Through the years, the Armed Forces have been constrained from making defense procurements from the current budget. In addition, the lack of a significant domestic arms industry and the consequent import of almost all of its weaponry represented another constraint in defense procurement. Domestic arms production consists of ammunition, small arms, explosives, some spare parts, and coastal patrol boats for the Navy and the National Guard. As a result, the Venezuelan procurement process has focused primary on acquiring imported weapon systems. These acquisitions are characterized by obtaining mature systems from industrialized allies in the global market.
The Venezuelan Defense industry was virtually non-existent until 1975 with the establishment of the state owned Venezuelan Military Industries Company (Compañía Anónima Venezolana de Industrias Militares - CAVIM). CAVIM was established on April 29th, 1975, by Presidential Decree 883. CAVIM was organized to encourage growth of the domestic defense industry and to produce the materiel required by the Venezuelan military. It has yet to achieve this goal.
The main reasons for CAVIM's failure was the collapse of oil revenue in the 1980s, and thus, the loss of government funding. Another reason lay in the decision by the Venezuelan government to invest in imported advanced technology weaponry, such as the American F-16, which CAVIM could not produce or offer itself as a primary source of parts. Instead, CAVIM has been delegated to the production of small arms and ammunition, chemicals, explosives, and patrol craft for the Venezuelan navy.
CAVIM's administrative headquarters is based in Caracas and it presently has two industrial complex divisions: chemical and metal-mechanical. The chemical division is located in Moron and is the site of a nitric acid plant, a nitrocellulose plant, an explosives plant, a blasting agent plant, a chemical explosive plant, and a shaped charges plant. The metal-mechanical complex is located in Maracay, and is the site of a guns and ammunition plant, a non-ferrous foundry, and home to a metal-mechanical process technical consultancy.
In February, 2006, Cavim announced the production of the Pistola Zamorana, the first domestically produced handgun in Venezuela. The pistol is a 9mm with a stock of fifteen rounds. Jane's Defence Weekly reported in December 2006 on plans by the Venezuelan Air Force to build a new manufacturing facility for its own military aircraft in 2006.
In July, 2006, Venezuela announced it had paid Russia for the licensing rights to produce AK-47s and CAVIM is expected to establish a factory for their production. Incidentally, the AK-47 models to be built are an older model and CAVIM will need to rework its present ammunition production to support the rifle production. The factory was expected to be built in Maracay and under full production in two years.
The Urals-based Izhevsk Mechanical Plant (IMP) announced plans in August 2007 to build two factories for production of the famous Kalashnikov assault rifle and ammunition in Venezuela by 2010. "We will begin construction of two plants in Venezuela at the end of 2007," Vladimir Gorodetsky, the IMP general director told a news conference dedicated to the 60th anniversary of the famous small arms brand. "One plant will manufacture AK-103 assault rifles and another plant will produce 7.62-mm ammunition for the rifle," the official said. He said the contract, whose amount was not disclosed, specified construction of both plants at one site and the transfer of all related technologies and production licenses to Venezuela. "It is an absolutely legitimate license on the production of small arms in Venezuela legally purchased by the country," Gorodetsky said, adding that the contract also envisioned training of personnel and after sales maintenance.
The IMP official said Russia and Venezuela are discussing details for a new agreement on the supply of other types of small arms, including the Dragunov sniper rifle, to the South American state led by outspoken Socialist leader, Hugo Chavez. "Out goal is to re-equip the Venezuelan army with modern types of small arms, grenade launchers, and sniper rifles," he said.
Nineteen shipping containers carrying Russian made ammunition for AK-103 assault rifles were transferred from Puerto Cabello to Maracay under heavy security on 25 March 2008 according to local media. General Alejandro Tineo of the 41st Armored Division added that the shipment included machinery for the the CAVIM AK-103 factory under construction in Ciudad Jardin, expected to open in 2009.
The Russia-Venezuela arms trade generated criticism from the United States. The Bush administration lodged a formal complaint with Russia for agreeing to provide Venezuela more than 100-thousand Kalashnikov rifles that U.S. officials say could be used to aid guerillas such as the Revolutionary Armed Forces of Colombia or the National Liberation Army -- the United States calls terrorists. Mark Bromley with the Stockholm International Peace Research Institute said U.S. Secretary of State Condoleezza Rice pursued these concerns during her recent talks in Moscow with Russia's defense and foreign ministers. "The U.S. argument is [that] this is completely disproportionate to Venezuelan military needs. And there is a strong likelihood that the weapons being imported or the weapons they're replacing will either deliberately or through omission cross the border and fall in the hands of, for instance, guerillas in Colombia," said Bromley.
In 2012, Venezuela opened the Russia-licensed factory for production of AK-103 assault rifles, an upgraded model of the AK-47.
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