BMI's Executive Summary

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Argentina's defence and security position has undoubtedly improved over the last decade. At the end of 2007 the country was undergoing a new democratic transition, as Cristina Fernández de Kirchner, who had won the October presidential elections with a comfortable majority, formally took office in December. Despite criticism of the Kirchner family's tight hold on political power, various underlying factors were undoubtedly favourable when compared to the country's recent past.

First and foremost, Argentina has enjoyed a period of strong economic growth since 2003, a vitally important counterpoint to the social and economic collapse of 2001-02. This growth, and the consequent improvement in living standards, helped reduce social tensions and ease the crime wave that had become a serious threat to internal security. Inequalities of income and wealth together with crime in the major cities remain an important issue, but these problems are less overpowering and perhaps more manageable now than they were before. A key challenge facing the new president will therefore be to maintain domestic economic growth at a time of potentially choppy waters in the international economy. Secondly, despite some ongoing regional rivalries, Argentina remains fundamentally at peace with its immediate neighbours, a situation which has not always been the case. There is some concern over growing arms purchases by Chile, but relations are much improved (the two countries almost went to war in the late 1970s). Argentina continues to seek a counterweight to Brazilian regional influence, largely through friendship with Venezuela, but ultimately co-operation rather than competition has predominated along the Buenos Aires-Brasilia access. An ongoing dispute with Uruguay over celulose plants on the border between the two is an irritant which the President-elect may try and ease. Outside the region, we expect Argentina to continue opposing the British presence in the Falklands/Malvinas islands with some diplomatic vigour, but a return to military action such as during the 1982 occupation, which had disastrous conequences, is not on the cards. Finally, in the critical relationship with the US, pragmatism is likely to dominate: Cristina Fernández clearly hopes she will be dealing with Hillary Clinton in 2009.

Third, a country which has suffered serious threats from both domestic and international terrorism, and where there has often been a damaging backlash leading to authoritarianism and human rights violations, is currently enjoying a relatively trouble-free period. The last known domestic terrorist activities ocurred in 2005 with small-scale attacks on retail outlets run by US multinationals (Citibank, McDonalds, Blockbuster video). The last major attack attributed to international terrorism, the bombing of a Jewish community centre which killed 85 people, took place in 1994. The authorities continue to believe Lebanon-based Hizbollah, backed by Iran, was involved, although this has been denied. Concern over potential activity by Al Qaeda-linked groups in the Triple Border area (Argentina's shared border with Brazil and Paraguay) appears to have peaked in 2006 and since subsided. Clearly terrorist groups may be regrouping 'under the radar' and the danger from this quarter can never be discounted: but for the immediate future the threat level looks to be low.

Contents

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Chapter 1 - Executive Summary

SWOT Analysis

Argentina Political SWOT

Argentina Security SWOT

Argentina Defence Industry SWOT

Chapter 2 - Political Overview

Domestic Political Outlook

UCR In Trouble

Chapter 3 - Security Risk Analysis

BMI’s Security Ratings

Risk Ratings

Table: Regional Risk Ratings

Table: State Terrorism Vulnerability Index

Regional Security: Latin America

US-Latin America Relations

Regional Arms Race

Narcotics And Security

Argentina Security Risk Rating

Argentina Conflict Risk

Argentina Terrorism Risk

Islamist Groups

Argentina Physical Safety Risk

The Rise of Political Gangs

Chapter 4 - Security Overview

Internal Security Situation

Crime and Security

Drugs Trafficking

Military and Human Rights

External Security Situation

Table: Regional Insurgent Groups

Argentina-Brazil Relations

Argentina-Uruguay Relations

Argentina-US Relations

Argentina-Chile Relations

Argentina-UK Relations

Relations With Asia

Chapter 5 - Military Structure & Defence Industry

Armed Forces

Table: Regional Armed Forces (including conscripted) 2006

International Deployment

Table: Foreign Deployments

Weapons Of Mass Destruction

Market Overview

Arms Trade Overview

Imports

Industry Trends & Developments

Table: Key Players – Argentina Defence Sector

Procurement Trends & Developments

Air Force Procurements: Budgetary Setbacks?

Naval Developments

Chapter 6 - Industry Forecast Scenario

Army Enlargements

Table: Argentina Defence Sector – Historical Data & Forecasts

Government Expenditure

Table: Argentina Defence Expenditure – Historical Data & Forecasts

Key Risks To BMI’s Forecast Scenario

Chapter 7 - Macroeconomic Forecast

Table: Argentina – Economic Activity

Chapter 8 - Company Profile

Lockheed Martin Argentina (LMAASA)

Chapter 9 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Defence Industry

Sources

Chapter 10 - Appendix A: Risk Ratings Methodology

Conflict Risk Methodology

Terrorism Risk Methodology

Physical Safety Risk Methodology

Overall Risk Rating

State Vulnerability Index Methodology

Competitive Landscape for Latin America Defence & Security: Sample of  
Companies Ranked

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Rankings and Competitive Landscapes by production and sales; market share and change on previous year; number of employees, ownership structure and year established. Also includes analysis of company expansion, export and investment strategies.

Network of Defence & Security Sources

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BMI's Latin America Defence & Security Reports are based on an extensive network of multilateral organisations, government departments, automotive industry associations, chambers of commerce and company reports. Information sources include: