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Defense Spending

In recent years Brazil's defense budget has averaged about 1.5% of GDP, nearly $40 billion each year. In the year 2012 Brazil's GDP was $1.2 trillion at market exchange rates, and $2.1 trillion at PPP rates. By the year 2022 Brazil's GDP is expected to grow to $2.2 trillion at market exchange rates, and $3.8 trillion at PPP rates. Brazil's defense budget might be expected to double over this same time frame.

In March 2016, President Temer hiked the country's military budget by 36 percent, just months after he pushed the approval of a controversial constitutional amendment to freeze public spending in the country for the next two decades. According to a report by Brazilian newspaper Folha de Sao Paulo based on Senate data, military spending for this year is set to hit nearly US$3.1 billion after seeing cuts under the government of former President Dilma Rousseff, ousted last year in a process widely condemned as a parliamentary coup. The defense budget hike makes military spending the second-largest government expenditure, even ahead of education, which has remained at the same level since the 2015 economic crisis and only received only about US$1.8 billion in 2016. Temers disapproval rating was at an impressive 87 percent, according to a recent Ipsos poll.

By 2012 Brazil was in the process of renewal of its armed forces, to ensure the defense of its territory and protecting its natural resources. "A country that aspires to have an international dimension has to be in the military an example of his ability. It is essential to reduce our vulnerabilities, upgrade the operating means and increasingly integrate the three forces," said President Dilma Rousseff in2011, ratifying the course scheduled by the National Defense Strategy (END), adopted in 2008 during the government of her predecessor, Luiz Inacio Lula da Silva.

The directions END established as the restructuring of the armed forces call for the revival of the defense industry and the restructuring of the military, which now reached 319,427 men and women in the three branches. Thus, in 2010, under the supervision of then-Defense Minister Nelson Jobim, the Joint Staff of the Armed Forces was established by the General Jose Carlos de Nardi, and began designing the ambitious Plan Articulation and Defense Equipment (PAED - Plano de Articulao e Equipamento de Defesa ).

While several projects were already underway, the PAED spanned the next 20 years, with investment spending on armaments and equipment estimated 30,000 to 35,000 million dollars. "Brazil is emerging from a situation of abandonment of its armed forces and when we complete our plan will have adequate capacity for which it is the sixth largest economy in the world, perhaps the fifth by then," General De Nardi said to the NATION.

In 2012 the Brazilian government published the National Defense White Book (LBDN) which clarifies Brazils defense activities and summarizes the countrys 2008 National Defense Strategy and National Defense Policy. The LBDN is a key document that Brazils defense agencies refer to frequently and which describes the priority projects of Brazils armed forces. Sub-Sector Best Prospects The military budget proposal for 2013 is around R$66 billion (US$37 billion). It is important to note that salaries and pension benefits comprise 55-70% of Brazils federal military budget. In a 2011 ranking of the ten countries with the highest defense spending in the world, Brazil ranked tenth.

Since the end of military rule in 1985, the armed services have steadfastly supported Brazil's civilian leadership and adapted to their new apolitical status. Brazil's military has subordinated itself to civilian rule, under a civilian Ministry of Defense. The officer corps is professional and dedicated to defending Brazil's constitution. In public opinion surveys the military tops all institutions in the level of public trust, even surpassing the Catholic Church.

Public esteem does not translate, however, into funds. Military budgets decreased steadily for 15 years, with the severest cuts introduced over the four years 2000-2004. This has naturally had a negative impact on the readiness of the armed forces. As President Lula stressed social priorities while working within tight fiscal constraints, the prognosis for the military's budget was for more of the same. The military grumbled that it is entitled to pay raises. The lack of money dampened the force projection capability. Procurement programs for new weapons systems to replace outmoded equipment are also starved for funds, while programs such as the development of a Brazilian nuclear-powered submarine and maintenance of antiquated vessels drain resources that could be better directed elsewhere.

In 2007, Brazils military budget was around $3.5 billion. According to official figures made public on 04 November 2007, Brazil requested $5 billion for its 2008 defense budget, with the possibility of raising it to $5.64 billion. President Lulas administration had larger plans than just equipment recapitalization, saying that we must overcome the lack of strategic planning and the technological dismantling of the last two decades.

In recent years, the navy procured 23 A-4 Skyhawk attack aircraft from Kuwait and bought the former French aircraft carrier Foch, renamed the Sao Paulo. Several pilots have already become carrier qualified in the US. The Navy is sending on average two officers a year for flight training. In March 2004, the navy signed an LOA for the FMS LINK 11 case to upgrade their secure communications. In a program plagued by technological and design flaws, the navy,s nuclear submarine program has swallowed about $1 billion in R&D costs. The navy claims it is still 20 years, and $500 million, away from final development and delivery of a nuclear sub. Meanwhile, the navy is in dire need of escort vessels, and is hard pressed to maintain its aging fleet. Navy command is interested in submarine rescue, diesel submarine, and UNITAS training and exercises.

The air force desperately wanted to replace its aging Mirages. Upon taking office in January 2003, President Lula postponed a decision on a new generation fighter (F-X), an understandable decision given the cost involved, approximately $700 million. New Lockheed F-16 Block 50 aircraft were previously offered in the competition. However, recognizing that other competitors might be preferred by FAB, Lockheed-Martin also decided to offer used F-16s in a deal that would provide the air force with capable aircraft at a fraction of the cost of new planes. Recent soundings from the GOB suggest that in order to avoid the significant budgetary outlay, consideration is also being given to upgrade of the current Mirage fleet. However, FAB continues to focus on the procurement of new, not used, aircraft. Regardless of the decision, GOB funding of the F-X will be difficult. FAB is also looking to replace its aging UH-1 helicopter fleet. In February 2004, the FAB sent a delegation to Alabama to discuss possible modifications needed on the 6-10 Black Hawks they are interested in purchasing.

Data on Brazil's military expenditures need to be approached with caution. Their accuracy is complicated by high rates of inflation since the late 1950s, by secrecy surrounding the funding of various military-related projects, by personnel costs that are sometimes hidden in other budgets, and by the common practice of mixing the accounts of the national treasury, the Central Bank, and the Bank of Brazil (Banco do Brasil--BB). However, even if the figures generally attributed to Brazilian defense expenditures understate their true value, there is consensus that Brazil is among the countries with the lowest levels of military expenditures, and that those levels have declined in the last three decades. For example, the rate of military expenditures in relation to GDP has dropped steadily: in the 1960s, it averaged 2 percent; in the 1970s, 1.5 percent; in the 1980s, 1 percent; and in the early 1990s, less than 0.5 percent. In 1993 that rate reached a mere 0.3 percent. Brazil in 1993 ranked 133d out of 166 countries in military expenditures as a share of government expenditures. Within South America, only Guyana and Suriname ranked lower.

Political scientist Paulo S. Wrobel notes that these data point to a correlation between the type of government (military or civilian) and military expenditures. That correlation is made even clearer if one examines military expenditures as a share of the federal budget: in 1970 that figure was 20 percent; in 1993 it was only 1.3 percent. The 1993 figure was the lowest since independence in 1822. The highest figure was in 1864 and 1865, at the early stages of the Paraguayan War, when defense expenditures accounted for 49.6 percent of all government expenditures.

Brazil's low level of military expenditures can be attributed to the perception that the country has few external threats and to Brazil's large size in relation to its neighbors. In terms of threats, the deepening integration process with Argentina since the early 1980s virtually has removed the only potential external threat to Brazil.

Despite its low rate of military expenditures, in absolute terms Brazil is by far the largest military power in Latin America. In 1993 it ranked nineteenth among 166 countries in total military expenditures; the next highest in Latin America was Argentina, which ranked twenty-fourth. From 1988 through 1993, Brazil's military expenditures totaled US$43.12 billion (in constant 1993 dollars; an average of US$7.19 billion per year). They totaled US$10.6 billion in 1996. The defense budget in 1997 totaled US$12 billion.

The armed forces have had some minor triumphs on budget issues. In early 1994, the Franco administration announced that it would cut US$22 billion in the federal budget, dividing the cuts equally across ministries. The military ministers reacted quickly, going directly to the president to criticize the proposed reductions. They succeeded in lowering the proposed military cuts by at least US$300 million.

In late 1993 and early 1994, the armed forces were more vocal in their criticism of the low levels of military expenditures. They pointed out, for example, that the air force work week began on Monday afternoon, after lunch, and ended at Friday noon, before lunch, in order to save on the cost of feeding the officers and troops.

Military salaries were raised substantially in mid-1991 and in April 1992. According to one report, before the second raise, a four-star general with forty years in the service was earning about US$1,700 a month, and many soldiers earned only a few hundred dollars a month. In contrast, a congressional deputy earned more than US$6,000 a month.

The armed forces had been trying to protect their priority projects: the army--Calha Norte and the "defense" of the Amazon; the navy--its nuclear-powered submarine; the air force--its AMX subsonic fighter. Each project has had special funding from the federal government, aside from the general military budget. Additional funding has sometimes been available through various government agencies.

In essence, the armed forces were being squeezed in an unintended fashion by a neoliberal economic model that stressed cuts in government expenditures and privatizations. Not only has their budget been cut, but they no longer have the ready-made sinecure of state enterprises in which to work at the time of retirement. Indeed, under the military regime, state enterprises became bloated with retired military officers. A 1983 study by political scientist Walder de Ges identified more than 8,000 retired officers who were in positions within the state enterprises and federal bureaucracy.

What the defense spending levels suggest is that the military is having to compete with virtually every civilian ministry and, in many cases, is coming up short. Moreover, even though the military is still the most influential player on some issues, the number of civilian actors involved in the decision-making process has increased. In many cases, the military has been displaced by civilians. The Ministry of Finance has become the dominant actor on budget issues. Although the armed forces can try to appeal directly to the president, such an approach is not guaranteed to succeed. Also, the armed forces must deal directly with a Congress responsible for approving the budget.

Military budgets decreased steadily for 15 years after 1990, with the severest cuts introduced over the four years after the turn of the century. This naturally had a negative impact on the readiness of the armed forces. As President Lula stressed social priorities while working within tight fiscal constraints, the prognosis for the military's budget was for more of the same. The military grumbled that it is entitled to pay raises. The lack of money dampened the force projection capability. Procurement programs for new weapons systems to replace outmoded equipment were also starved for funds, while programs such as the development of a Brazilian nuclear-powered submarine and maintenance of antiquated vessels drain resources that could be better directed elsewhere.

On 18 December 2008, President Lula signed the National Defense Strategy, concluding a fifteen month drafting exercise. The document was principally drafted by Minister for Strategic Planning Roberto Mangabeira Unger, and it provides a security policy framework that places defense in the context of the government's broader goal of national development. While the restructuring plans generally are consistent with the goal of a modern, more capable military, (leaving aside such politically popular white elephants as a nuclear powered submarine), the strategy document is silent on how resources will be found to cover the costs of expensive new hardware including aircraft carriers, satellite constellations and fighter production. Even ballpark estimates of possible modernization costs were far in excess of current defense budgets. The defense strategy as a whole is in some measure designed to address this question by linking defense to overall development goals, but it is likely that defense expenditures will not be increased to the degree required to fulfill the shorter term goal of equipping the armed forces with cutting edge technology produced in Brazil.

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