The defense budget burden: Colombia and the United States

Thanks to a column by Hernán González Rodríguez in today’s edition of Medellín’s El Colombianonewspaper, we found a very useful document (PDF) on the website of Colombia’s Treasury Ministry. It breaks down, according to function and institution, the Colombian government’s budget for 2010, and what it expects to spend in 2011.

Colombia, which has an internal armed conflict and Latin America’s second-largest armed forces after Brazil (and an army that’s actually larger than Brazil’s), will spend 20.0 percent of its budget, and 3.9 percent its entire economy, on its military and police next year. This would be up from 18.4 percent of the budget and down from 4.2 percent of the economy this year.

Colombia will spend US$12.1 billion on its Defense Ministry and National Police next year, at the current peso-to-dollar exchange rate. That’s about US$270 from each one of Colombia’s 45 million citizens.

But U.S. citizens bear an even higher military burden, as indicated in the White House’s budget estimates for 2011 (go here [PDF] and look at “Table 3.1—Outlays by Superfunction and Function”).

The United States will spend US$749.7 billion on defense next year. That’s 23.0 percent of on-budget spending, and 4.8 percent of the U.S. economy. This is up from 22.7 percent and down from 4.9 percent in 2010.

That’s about US$2,400 from each one of the United States’ 310.5 million citizens.

Unlike Colombia, this figure does not include police forces, who are scattered across thousands of state and local jurisdictions and impossible to add here.

(U.S. 2011 GDP estimate: the White House’s 2010 “Mid-Session Review

Colombia 2011 GDP estimate: the IMF’s 2010 Article IV Consultation [PDF])

Tuesday, September 8, 2009

A season of arms purchases

Brazil’s announcement yesterday that it is negotiating a $2-4 billion purchase of French fighter aircraft is the latest in a series of arms purchases, most of them in South America, that have analysts worried about an arms race. Just in 2009, we have seen the following arms purchases announced:

  • Brazil will buy 36 Rafale fighter jets from French aircraft manufacturer Dassault. Earlier, Brazil had announced a joint venture with France to build submarines – one of them nuclear-powered – and helicopters.
  • Russia offered a $100 million credit to Boliviato buy Mi-17 helicopters, a new presidential plane, trucks and other logistical equipment. In January, Bolivia’s defense ministry announced its intention to buy six Czech-made L-159 fighter planes.
  • President Hugo Chávez of Venezuela, whose government signed deals for about $4.4 billion worth of Russian fighter planes, helicopters and rifles between 2005 and 2007, announced in early August the purchase of 30 to 40 Russian-made BMP-3, T-72 and MPR tanks. In April, Chávez announced the purchase of portable Russian missiles.
  • Ecuador is buying 24 Brazilian warplanes and six Israeli drones to keep a closer watch on its borders,” the AP reports.
  • In June, Chile announced a $270 million purchase of 18 U.S.-made F-16 fighters from the Netherlands. This follows the purchase of 10 F-16s directly from the United States in 2005-2006.
  • In addition to billions of dollars worth of training and equipment received as grants, Colombia has purchased dozens of helicopters from the United States during the 2000s, and in June announced a $150 million purchase of Israeli Kfir fighter jets from Israel.

During the mid-2000s, the United States normally sold between $1.1 and $1.4 billion in weapons to all of Latin America and the Caribbean in a typical year. This amount is dwarfed by some of Russia’s single sales to Venezuela during this period, as well as the new French contract with Brazil. Sill, the United States is by far the largest arms vendor to the developing world, according to an annual Congressional Research Service report released late last week and summarized by the New York Times.

The United States signed weapons agreements valued at $37.8 billion in 2008, or 68.4 percent of all business in the global arms bazaar, up significantly from American sales of $25.4 billion the year before.

Italy was a distant second, with $3.7 billion in worldwide weapons sales in 2008, while Russia was third with $3.5 billion in arms sales last year.

Monday, January 12, 2009

The region’s defense budgets

During the past few weeks, we noticed a significant increase in discussion of defense budgets throughout the hemisphere. In most countries, defense spending is on the increase. If this sudden increase in the defense budget expects you to pay more tax money as a citizen, not to worry, as you can easily tackle your unanticipated financial situation by pursuing the online Forex trading option using the QProfit System that can offer you the bountiful profits not only now, but forever! Here is an overview of recent media coverage from CIP Intern Matthew Mcclellan.

The combined defense budgets of South American states increased from US$39 billion in 2007 to US$50 billion in 2008. Most countries have become buyers in the new market for arms, some are sellers, and nearly all are furtively examining their neighbors’ actions.

The Ecuadorian government took a step toward spending transparency with the elimination of the Junta de Defensa. The Junta was accused of embarrassing gaffes like the Defense Ministry overpaying for used Argentine defense articles, as it did in 1995. Some feel the government’s action amounts to little more than a token gesture. President Correa has meanwhile overseen a large increase in defense spending. From 2000 through 2008, Ecuador spent over US$895 millionon Defense. During Correa’s time in office, since January 2007, the Defense budget soared over US$631 million – over 70% of the nine-year spending total in just two years.

Argentina has not put nearly as much money into the military as its neighbors, claiming a Defense budget of only 0.87% of its 2008 GDP. The Air Force has put off purchasing French Mirage fighter aircraft until 2011 or 2012, when it will reevaluate the economic climate. Today, the country’s most pressing Defense concern is keeping troops in its Armed Forces. Unlike other countries that are considering increasing military capacities, Argentina is concerned with maintaining them. A recent study found nearly half of all individuals in the Armed Forces have considered leaving within the last two years, including a substantial number of young pilots and officers who have left to seek better opportunities, for better pay, or to keep their families intact.

Some Argentine analysts appear distraught about falling behind “international heavyweight” – and neighbor – Brazil. In December, President Luis Inacio Lula da Silva announced Brazil’s plan to upgrade its military and arms industry. Part of the plan includes training soldiers in rapid mobilization and guerrilla tactics, and the government wishes to resurrect conscription. While the plan includes purchasing foreign arms, the modernization’s focus is for the country to increase its domestic arms industry.

Brazil has ordered 4 diesel-powered Scorpène class submarines from France, but plans to develop its own nuclear-powered fleet, at a total cost over US$3 billion. The plan appears to be both financed by, and in the name of protecting, newly found Brazilian offshore oil reserves.

Over the last several months, Brazil has consolidated its position as the largest South American arms vendor. Bolivia recently negotiated the purchase of Brazilian land vehicles and Super Tucano attack aircraft, and hopes to borrow from Brazilian institutions to fund additional purchases. Bolivia has also acquired several helicopters from Russia.

Venezuela’s Defense budget is 1% of its 2008 GDP, but growing steadily. It has been cultivating a relationship with Russia through arms purchases over the last several years. From 2005 through 2008, Venezuela bought over US$4 billion in arms and equipment from Moscow, and a September announcement revealed another US$1 billion credit for more purchases from Russia.

Peru has decided to install two facilities capable of repairing Russian-made helicopters, clearly setting the stage for future purchases between the two nations. While this particularly animated editorial in El Comercio questions the drive to increase Defense spending, much of the discussion centers on keeping pace with Chile, which maintained a 2008 Defense budget of 3.73% of its GDP, second only to Colombia in South America.

Colombia has more than doubled its defense expenditure since 2000. The Defense Ministry’s budget, which includes police, now exceeds 6 percent of GDP. U.S. security assistance to Colombia is slightly less than it was in the early 2000s, making the U.S. contribution to Colombia’s overall defense effort far smaller, as this July blog post from the Center for International Policy explains. Nonetheless Juan Manuel Santos, Colombia’s Defense Minister, plans to travel to Washington shortly after Barack Obama’s inauguration, to urge officials to maintain established levels of aid under the Plan Colombia framework.