Brazil Defence and Security Industry Update Quarter 4 2011

  • August 2014
  • -
  • Business Monitor International
  • -
  • 78 pages

Most of the newsflow pertaining to defence and security issues in Brazil through mid-2011 have confirmed that the various major trends remain intact.
In advance of the 2014 FIFA World Cup and the 2016 Olympic Games in Rio de Janeiro, the government is actively working to improve security in the favelas in that city which, according to the municipal government, are home to 1mn out of Rio’s population of 6mn. Headlines in the mainstream media highlight that the authorities are using three measures to end the control of the favelas by rival drug gangs. Police and troops have undertaken military-style occupations of favelas, in some instances, with blood being shed.
More generally, though, the police continue the policy of using a permanent presence in the favelas, through Police Pacification Units (or UPPs, to give them their Portuguese acronym): these are police stations actually constructed in the shantytowns. A more interesting development is the construction in Rio’s Complexo de Alamão favela of a cable car network that gives residents much greater access to the city’s public transport system and jobs.
Meanwhile, on June 8 President Dilma Rousseff announced a new ‘Strategic Border Plan’, which will be overseen by Vice-President Michael Temer. In practice, this initiative does not appear to add anything to three existing programmes to deter smuggling and, in general, to secure Brazil’s frontiers (and, in particular, those with Venezuela, Colombia, Peru, Bolivia and Paraguay). In accordance with the National Defence Strategy (NDS) that was drafted in late 2008, the government was committed to a dramatic increase in the number of troops in the Special Border Platoons of the Amazon Military Command (and, given the heightened need to defend the country’s massive offshore energy resources, the navy).
Press reports at the beginning of 2011, citing defence minister Nelson Jobim, indicated that the new Integrated System for Border Surveillance (Sisfron), which will come into operation over the next eight years or so, will include radar coverage along the length of Brazil’s frontiers.
The NDS also envisages the expenditure of huge amounts of money on the purchase of new materiel and the modernisation of existing equipment. Over the long-term, procurement expenditure should amount to around US Dollar 128bn. Brazil is an excellent example of a large but, previously, relatively poor country whose government is sensibly taking advantage of a resources-led boom to undertake a radical reform of the armed forces. In the short-term, though, the government has cut BRL4,000mn (US Dollar 2,400mn) from the BRL 15,170mn (US Dollar 9,100mn) procurement budget for 2011: this is a part of a general policy which involves a brutal reduction in government spending in order to reduce inflationary pressures. When procurement resumes in 2012, it is likely that attention will return to the FX Fighter Replacement Program – the large scale purchase of jets for the air force. Reports indicate that the cost of the planes themselves could easily exceed US Dollar 6bn. There will also be substantial maintenance contracts. The Program remains, essentially, a three-way race between Boeing’s F-18, Dassault’s Rafale and the Saab Gripen.
Embraer continues to take steps to consolidate its position as the leading defence-aerospace supplier in the country. In March 2011, the industry player agreed to pay BRL28.5mn to buy a 64.7% stake in radar development industry player Orbisat de Amazonia. This deal will give Embraer greater ability to participate in the government’s plans for a massive increase in its capacity for electronic surveillance of Brazil’s frontiers and maritime zones. A month later, Embraer announced a partnership with Atech Negócios em Tecnologias SA, which ‘develops strategic command, control and surveillance solutions.’ This deal should boost Embraer’s ability to ‘offer genuinely Brazilian products for national and foreign defence and security industries.’ Elsewhere, Embraer’s dealmaking should find it new partners for the development of the KC-390 tanker/transport aircraft.

Table Of Contents

Industry SWOT Analysis 7
Brazil Security SWOT ....... 7
Brazil Defence Industry Environment and Risk Analysis ..... 8
Brazil Political Environment and Risk Analysis ...... 9
Brazil Economic Environment and Risk Analysis .. 10
Brazil Business Environment SWOT ....... 11
World Political Outlook ........ 12
Data : Election Timetable ........... 16
Latin America Security Overview ..... 28
Security Risk Analysis .......... 32
BMI’s Security Ratings ... 32
Data : Latin America Security Ratings ... 32
Data : Latin America State Vulnerability To Terrorism Ratings. 32
Brazil’s Security Risk Ratings ..... 33
City Terrorism Rating ..... 35
Data : BMI Americas City Terrorism Index ........ 35
Political Overview ...... 37
Domestic Politics 37
Long-Term Political Outlook ...... 38
Data : Political Overview ........... 44
Security Overview ..... 45
Internal Security Situation .......... 45
Amazon Basin ..... 45
Gun Crime And Violence 46
Corruption .......... 47
External Security Situation ......... 47
Data : Regional Insurgent Groups .......... 47
Brazil-Colombia . 48
Brazil-Paraguay . 48
Armed Forces And Government Spending . 49
Armed Forces ..... 49
International Deployments .......... 50
Data Foreign Deployments ........ 50
Weapons Of Mass Destruction .... 50

Industry Analysis ........ 52
Arms Trade Overview ..... 52
Industry Trends And Developments ........ 52
Procurement Trends And Developments . 54

Market Projection Scenario ... 56
Armed Forces ..... 56
Data : Brazil’s Armed Forces Personnel, from 2000 to 2008 (‘000 personnel, unless otherwise stated) 56
Data : Brazil’s Available Manpower For Military Services, from 2008 to 2015 (aged 16-49) .... 56
Defence Expenditure ....... 57
Data : Brazil’s Defence Expenditure, from 2008 to 2015 ........... 57
Defence Exports .. 58
Data : Brazil’s Defence Exports, from 2008 to 2015 (US$mn) ... 58
Data : Brazil’s Defence Imports, from 2008 to 2015 (US$mn) ... 59
Data : Brazil’s Defence Trade Balance, from 2008 to 2015 (US$mn) ..... 59

Macroeconomic Data . 60
Data : Brazil - Economic Activity, from 2007 to 2015 ... 62
Company Profiles ...... 63
AVIBRAS Indústria Aerospacial SA ........ 63
Embraer .. 64
BMI Methodology ...... 66
How We Generate Our Market Projections ......... 66
Defence Market . 66
City Terrorism Rating ..... 67
Data : Methodology ........ 69
Sources ... 70

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