MIL OSI Analysis – Source: Council on Hemispheric Affairs – Analysis-Reportage: NAFTA and Drug Trafficking: Perpetuating Violence and the Illicit Supply Chain By: Cameron McKibben, COHA Research Associate, with editorial assistance provided by Gonzalo Escribano, COHA Guest Scholar and Lecturer of Political Science and International Relations at the Iberoamericana University in Mexico City The North American Free Trade Agreement (NAFTA) has been critiqued as merely serving U.S. and Canadian interests, while making the rich richer and only providing marginal, geographically isolated benefits to the poor in Mexico. Although NAFTA promised to decrease migration to the north, increase foreign direct investment, and provoke universal economic prosperity in Mexico, such outcomes have not materialized. The agreement, however, has undoubtedly facilitated U.S.-Mexican trade. As former Mexican Foreign Minister (2000-2003) Jorge G. Castañeda argues, “NAFTA brought neither the huge gains its proponents promised nor the dramatic losses its adversaries warned of.”^[i] Still, NAFTA has contributed significantly to one market in particular: the illicit drug trade. While NAFTA can by no means be identified as the principle cause of the drug violence in Mexico, it has certainly attributed to increasing drug traffic over the border through its implementation of free-market reforms. However, this did not come as a surprise. In his book, Border Games, Peter Andreas reveals that “[p]ushing NAFTA through Congress…required deflecting concerns that opening the border to legal trade might unintentionally open it to illegal drugs.”^[ii] He expands upon this by noting that law enforcement officials who initially made this argument were silenced. As a pressing security concern in the United States, illegal drug trafficking and the resulting violence has become one of the most popular and contentious research topics in academia. This analysis will, first, examine how drug trafficking organizations (DTOs) are able to obtain and maintain power within the state system. Second, the study will scrutinize NAFTA’s affects on the drug trade. Finally, policy implications will be offered that could increase cooperation in pursuit of a North American solution to the security threats arising from drug trafficking. Illicit Power in a Licit System Despite U.S. and Mexican strategies targeting both the demand for, and supply of drugs smuggled over their shared border, the levels of both drug supply and demand continue to rise. Washington’s post-9/11 policies have intended to harden the border by increasing funding and technology, but by increasing the amount of cross-border trade, NAFTA inadvertently reduced transaction costs and potential risks for the DTOs. The economic success that DTOs have acquired largely stems from their ability to supply to U.S. domestic drug demand, but their operations do extend worldwide. Mexican DTOs have access to cheap cocaine, with a kilogram priced as low as $2,200 USD in Colombia or $10,000 USD in Central America, which they are able to sell at around $27,000 USD in the United States, over $50,000 USD in Europe, and as much as $200,000 USD in Australia.^[iii] DTOs are able to use profits from illegal sales to gain social and political capital through lana (“silver,” or money) by providing public goods (i.e. employment, education, medical care, religious opportunities, security, etc.) to the community that the state is incapable of delivering. Additionally, DTOs bribe corrupt politicians to support or overlook their operations by offering monetary incentives or political support (i.e. providing votes or targeting opposition members). However, operating within an illicit economy enables DTOs to act outside the rule of law. This grants DTOs the option to act violently, should lana be unsuccessful, to obtain the social and political capital necessary for survival through plomo (“lead,” or bullets). NAFTA has only further enables Mexican DTOs to prosper. Drug trafficking is a multi-billion dollar business in the global illicit economy. The United Nations Office on Drugs and Crime estimates that the North American market for cocaine alone totaled approximately $35 billion USD.^[iv] Given such significant profits, the DTOs prefer to purchase the support of corrupt public officials as well as the social capital necessary for their operational success. Michael Kenney defines this as the “power principle.”^[v] The power principle maintains that the survival of illicit organizations is dependent upon the accumulation of and access to power, notably political power. Consequently, when lana is not accepted in illicit transactions, or individuals renege on their commitments to the DTOs, the organizations incorporate plomo to invoke fear via threats or violence in order to acquire the necessary power. Prior to 2000, the Partido Revolucionario Institucional (Institutional Revolutionary Party, PRI) regime (1929-2000) co-opted the major DTOs into its corporatist system. This relationship proved to be mutually beneficial as the PRI achieved stability through managing the drug trade by empowering a small number of DTOs. These DTOs benefitted from the political power afforded to them, and also the exorbitant profits available in the drug trade. In return, the DTOs aided the PRI to remain in power by targeting the political opposition, leading to endemic corruption in the Mexican political system. Following the transition to democracy in 2000 with the election of the opposition Partido Acción Nacional (National Action Party, PAN) candidate Vicente Fox, the new system allowed Mexico to initiate a drug war against the DTOs, appealing to U.S. pressure. With Washingon’s support, the Mérida Initiative effectively militarized Mexico’s Drug War and through decapitation tactics, targeting the drug kingpins, successfully ruptured the four major DTOs: the Tijuana/Arellano-Felix organization (AFO), the Sinaloa Cartel, the Juárez/Vicente Carillo Fuentes organization (CFO), and the Gulf cartel. Under the Fox administration, the institution of democratic processes made corruption less tolerable in the Mexican political system. Thus, lana became less effective to win the support of public officials. However, this change has produced a new threat. The DTOs adapted structurally by fragmenting and diversifying their illicit activities beyond the drug trade to include kidnapping, extortion, weapons trafficking, and money laundering. This also led the DTOs to become extremely violent, using this as a tool to gain power between and within organizations as well as in the state system. Flaring violence and growing economic capacities allows DTOs to continue embedding themselves within Mexican society as well as the state security apparatus, obtaining notable political capital, and establishing narco-states within the country. Today, differentiating between the DTOs and authorities has become practically impossible, particularly at the municipal state levels. Repercussions of NAFTA In 2013, about 350,000 loaded truck containers, 442,000 loaded rail containers, over 1.2 billion personal vehicle passengers, and more than 41 million pedestrians crossed the U.S.-Mexican border.^[vi] Exports from Mexico to the United States increased from $51.6 billion USD to $280.5 billion USD between 1994 and 2013, an increase of 444%.^[vii] Whether by train, truck, or foot, the amount of traffic crossing the border has increased exponentially since NAFTA came into force on January 1, 1994. It is not surprising that the flow of drugs has also increased. As of 2003, only 12.1 percent of all containers entering the United States nationwide were actually inspected.^[viii] While an impressive number of containers are being searched, given the amount of total trade across the border, there remains ample opportunity for the smuggling of illicit materials. Despite the successes of NAFTA in increasing U.S.-Mexican trade, its failures have ultimately exacerbated the drug trade today. This further emphasizes the ambiguity in the relationship between the state and the DTOs. Even though state policies threaten the existence of DTOs, these organizations cannot survive without state support. Andreas labels this as a paradoxical “state-smuggler” relationship.^[ix] NAFTA has manifested as state action inadvertently supporting the DTOs. Increased U.S.-Mexican trade resulting from NAFTA has benefitted regions primarily along the border in the northern regions of Mexico. In Ciudad Juarez and a number of other border cities, the income per capita hovers around $10,000, primarily due to the economic boost from the maquiladoras operating in the free-trade zones, which import raw materials duty- and tariff-free in order to create finished products that are then exported. Contrarily, the average income per capita for the rest of the country is about $7,000.^[x] The southern Mexican states remain less industrialized and widely impoverished, suffering from inequality. One of the most notable components of NAFTA targeted the communal land sharing system, ejido, established under Article 27 of the 1917 Mexican Constitution. During the NAFTA negotiations in 1991 under President Carlos Salinas de Gortari, the Constitutional right to ejidos was eliminated. Despite ejidos continuing to be recognized, the state removed subsidies to farmers, and eliminated government price regulation for the poor. Consequently, prices of basic foodstuffs increased dramatically. Mexico, previously self-sufficient in food security, must now import cheap foreign products, primarily from the United States, where farmers benefit from state subsidies. The upper class in Mexico has benefitted from the country’s efforts to attract foreign investors by privatizing the economy under the neoliberal program. By excluding Mexico’s south from these benefits, the ensuing inequality has contributed to the success of the DTOs, particularly in the states of Guerrero and Michoacán. Without opportunity to participate in the formal economy and earn a satisfactory income, NAFTA has created a network of disenfranchised individuals for the DTOs willing pursue profit in the illicit economy, rather than the formal economy. Whereas Mexico supplies the U.S. drug demand, the United States, with its comparatively lax gun laws, participates in the “smuggler relationship,” providing the Mexican DTOs with the weapons used in plomo. DTO agents frequently travel across the U.S.-Mexican border on drug runs to satisfy the U.S. drug demand. The income generated from successful drug deliveries is often used to purchase weapons in southern U.S. border counties, but also Central America, which are then smuggled back into Mexico. The cycle of smuggling drugs into the U.S., using the profits to purchase weapons, and smuggling the weapons into Mexico is perpetuated by both the violence occurring in Mexico and the insatiable drug demand in the U.S. NAFTA has effectively increased the flow of goods and people across the border, not only enabling and influx of U.S. firearms into Mexico, but also exacerbating the violence there. This makes the DTOs’ access to weapons critical to their survivability, perpetuating the cycle. The 1994 Free Trade Agreement ushered in Mexico’s single market development plan, which essentially pinned the Mexican economy to the U.S. market. Nearly 80 percent of Mexican exports were destined for the United States and the U.S. in turn provides about half of Mexico’s imports.^[xi] The Mexican economy’s dependence on the U.S. market has political implications in Mexico, making Mexican policymakers susceptible to pressures from Washington. Analysts suggest that Mexican policies that militarize the drug war and criminalize drugs are an outcome of Washington’s influence.^[xii] These policies have contributed immensely to the prominence and violence of the drug trade today. One constant geostrategic component of the U.S.-Mexico relationship is their shared border. Thus, the two countries are natural partners, which is the reason that the institution of NAFTA was practical. This geography also underlies why the United States is the primary market for Mexican drug exports. Since the United States is the hegemon of the international system, Mexico’s policy options to tackle the drug problem are constrained by its neighbor. This is why Mexico has been unable to pursue policies such as drug legalization, which has been occurring elsewhere in the hemisphere. Washington is overwhelmingly more capable of influencing Mexican drug and, more generally, security policy (i.e. the Mérida Initiative) than Mexico is able to influence U.S. drug or gun control policies. Policy Implications Despite a preference for militarized action against DTOs, Mexico and the United States have been unable to produce any new mechanisms to facilitate security cooperation or coordinate cross-border policy through interactions via NAFTA. The U.S. continues to predominantly address the increased drug trade violence and resulting migration by militarizing the border, ineffectively curtailing the passage of drugs and people from Mexico over the border. There have been recent increases in cross-border cooperation, but skepticism persists between Washington and Mexico. Mexico continues to concern itself with the lack of U.S. respect for its sovereignty and the U.S. worries that Mexico is unable to ensure its own security and contain the residual spill-over that may occur across the border. Tony Payan, Fellow and Director of Rice University’s Mexico Center at the James A. Baker III Institute for Public Policy, argues in his book, The Three U.S.-Mexico Border Wars, that in order for security to be achieved, regarding drug trafficking or any other threat, a North American solution must be found.^[xiii] This could take the shape of a North American security community. However, unlike the U.S.-Canadian relationship, the U.S.-Mexican relationship has not yet reached a point at which trust in security cooperation is achievable. Payan reveals a significant factor that must be addressed before concrete advancement can occur between U.S. and Mexico: NAFTA has contributed to the widening of the development gap between Mexico and the rest of North America. While he prescribes undertaking actions to reduce the development gap to improve “[t]he social and economic dislocations in Mexico [, which] have turned to security problems on the border for the United States” (i.e. increased undocumented workers fleeing to the north), it is also crucial in tackling the illicit drug trade problem.^[xiv] The development gap, frequently referred to as the North-South divide, emphasizes the developmental, economic, and educational differences between developed countries, primarily in the North, and the developing countries of the South. Bringing the Mexican economy on par with the United States reduces inequality and economic frustration that many Mexicans currently endure. Thus, not only does it mitigate an incentive to migrate north, it will also hopefully decrease unemployment rates and raise wages, consequently limiting the network available for DTOs to exploit and employ in the illicit economy. Still, for any real progress to be made in mitigating the development gap, the United States (and Canada) will need to shoulder some of the burden in pursuit of a more secure North America. One advantage, stemming from the development gap, that the United States does benefit from the cheap labor of around 12 million undocumented workers, primarily from from Central America and Mexico, that the U.S. able to exploit.^[xv] Contributing additional economic and technological aid in order to reduce that gap would result in losing that cheap labor force, which the U.S. economy has essentially depended on. However, in the post-9/11 security environment, it has become obvious that Washington prioritizes national security. This priority has been highlighted by the inordinate amount of spending since September 11, 2001 in securing the southern border. Ultimately, a solution to the problems caused by DTOs must be a comprehensive, North American one. Inequality and poor governance in Mexico has been exploited by the DTOs and exacerbated by NAFTA. The amount of trade and flow of people over the U.S.-Mexican border has become impossible to thoroughly regulate. While it is important to control the border, identifying and addressing structural problems at the root of the drug trade is of greater importance. Reducing the development gap between Mexico and the rest of North America and increasing the average income of both ordinary people and public officials in Mexico diminishes the network from which the DTOs are able to recruit. Domestically, Mexico must promote infrastructure development projects that aim to connect the most impoverished regions of the country, which are largely outside the influence of the state and susceptible to DTO influence. Through connecting these areas to the state, the federal government can foster targeted social service provision. Still, the U.S. and Canada must become more invested in promoting development in Mexico, especially given Mexico’s poor economic growth, as their aid now directly correlates to their increased security in the future.^[xvi] In turn, this helps to satisfy Washington’s concerns about illegal immigration and violent spill-over by reducing inequality and increasing public security in Mexico, seeking to eliminate incentives to migrate north. Conclusion Even though NAFTA has increased trade between the United States and Mexico, it has failed to deliver on the benefits that its proponents promised. Instead, NAFTA has unintentionally, or through the negligence of those championing the free trade agreement, benefitted the DTOs. Not only has NAFTA exponentially increased border traffic, allowing the probability that drugs passing across the border to shrink, but it has made the smuggling of weapons back into Mexico easier as well. The increase in weapons being purchased in the U.S. and smuggled back to Mexico for the DTOs to carry out plomo in pursuit of political capital. This analysis argues that a North American solution is necessary to resolve the problems that the hemisphere is facing as a result of the drug trade. Reducing the development gap between Mexico and the rest of the hemisphere is critical to mitigating the power of the DTOs. The inequality and economic frustration that the Mexican people experience allows the DTOs to exploit these networks and recruit people to work in each point on the supply chain (i.e. production, transportation, distribution, security, etc.). Higher rates of unemployment and higher salaries will encourage more people to participate in the licit economy as opposed to the illicit one to which many turn to today in order to obtain the necessary resources to survive. Support from the United States and Canada will be required to foster the development of their southern neighbor. Increase investment in Mexico’s development directly correlates to the mitigation of U.S. security concerns, such as illegal immigration and the spill-over of drug related violence. However, the North American countries must reflect on their past and current policies to realized that they have largely failed to effectively curtail the drug trade and its related security problems. The three partners must collaborate to ensure that Mexico invests efficiently in programs that build the necessary infrastructure to connect the poor regions with the state. This interconnectedness within Mexico combined with the provision of targeted social services to those must vulnerable to DTO influence must be cornerstones in the North American plan addressing the drug trade. By: Cameron McKibben, COHA Research Associate, with editorial assistance from Gonzalo Escribano, COHA Guest Scholar and Lecturer of Political Science and International Relations at the Iberoamericana University in Mexico City Please accept this article as a free contribution from COHA, but if re-posting, please afford authorial and institutional attribution. Exclusive rights can be negotiated. For additional news and analysis on Latin America, please go to: LatinNews.com and Rights Action. Featured Image by: Ben Amstutz, “US/Mexico Border Crossing,” Retrieved from Flickr Creative Commons, https://www.flickr.com/photos/infinitewilderness/254375359/in/photolist-25av1G-4RMBoU-eSCqa-7Ygz4D-4VRAzY-9saqe8-9s97Hs-4VRAA3-7LstEz-otJW4-3BSjAk-7YjZYd-7Tx3yN-cEdLN1-eXWmna-cEdMrC-fqD1Eh-6XGirS-jzsqgY-48UYV7-7YjRrh-dkMta1-raQTqz-8GhDpe-spuWX-dmm8hE-4mzvUK-cEdMQY-ammk1d-FWdr8-eXWo8c-2NFkHo-fqD3vs-fqoMXp-KVmnB-h2yv7-eXWheR-bTrWc8-ftfLqD-eq5um1-ftv6S9-6gu1S2-3Armk-bExcJG-csiSyU-7YjVrJ-66ASJo-gu3vH9-bExcZ7-bS2zt ^[i] Jorge G. Castañeda, “NAFTA’s Mixed Record: A View from Mexico,” Foreign Affairs, January/February 2014. ^[ii] Peter Andreas, Border Games: Policing the U.S.-Mexico Divide, Second Edition (Ithaca: Cornell University Press, 2009), 58. ^[iii] Scott Stewart, “Mexico’s Cartels and the Economics of Cocaine,” Stratfor Security Weekly, January 3, 2013. ^[iv]Estimating Illicit Financial Flows Resulting from Drug Trafficking and Other Transnational Organized Crimes, Research Report (Vienna: United Nations Office on Drugs and Crime, 2011), Preface. ^[v] Michael Kenney, “Turning to the ‘Dark Side’: Coordination, Exchange, and Learning in Criminal Network,” in Networked Politics: Agency, Power, and Governance, edited by Miles Kahler (Ithaca: Cornell University Press, 2009), 88-89. ^[vi] Bureau of Transportation Statistics, “Border Crossing/Entry Data: Time Series Analysis,” accessed February 11, 2015, http://transborder.bts.gov/. ^[vii] M. Angeles Villareal, “U.S.-Mexico Economic Relations: Trends, Issues, and Implications,” Congressional Research Service (July 1, 2014): 2-3. ^[viii] Robert Bonner, “U.S. Customs Overhauling Trade under Terrorist Threat,” Testimony Before the Senate Committee on Commerce, September 9, 2003. ^[ix] Andreas, Border Games, 22. ^[x] Tony Payan, The Three U.S.-Mexico Border Wars (Westport, CT: Praeger Security International, 2006), 61. ^[xi] United States Department of State, “U.S. Relations with Mexico,” Bureau of Western Hemisphere Affairs, Fact Sheet, September 10, 2014. ^[xii] Luis Astorga and David A. Shirk, “Drug Trafficking Organizations and Counter-Drug Strategies in the U.S.-Mexican Context,” Center for U.S.-Mexican Studies at the University of California – San Diego (2010): 26. ^[xiii] Payan, 133. ^[xiv] Ibid., 132. ^[xv] “Unauthorized Immigrant Population Trends for States, Birth Countries and Regions,” Pew Research Center, Hispanic Trends, December 11, 2014. ^[xvi] Mexico’s annual GDP growth was about 4% in 2012, but fell to 1.1% in 2013. While it increased to around 2.1% in 2014 it is still below the forecasted growth for that year. See “Global Economic Prospects,” The World Bank. Additionally, Mexico’s Central Bank has now cut its 2015 GDP growth forecast twice leading to the current prediction of between a 2.5-3.5% growth. See Eric Martin and Brendan Case, “Mexico Central Bank Cuts ’15 GDP Forecast for Second Time,” Bloomberg Business, accessed March 3, 2015, http://www.bloomberg.com/news/articles/2015-02-18/mexico-central-bank-cuts-15-gdp-growth-forecast-for-second-time. – –  ]]>

MIL OSI Analysis – Source: Council on Hemispheric Affairs – Analysis-Reportage – Research: Brazil’s Weapons Industry By: W. Alejandro Sanchez, Senior Research Fellow at the Council on Hemispheric Affairs Latin America does not depend solely on exports from extra-regional powers for military equipment. On the contrary, the region boasts its own thriving domestic weapons industry. The crown jewel of Latin America’s defense industries is arguably Brazil’s, which has made a name for itself by domestically producing military equipment for export. Case in point is the Super Tucano, a light military aircraft that can be utilized for either training or combat operations, which is produced by the Brazilian aerospace conglomerate Empresa Brasileira de Aeronautica (EMBRAER) and enjoys significant prominence in the field. According to the latest headlines, the Portuguese-speaking nation is predicted to have a good year in weapon sales, bolstering Brazil and Latin America in terms of capital and relevancy in the global arms market. Recent Transactions Over the years, the Council on Hemispheric Affairs (COHA) has monitored Brazil’s budding military industry. This includes a report published in 2009, entitled: “EMBRAER: Brazilian Weapons Industry becoming a Global Arms Merchant?” The report discusses the history and recent activities of EMBRAER, the aforementioned Brazilian aerospace conglomerate. The company’s origins can be traced back to the Brazilian military junta that ruled the country from 1964 to1985. General Emilio Medici was head of the military junta in 1969 when EMBRAER was initially founded. Medici wanted the country to have its own self-contained aircraft-manufacturing company, with the state in control of 51% of the shares. COHA’s 2009 report features an interview with Dr. Thomaz Costa, Professor of National Security Affairs at the Center for Hemispheric Defense Studies at the National Defense University. Costa explains, “[Embraer’s] business philosophy seems to reflect a market position defined by producing platforms with technology, electronic components, and had a large array of private stock of parts available in its on-site global market. Its products directed to civilian markets are based in cost-effectiveness of product life cycle.”[i] Since the release of COHA’s “Global Arms Merchant” report, EMBRAER and Brazil’s arms industry have accomplished some significant achievements. One interesting development occurred in mid-2014, when the Brazilian media reported that Brazil had sold its first batch of unmanned aerial vehicles (UAV), commonly known as drones, to an African nation. It remains unclear which African nation bought the drones, though it is known that three FT-1000 Horus were sold, produced by the Brazilian company FT Sistemas S.A.[ii] Drones for military use are becoming increasingly popular among defense forces across the world, presenting an opportunity for Brazil to make a name for itself as a producer of reliable and efficient UAVs. In addition to military aircraft, Brazil also produces and exports land equipment. In early February, the Italian-based Industrial Vehicles Corporation (IVECO) signed an agreement with Lebanon to sell that nation around 80 military and police vehicles. It is important to note that ten of these armored vehicles will be manufactured in Brazil.[iii] Specifically, the vehicles that will be produced in the South American state are the Guarani (VBTP-MR), a 6×6 armored personnel carrier that can carry up to eleven troops.[iv] They will be assembled in IVECO’s plant in Sete Lagoas, located in Brazil’s Minas Gerais state, which will boost the local workforce.[v] Moreover, in November 2014, the Brazilian company AGRALE reached a deal with the government of Namibia for the sale of 141 Marrua, four-by-four wheeled transport and utility vehicles.[vi]/The African defense news website DefenceWeb explains that AGRALE has had a foothold in Namibia’s defense forces since 2011, when Namibia’s state owned Windhoeker Maschinenfabrik (WMF) company partnered with the Brazilian company to assemble its vehicles, including tractors.[vii] Furthermore, in late-2014 the Angolan Navy ordered seven Macae-class patrol boats from Brazil. This came about via an agreement between the defense ministries of the two countries, with four of the vessels to be constructed in Rio de Janeiro by Brazil’s Empresa Generencial de Projectos Navais (EMGEPRON).[viii] Finally, in response to an e-mail query by COHA, DefenceWeb also mentioned the A-Darter missile project between South Africa and Brazil. Just this past February, the Brazilian Air Force reported the successful firing of an air-to-air A-Darter missile. The defense news portal Defense Industry Daily has generally praised this partnership, explaining that “there’s a new advanced dogfighting missile coming to town, and it won’t be coming from any of the standard players.”[ix] The missile is a partnership between the Brazilian Air Force, the Brazilian Ministry of Defense and the South African-based Denel Dynamics (a subsidiary of Denel SOC Ltd) which dates back to 2006.[x] The aforementioned examples of confirmed orders highlight the growing presence of Brazil as a global arms merchant not only when it comes to warplanes, but also manufactures land and sea equipment. The independent geopolitical risk consultant Milena Rodban explained to COHA that “Brazil’s defense industry is protected as part of the country’s National Defense Strategy, which stresses the need for an autonomous national defense industry to keep Brazil from becoming reliant on other countries to equip its armed forces.”[xi] The U.S.-Super Tucano Deal The sale of Super Tucano planes to the U.S. deserves an in-depth discussion in itself. In recent years, Washington-Brazil relations have been at times tense, particularly due to the 2013 discovery that the U.S. National Security Agency (NSA) had spied on President Dilma Rousseff’s telephone and e-mail accounts. But prior to the diplomatic tensions, the two countries had reached an agreement over the transaction of 20 Super Tucanos. According to a September 2014 article in AviationWeek.com, the U.S. Air Force has begun receiving the first of the A-29 Super Tucanos purchased by the U.S. government.[xii] EMBRAER has teamed up with Sierra Nevada Corp., an electronic systems provider and systems integrator headquartered in Nevada. This was a very important order as it was EMBRAER’s first successful venture in the U.S. defense market.”[xiii] It is worth noting that the U.S. is merely a stopover for the Super Tucanos, as they will be eventually taken to Afghanistan to be flown by the local Air Force. In fact, renowned Jane’s Defense Weekly reports that as early as this January, the U.S. Air Force has “begun training Afghan pilots and maintainers on the Embraer A-29 Super Tucano light attack aircraft at Moody Air Force Base (AFB) in Georgia.”[xiv] It is certainly a great honor for EMBRAER to have its flagship aircraft chosen by the U.S. Air Force, and even more so that it will be utilized by the Afghanistan military to bring security and order back to the troubled Central Asian state. Nevertheless, the question remains whether current chilly Washington-Brasilia relations will affect future deals. Geopolitical risk consultant Milena Rodban argues that “Embraer’s plans to sell more planes to the U.S., for use in border surveillance and counter-narcotics missions, may be affected. I personally think that the likelihood of chilly relations resulting in fewer sales remains low. If Embraer loses out on bids, it’ll be because other companies are in a better position to provide adequate equipment, and not because of the fallout from the NSA scandal.”[xv] The opinion is shared by Inigo Guevara, a specialist in Latin American defense affairs. In an interview with COHA, Guevara explained that “the first Super Tucano deal was agreed upon before the NSA scandal. The question now is whether the U.S. government will want a second batch of these planes.”[xvi] Sales Speculation As is generally the case with the global arms trade, there is plenty of speculation regarding future prospects for Brazil’s weapons industry. For the sake of the argument, we will mention the most prominent rumors. One possible future for the Super Tucanos is Guatemala, as the country’s government has considered purchasing them for quite some time. In fact, Guatemala and EMBRAER signed an agreement in 2013 for a transaction including six Super Tucanos. Nevertheless, in 2013, Guatemalan President Otto Perez Molina announced his decision to withdraw from the original order. The Guatemalan head of state argued at the time that the aircrafts were overpriced, hence his decision to cancel the deal.[xvii] As a penalty, Guatemala paid around 600 thousand USD dollars in fines.[xviii] It appears that Guatemala City still desires the planes, but only two instead of six. However, some concerns remain regarding the planes’ cost. Specifically, the Guatemalan Minister of Defense, General Manuel Lopez, has declared that purchasing the two Super Tucanos, along with three radars and two interceptor speed boats, will cost around $13 million USD. The highly regarded defense-news agency Infodefensa.com argues that even in the best of cases, this amount is too low, considering one new Super Tucano with basic-equipment costs around $10 million USD alone.[xix] The Guatemalan media has widely quoted Minister Lopez on the issue, who emphasizes that regardless of the cost, Guatemala is committed to obtaining several Super Tucanos this time around. The United Arab Emirates (UAE) are involved in rumors surrounding the notorious Super Tucanos. Senior military official Brigadier General Juniti Saito, Commander of the Brazilian Air Force, has declared that the UAE is interested in acquiring twenty-four A-29 Super Tucanos. This particular speculation may turn out to ring true in the near future, as the UAE government apparently aims to acquire some aircraft directly from the Brazilian Air Force’s inventory for a speedy delivery.[xx] Another agreement over the Super Tucanos which is currently in the works is tied to Indonesia. The Asian nation originally wanted to purchase an aircraft, but relations between the two governments have soured since January when Indonesia executed Mario Archer, a Brazilian citizen who had been found guilty of smuggling 13.4 kilograms of cocaine into the country. Prior to the execution, President Rousseff herself called Indonesian President Joko Widodo, pleading for mercy on behalf of her citizen, but the Indonesian government continued with his execution and other prisoners, some of them also foreigners. In retaliation, Brazil called its ambassador back to the country for consultations and also did not recognize the credentials of the new Indonesian ambassador.[xxi] In response to this, Indonesian Vice President Jusuf Kalla declared that his government was considering canceling the purchase of 16 EMB-314 Super Tucano warplanes for the Indonesian Air Force.[xxii] (For another perspective on this affair, it is worth noting that Indonesia is a long-time customer of EMBRAER, as it purchased 18 of their aircrafts in 2010.[xxiii]) It should be noted that there is another Brazilian citizen, Rodrigo Gularte, on death row in Indonesia. Like Archer, Gularte is also accused of smuggling cocaine.[xxiv] If Gularte is also executed, this could further tarnish relations, damaging any hope for the Super Tucano deal. Analysis In 2014, the major news regarding Brazilian arms sales was related to Brazil’s decision to purchase 36 Gryphen warplanes from the Swedish company Saab.[xxv] This decision was a shock formany because it was widely believed, that the Brazilian government would choose the Rafale warplanes, produced by the French company Dassault.[xxvi] But  while Brazil’s purchase of weapons from the exterior is certainly noteworthy – the Gryphen deal will cost some $4.5 billion USD – the Brazilian weapons complex has not fallen behind. Recent deals over Super Tucanos with the U.S. and Afghanistan, the sales of combat and armored vehicles to Lebanon and Namibia, and even the sale of a small quantity of drones to an unidentified African nation, highlight that several governments, even major military actors like the U.S. and UAE, are interested in Brazilian-made weapons. Should new deals occur in the coming months, like with the UAE, this will only strengthen Brazil’s pedigree when it comes to the manufacturing of reliable weaponry that nations across the world desire. Nevertheless, a word of caution is necessary. Although arms sales continue, they have fallen beneath the projections of what Brazilian weapons companies desire. Furthermore, not all aspects within these companies are ideal. Specifically, Sami Hassuani, CEO of Avibras Aeroespacial, a producer of military equipment, acknowledges that some 1,500 employees were not promptly paid this past December.[xxvii] COHA interviewed Mauricio Santoro, a professor of International Relations at Candido Mendes University. Professor Santoro explained to COHA that during the Rousseff presidency, there have been “many cuts in the federal budget, and these companies experienced serious setbacks. Avibras´ situation is controversial. The Minister of Defense [Jacques Wagner] says that the problem is its management, and not lack of contracts.”[xxviii] As a way to assure its customers and employees of its current situation, Avibras released a press release just this past March 11, explaining that it is paying its collaborators and missing salaries.[xxix] It is a positive development that the company is paying its dues, but it is troubling that the company felt the need to publish a communiqué arguing that its management is in control of the company. While sharing his thoughts with COHA, independent analyst Inigo Guevara highlighted that “in the 1990s, ENGESA produced and exported armored vehicles and it went bankrupt,” highlighting how companies that are having successful sales can undergo major turmoil.[xxx] Ultimately, there is the obvious concern of whether Brazilian arms manufacturers will be able to maintain their momentum regarding exports. The aforementioned sales exemplify that various countries desire to purchase Brazilian military technology. However, the global arms trade has a plethora of suppliers. Apart from the usual suspects like the U.S., Russia, and China, various other nations also produce high-tech weaponry. Sweden, for example, which is not usually regarded as a European military powerhouse, produces the Gryphen warplanes that Brazil recently purchased. Even Peru, which houses a smaller industry than Brazil, jumpstarted its weapons industry in recent years with positive results. For example, Servicios Industriales de la Marina (SIMA), a state-owned Peruvian company with multiple shipyards, produces vessels for the Peruvian Navy, including a new training vessel, the BAP Union.[xxxi] Furthermore, SIMA recently reached an agreement with Panama to open a SIMA subsidiary shipyard in the strategic Central American nation.[xxxii] Geopolitical risk consultant Milena Rodban explained to COHA that one crucial factor that makes Brazilian weapons, and those produced by other Latin American countries, attractive, is the “willingness” of these governments “to sell to customers without imposing rules on resale, use, etc. This latter point is very important, since it greatly expanded the pool of potential customers, allowing Brazil to sell to countries including Libya and Saudi Arabia, which were willing to buy, but only if there were no strings attached to the sale.”[xxxiii] Professor Santoro adds that “Brazil has been trying hard to build an arms industry since the 1960s, but this project only advances when the State has enough resources to support the companies in a very competitive international market.”[xxxiv] Ultimately, there is the question of how much of a “splash” is Brazil making in the global weapons market. The renowned Stockholm International Peace Research Institute (SIPRI) has released a new report with updated data on the arms trade. A March 2015 SIPRI Fact Sheet, “Trends in International Arms Transfers, 2014,” states that the top 10 largest exporters of weapons nowadays are the U.S., Russia, China, German, France, the UK, Spain, Italy, Ukraine and Israel.[xxxv] In other words, even with the Super Tucano sale to the U.S. and sales to Namibia and Lebanon, Brazil is not considered within the top 10 of global weapons exporters. On March 16, the Stimson Center, a Washington DC-think tank, hosted an event to celebrate the SIPRI report, which included speakers from SIPRI, the Forum on the Arms Trade and an expert from Stimson.[xxxvi] During the Q&A section, a COHA military analyst asked the speakers for their thoughts on Latin America as an emerging exporter of weapons, with Brazil as the crown jewel. The SIPRI expert, Dr. Aude Fleurant, spoke about South-South cooperation, while Jeff Abramson, from the Forum on the Arms Trade, spoke about countries having “niche markets” for their products. Moreover, it was highlighted that emerging powers with strong militaries are having troubles placing their domestically-made products in the global market, like for example India. It seems that experts in general agree that several Brazilian companies, EMBRAER chief among them, are going to continue their weapons exports abroad; with the no-strings-attached sale certainly helping. Nevertheless, even the major sale of 20 Super Tucanos to the U.S. Air Force is not enough to break Brazil into the Top-10 list of major weapons exporters in the world. With that said, smaller sales to other developing nations will continue to enrich these companies’ coffers. Conclusions The early months of 2015 put the Brazilian weapons industry in an interesting situation. Several deals have transpired that should qualify the country as an admired and respected global arms merchant, best exemplified by its deals with Lebanon, Namibia, and even the U.S. and Afghanistan as a final destination for the planes. Nevertheless, there are obstacles. The issue of unpaid salaries is a troubling matter that may indicate managerial problems in some of these companies. Moreover, the 2013 annulment of the Guatemala deal and inter-governmental tensions that threaten the deal with Indonesia stress the subjectivity of speculation over agreements; even finalized agreements are at risk for cancellation. Professor Mauricio Santoro concludes that in Brazil, “there are some very dynamic companies, such as Embraer and Condor (which produces less-lethal weapons) and good perspectives for firms engaged in the Navy expansion program. But the future of many other companies, including Avibras, is still a difficult question to answer.”[xxxvii] Finally, as Brazil’s weapons industry grows, the question becomes to which countries it is willing to sell weapons. The obvious concern is that Brazilian weapons may be acquired by governments that are accused of human rights abuses, such as genocide, or engaged in illicit activities. As a signatory of the UN Arms Trade Treaty, the Brazilian government has the duty not just to its domestic companies to ensure that they flourish, but also to humanity to ensure that Brazilian weapons are not used for evil. With that said, Brazil continues to grow as a major weapons supplier to nations across the world. The country’s Super Tucano cannot be compared to the highly-advanced, and very costly, F-35 Joint Strike Fighter warplane (constructed by Lockheed Martin and funded by the U.S. and several of its allies), nor can the Horus UAV be compared to an armed Predator, but Brazil is also capable of meeting the demand for cheap and effective weapons on a global scale. By: W. Alejandro Sanchez, Senior Research Fellow at the Council on Hemispheric Affairs Please accept this article as a free contribution from COHA, but if re-posting, please afford authorial and institutional attribution. Exclusive rights can be negotiated. For additional news and analysis on Latin America, please go to: LatinNews.com and Rights Action. Featured Photo: : Chris Carlson, a Sierra Nevada Corporation senior pilot, taxis an A-29 Super Tucano on the flightline during its first arrival, Sept. 26, 2014, at Moody Air Force Base, Ga. The Afghan Air Force will implement the A-29 as their current air-to-ground aircraft, the Mi-35 attack helicopter, reaches its end of service life in January 2016. (U.S. Air Force photo/Airman 1st Class Dillian Bamman) –  http://www.af.mil/News/Photos/tabid/129/igphoto/2000945465/Default.aspx References [i] W. Alejandro Sanchez. “EMBRAER: Brazilian Weapons Industry Becoming a Global Arms Merchant?” Council on Hemispheric Affairs. Report. September 1, 2009. http://www.coha.org/embraer-brazilian-military-industry-becoming-a-global-arms-merchant/ [ii] Angelo Young. “Brazil exports first military drone: Flight technologies FT-100 hours heads to unnamed African country.” International Business Times. August 4, 2014. http://www.ibtimes.com/brazil-exports-first-military-drone-flight-technologies-ft-100-horus-heads-unnamed-african-1647774 Also see: “Brazil sells UAV to Africa.” DefenceWeb. August 1, 2014. http://www.defenceweb.co.za/index.php?option=com_content&view=article&id=35695:brazil-sells-uav-to-africa&catid=35:Aerospace&Itemid=107 [iii]“Brazil logra en Libano el primer contrado de exportacion del blindado Guarani.” Infodefensa.com. January 30, 2015. http://www.infodefensa.com/latam/2015/01/30/noticia-brasil-logra-libano-primer-contrato-exportacion-blindado-guarani.html [iv]“Brazil logra en Libano el primer contrado de exportacion del blindado Guarani.” Infodefensa.com. January 30, 2015.http://www.infodefensa.com/latam/2015/01/30/noticia-brasil-logra-libano-primer-contrato-exportacion-blindado-guarani.html [v] “Lebanon orders armored vehicles from Brazi.” Defense-Update. January 1, 2015. http://defense-update.com/20150101_lebanon-orders-armored-vehicles-from-italy-and-brazil.html#.VQLyCI54otc [vi]Roberto Caiafa. “La empresa brasileña Agrale exporta a Namibia vehiculos militares Marrua.” Infodefensa.com. November 28, 2014. http://www.infodefensa.com/latam/2014/11/28/noticia-empresa-brasilena-agrale-exporta-namibia-vehiculos-militares-marrua.html [vii] “Namibia Defense Force orders Marrua vehicles.” DefenceWeb. December 11, 2014. http://www.defenceweb.co.za/index.php?option=com_content&view=article&id=37339:namibia-defence-force-orders-marrua-vehicles&catid=50:Land&Itemid=105 [viii] “Angolan Navy acquiring seven patrol vessels from Brazil.” DefenceWeb. September 9, 2014. http://www.defenceweb.co.za/index.php?option=com_content&view=article&id=36188:angolan-navy-acquiring-seven-patrol-vessels-from-brazil&catid=51:Sea&Itemid=106 [ix] “South Africa, Brazil’s A-Darter SRAAM Hits Target.” Defense Industry Daily. February 13, 2015. http://www.defenseindustrydaily.com/south-africa-brazil-to-develop-adarter-sraam-03286/ [x] “South Africa, Brazil’s A-Darter SRAAM Hits Target.” Defense Industry Daily. February 13, 2015. http://www.defenseindustrydaily.com/south-africa-brazil-to-develop-adarter-sraam-03286/ [xi] Milena Rodban. Geopolitical risk consultant. Interview with the author. March 2015. [xii] Amy Butler. “First Tucano Accepted into U.S. Air Force.” Aviation Week. September 25, 2014. http://aviationweek.com/defense/first-super-tucano-accepted-us-air-force [xiii] Amy Butler. “First Tucano Accepted into U.S. Air Force.” Aviation Week. September 25, 2014.  http://aviationweek.com/defense/first-super-tucano-accepted-us-air-force [xiv] Gareth Jennings.” USAF begins Afghan Super Tucano training.” HIS Jane’s Defense Weekly. January 11, 2015. http://www.janes.com/article/47801/usaf-begins-afghan-super-tucano-training [xv] Milena Rodban. Geopolitical risk consultant. Interview with the author. March 2015. [xvi] Inigo Guevara. Latin American defense affairs specialist. Interview with the author. March 2015. [xvii]“Guatemala da marcha atras en la compra a Embraer de aviones SuperTucano.” Infodefensa.com. November 19, 2013. http://www.infodefensa.com/latam/2013/11/19/noticia-guatemala-marcha-atras-compra-embraer-aviones-super-tucano.html [xviii]“Guatemala insiste en comprar aviones SuperTucano a Brasil.” La Nacion (Guatemala). January 23, 2015. http://www.lanacion.com.gt/guatemala-insiste-en-comprar-aviones-super-tucano-a-brasil/ [xix]Alberto Lopez. “ Guatemala insiste en comprar dos aviones SuperTucano tras cancelar un contrato de seis.” Infodefensa.com. January 27, 2015. http://www.infodefensa.com/latam/2015/01/27/noticia-guatemala-insiste-comprar-menos-aviones-super-tucano-cancelar-contrato.html [xx]“Emiratos Arabes Unidos quiere comprar 24 cazas SuperTucano a Embraer.” Infodefensa.com. January 22, 2015. http://www.infodefensa.com/latam/2015/01/22/noticia-emiratos-arabes-unidos-quiere-comprar-cazas-super-tucano-embraer.html [xxi] “Brazil ‘outraged’ by Indonesia drug trafficking execution.” BBC. Latin America & Caribbean. January 17, 2015.http://www.bbc.com/news/world-latin-america-30866752 [xxii]Paula Ferreira. “AposRetaliacao de Dilma, Indonesia pode cancelar compra de avioes de Embraer.” Oglobo. February 24, 2015.http://oglobo.globo.com/brasil/apos-retaliacao-de-dilma-indonesia-pode-cancelar-compra-de-avioes-da-embraer-15420471 [xxiii] No title. EMBRAER. Press Release. August 6, 2012. http://www.embraer.com/en-us/imprensaeventos/press-releases/noticias/pages/embraer-entrega-os-quatro-primeiros-a29-super-tucanos-para-a-forca-aerea-da-indonesia.aspx [xxiv] Hugo Bachega. “Brazilian family’s fight to stop execution of Rodrigo Gularte.” BBC. Latin America & Caribbean. March 11, 2015. http://www.bbc.com/news/world-latin-america-31831000 [xxv] W. Alejandro Sanchez. “Brazil’s warplane choice not a Saab story for France.” Blouin News. Blouin Beat: Politics. December 19, 2013. http://blogs.blouinnews.com/blouinbeatpolitics/2013/12/19/brazils-warplane-choice-not-a-saab-story-for-france/ [xxvi] W. Alejandro Sanchez. “Brazil’s warplane choice not a Saab story for France.” Blouin News. Blouin Beat: Politics. December 19, 2013http://blogs.blouinnews.com/blouinbeatpolitics/2013/12/19/brazils-warplane-choice-not-a-saab-story-for-france/ [xxvii]Roberto Caiafa. “El turbulento inicio de ano para las empresas de defensa de Brasil.” Infodefensa.com. Perspectivas. January 21, 2015.http://www.infodefensa.com/latam/2015/01/21/opinion-turbulento-inicio-empresas-defensa-brasil.php [xxviii] Mauricio Santoro. Professor of International Relations at Candido Mendes University. Interview with the author. March 2015. [xxix] Avibras. Press Release. March 11, 2014. Republished by Defesanet.com.br. http://www.defesanet.com.br/bid/noticia/18391/AVIBRAS—Nota-Oficial/ [xxx] Inigo Guevara. Latin American defense affairs specialist. Interview with the author. March 2015. [xxxi]“SIMA botara el nuevo buque escuela a vela BAP ‘Union’ el 22 de diciembre.” Defensa.com. December 4, 2014. http://www.defensa.com/index.php?option=com_content&view=article&id=14065:sima-botara-el-buque-escuela-a-vela-bap-union-el-22-de-diciembre&catid=203:fidae-news&Itemid=691 [xxxii]“SIMA Peru instalara un astillero subsidiario en Panama. Infodefensa.com. April 24, 2014. http://www.infodefensa.com/latam/2014/04/24/noticia-instalara-subsidiaria-panama.htmlAlsosee: “SIMA instalara filial en Panama para desarrollar proyectos navales.” Andina – Agencia Peruana de Noticias. April 16, 2014.http://www.andina.com.pe/agencia/noticia-sima-instalara-filial-panama-para-desarrollar-proyectos-navales-502498.aspx [xxxiii] Milena Rodban. Geopolitical risk consultant. Interview with the author. March 2015. [xxxiv] Mauricio Santoro. Professor of International Relations at Candido Mendes University. Interview with the author. March 2015. [xxxv] Pieter D. Wezeman and Siemon T. Wezeman. “Trends in International Arms Transfers, 2014.” SIPRI Fact Sheet. Stockholm International Peace Research Institute. March 2015. [xxxvi] “Global Arms Trade, Recent Trends & Looking Ahead.” The Stimson Center. Event. March 16, 2015. Held at the Stimson Center, Washington DC. http://www.stimson.org/events/global-arms-trade-recent-trends-looking-ahead/ [xxxvii] Mauricio Santoro. Professor of International Relations at Candido Mendes University. Interview with the author. March 2015. – –  ]]>