capacity through common training, combined exercises and the exchange of information
on peacekeeping, to cite just a few possibilities.10
Rather than pompous presidential
summits, these are concrete steps that could help improve levels of trust among the
armed forces in South America.
Even these steps, however, are of limited use, unless measures are also taken in the
political sphere. A decision by Hugo Chávez to repudiate, in unequivocal terms, the
narco-terrorist activities of the Revolutionary Armed Forces of Colombia (FARC), or a
decision by Brazil to end its reluctance to cooperate with the inspectors of the
International Atomic Energy Agency (IAEA), to mention but two examples, could do far
more for political trust in South America than one year of joint military exercises and
information exchanges, and certainly more than a decade of presidential summits and
solemn declarations. No matter how much the current institutional framework to improve
military transparency and trust in the region may help, the simmering suspicion among
South American countries can only be undone at the political level.
Underlying all these measures is the notion that the region will come to realize that it is
in its best interest to improve mutual trust and, ultimately, to keep military expenditures
under control. This is easier said than done. After all, Latin America has a history of
unsuccessful conventional arms-control initiatives dating from the Ayacucho Declaration
in 1974, in which seven South American countries, plus Panama, jointly declared the
need to ―create conditions which permit effective limitation of armaments and put an end
10
See: ―Consensus of Miami – Declaration by the experts on confidence- and security-building measures:
Recommendations to the Summit-mandated Special Conference on Security,‖ OAS Committee on Hemispheric
Security, 2003. Available at: http://www.oas.org/csh/english/documents/re00218e04.doc

7. 7
to their acquisition for offensive military purposes, in order to dedicate all possible
resources to economic development.‖11
While collective rationality is always tricky to
achieve, it is nonetheless possible to identify individual actors that may have compelling
reasons to support this process, most notably Brazil and the United States. It is
plausible that both share a core interest in a more stable, more democratic, more
developed South America, where resources do not get diverted unnecessarily to military
pursuits. This is despite the obvious fact that both countries are important suppliers of
military hardware to the region. For both Brazil and the United States, the geopolitical
interest in long-term regional economic prosperity and political stability may well trump
their immediate commercial interests.
What Brazil and the United States Should Do
Brazil likes to see itself as a benign rising power. This perception is generally shared in
Latin America, much as it may be doubted in Brazil‘s ―near abroad‖ (i.e., in places like
Bolivia or Paraguay), where the South American giant‘s economic presence is often
overwhelming. The positive perception of Brazil in the region coexists with some
wariness with regard to two aspects of its foreign policy, which remain unclear to this
day. The first is the nuclear issue. It is true that Brazil has enshrined in its constitution
the decision to forego the development of nuclear weapons. This renders puzzling
Brazil‘s equivocal relationship with the International Atomic Energy Agency (IAEA)
inspectors, the odd tone of some of President Luiz Inácio ―Lula‖ da Silva‘s own words
with regard to the Nuclear Non-Proliferation Treaty and his very public overtures
towards Iran.12
Given the troubled history of Brazil‘s nuclear program in the 1970s and
1980s, any discomfort about it among its South American neighbors is understandable.
The second uncertainty concerns the burdens, both diplomatic and military, that Brazil is
willing to bear regarding collective security in South America. Brazil has mentioned
repeatedly the need to replace the old collective defense arrangements—such as the
Inter-American Treaty for Reciprocal Assistance (the Rio Treaty), which was conceived
in the context of the Cold War—with a new architecture. Moreover, it has taken the lead
in the development of the SADC. Yet, as already mentioned, it is still an open question
whether what has been construed as a security cooperation mechanism will ever evolve
into a more elaborate collective defense arrangement, capable of taking the place of the
current, obsolete Rio Treaty. So far, the attitude of Brazil with regard to the conflict in
Colombia, the one case in which a South American state faces a concrete threat to its
sovereignty, has been ambiguous at best, to the dismay of the Colombian government.
This gives little confidence regarding Brazil‘s true commitment to a collective defense
mechanism. If such an instrument is to emerge in South America, Brazil will be
expected to lead it and to bear a large share of the costs. Is it willing to do it? Dispelling
these two sources of uncertainty would be a great service that Brazil could do to bolster
regional stability in South America.
11
See: U.S. Department of State, ―Regional arms control initiatives in Latin America and the Caribbean‖. Available at:
www.state.gov/t/pm/rls/fs/22054pf.htm. This lack of success, of course, is not applicable to the Tlatelolco Treaty,
which since 1967 banned nuclear weapons in Latin America and the Caribbean.
12
Hans Ruhle, ―Is Brazil developing the Bomb‖, Spiegel Online, May 7, 2010. Available at:
www.spiegel.de/international/world/0,1518,druck-693336,00.html

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Finally, there is the United States. In the current political climate in South America, what
the United States can do to enhance trust levels and prevent an arms race is relatively
limited. It should certainly avoid unnecessary slips in its communication towards the
region. As has been repeatedly pointed out, much of the negative regional reaction
elicited by the reactivation of the Fourth Fleet and the U.S.-Colombia security
agreement could have been avoided with a greater effort to explain to the regional
partners the underpinnings and objectives of these decisions. This would not have
prevented those governments that are unwilling to listen to the United States from using
both decisions as rhetorical fodder. But it would certainly have deprived them of an echo
chamber. It is a hopeful sign that the defense cooperation agreement signed between
Brazil and the United States in April 2010 generated no criticism in the region, thanks, in
part, to an effort by the Brazilian diplomats to communicate the content of the
agreement to their neighbors before the deal was formally announced.13
Miscommunication and opacity are not the only things that the United States should be
concerned about. For the sake of its own strategic interests, and even, perhaps, for the
sake of the Hemisphere‘s stability, the United States must also steer clear of a
deceptively attractive idea that rears its head whenever military outlays in Latin America
start to creep upwards – the adoption of an arms embargo towards the region. Adopted
repeatedly over the course of the past decades, these embargos have proved useless,
when not counterproductive. They have simply driven countries to other suppliers of
weapons. This is exactly what we are witnessing, in stark terms, in the case of
Venezuela, which has been excluded from U.S. weapons sales since the 2007 decision
by the Bush Administration to certify it as ―not fully cooperating‖ with U.S.
counterterrorism efforts. It is not clear, of course, that the current Venezuelan
government would be willing to purchase weapons from the United States if given the
chance. But the fact remains that it is facing no problem whatsoever to replenish its
military arsenal, forging in the process strategic links with extra-regional powers such as
Russia and China.
There is a point of realism that is particularly important in the current South American
context. The cases of Venezuela and Brazil suggest that greater economic reliance on
primary commodities, notably natural resources, provides governments with an obvious
rationale to increase military expenditure in order to protect their ―strategic assets.‖ This
is more serious when an extra-regional power, such as China, develops a vital interest
in obtaining or accessing those primary resources. In the hypothesis of a U.S. arms
embargo to South America, is very easy to imagine China providing, in abundance, the
military hardware required by the region‘s governments to protect those commodities. It
may do so for immediate commercial gain, but also, and more fundamentally, in order to
fulfill long-term strategic imperatives. Potentially, this could be a very serious source of
friction between China and the United States, as well as a very awkward complication in
hemispheric relations.
I feel somewhat uncomfortable stating this. Coming from a country, Costa Rica, that
wisely abolished its armed forces long ago, I would very much prefer that the South
13
See: http://justf.org/blog/2010/04/13/us-brazil-defense-cooperation-agreement

9. 9
American countries did not spend any money at all on military hardware. Yet, to the
extent that they do purchase weapons systems, it is very important for the United States
to remain their main supplier. This is not the case now. Even without an arms embargo
in place, during 2006-2009 the United States accounted for a mere 10.2% of arms sales
to Latin America as a whole, well below Russia and France, and much lower than its
share earlier in the decade, which was close to 25%.14
Whether we like it or not, the
provision of weapons is a powerful tool for the United States to remain in close contact
with the region‘s armed forces.
There may or may not be an arms race in motion in South America, but one thing is
undeniable: the region does not need one. If it does want to take advantage of the
favorable economic winds that seem to be blowing its way, then this is the time to invest
its fiscal resources—never too abundant—in public education, basic infrastructure,
technology and the prevention of crime, the continent‘s true security affliction. Prosperity
and stability in South America do not require a nuclear submarine. They call for more
investment in human development, a better use of the existing diplomatic instruments to
enhance military trust and transparency and clarity, and leadership from the countries
that stand the most to gain if South America gets its priorities right.
Kevin Casas-Zamora is a senior fellow in foreign policy at the Brookings Institution in Washington,
D.C. In 2006-2007, he served as the Costa Rican minister of national planning and economic policy and
as second vice-president. Dr. Casas-Zamora was selected as Young Global Leader by the World
Economic Forum in 2007. Prior to this, he was an international consultant in campaign finance, a program
officer at the Arias Foundation for Peace and Human Progress and the general coordinator of the United
Nations Development Programme’s National Human Development Report for Costa Rica.
The ―Perspectives on the Americas‖ series is assisted financially by the
Bureau of Educational and Cultural Affairs of the United States Department of State.
All statements of fact or expression of opinion contained in this publication are the responsibility of the author.
14
See: Richard Grimmett, Conventional Arms Transfers to Developing Nations, 2002-2009; Congressional Research
Service, September 10, 2010.