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Israeli arms firms target Latin America

by Staff Writers
Tel Aviv, Israel (UPI) Apr 25, 2011
Elbit Systems, one of Israel's leading defense companies, has won an $85 million contract to upgrade 11 Brazilian air force F-5 fighter-bombers as well as a joint venture with plane maker Embraer to build Israeli-designed unmanned aerial vehicles.

The deals, signed at the Latin American Aerospace and Defense Exhibition LAAS 2011 this month in Rio de Janeiro, underline the Israeli defense industry's new focus on opening up the Latin American arms market.

Elbit didn't disclose the value of the contract between its Brazilian subsidiary, AEL Sistemas, and Embraer Defense and Security but the deal to develop, manufacture and market Elbit's Hermes 450 UAV is expected to catapult the Israeli outfit into the regional defense market.

Even before that deal, Elbit had made its mark in Brazil, secured two large defense contracts, including one in January 2010 to supply Hermes 450 surveillance drones to the Brazilian air force.

The Israeli business daily Globes reported that Embraer has a long-standing relationship with AEL, which supplies the avionics for Embraer's EMB-312 Super Tucano light attack/advanced trainer aircraft and for the F-5M jets Embraer is upgrading for the Brazilian air force.

"We woke up late to globalization and there's now a need to close gaps and even get ahead of competitors," declared Itzhak Nissan, chief executive officer of Israel Aerospace Industries, state-owned flagship of Israel's defense industry.

"We can do this thanks to our portfolio of products in various fields, including satellites, UAVs, missiles and planes."

IAI unveiled its new intelligence-gathering and observation vehicle, which can travel across difficult terrain, at the Brazilian expo. The vehicle was jointly developed by IAI subsidiary Elta and Brazil's Tac Motors.

Another Israeli defense major, Rafael Advanced Defense Systems was also at LAAD 2011 and its main display was its Tamir interceptor missile used in the Iran Dome air-defense system. Iron Dome made its combat debut against Hamas rockets unleashed on southern Israel in March.

In recent years, Latin America has emerged as a major defense spender, the Stockholm International Peace Research Institute, which monitors global defense spending, reported in a recent study.

The increase in Latin American defense expenditure in real terms was 5.8 percent in 2010, compared to 5.2 percent for Africa, 2.8 percent for North America and 2.5 percent for the Middle East.

SIPRI said this was due to the strong economic growth Latin America, particularly Brazil and Chile, has experienced in recent years, even though there are no major conflicts in the region.

Globes reported April 7 that Israel's military exports in 2010 exceeded $7.3 billion, according to provisional figures from defense companies.

That's expected to hit $7.4 billion when the final tally is completed, equaling the all-time high recorded in 2009, Defense Ministry officials said.

Israel's military exports have been rising steadily over the last five years. But Defense Ministry officials caution that trend is likely to be reversed in the years ahead because of stiff defense budget cutbacks in Europe and other factors.

So the increased focus on Latin America is intended to compensate for the anticipated downturn in exports.

Nissan of IAI observed that Brazil in particular has opened for Israel because of "new understandings."

In 2010, Brazil signed a confidentiality agreement with Israel guaranteeing that it won't transfer classified technology to third parties. That opened the door for Israeli companies to offer some of their most advanced systems.

"The new understandings … will enable Israeli companies to offer products which were previously forbidden," Nissan said.

"Whereas for years, business ties amounted to sales of specific, unclassified technologies, Israeli industry can now offer a much broader range of products to Brazil, creating a real dimension of worthwhile contracts with this market."

Israeli defense firms, many of them state-owned, and private security companies have been dealing with Central and South America since the 1970s. Some of these firms have maintained sales of around $500 million annually to Brazil, The Jerusalem Post reported.

In May 2010, IAI won a $350 million contract to supply Brazil's federal police force with long-range Heron unmanned aerial vehicles. IAI has a $150 million contract, signed in late 2007, to upgrade the Colombian air force's 24 IAI-built Kfir fighter jets and supply additional aircraft.

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