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Mexico - Defense Budget

Mexico does not publish defense budget information for reasons of national security. Funds are officially budgeted only for troop and base maintenance. Any purchase of hardware is requested by the defense ministries (Army and Navy) directly to the president, who appropriates money from a discretionary fund.

The Mexican military is very small. The army is by far the largest service branch. Of some 175,000 active armed forces personnel in 1996, 130,000 were in the army, 8,000 in the air force, and 37,000 in the navy. The army total at any one time included about 60,000 conscripts. No conscripts were assigned to the air force or navy. A "reserve" force of 300,000 is claimed, although this number is a manpower pool rather than an existing trained force.

The size of the armed forces is modest considering Mexico's size and importance. Mexico has the smallest number of military personnel per capita of any country of Latin America. According to the United States Arms Control and Disarmament Agency (ACDA), Latin America as a whole had 3.5 soldiers per 1,000 population in 1991. The corresponding figure for Mexico was 1.9 soldiers per 1,000 population. In spite of the steady increase in the armed forces--they have roughly doubled in size since the mid-1970s -- the number of soldiers per capita has remained remarkably steady because of the parallel increase in population.

Mexico long maintained a military establishment that was relatively small for a regional power. The picture began to change in the late 1970s, however. The discovery and exploitation of new petroleum reserves gave Mexico added stature as a world energy supplier. Violence in Central America brought tens of thousands of refugees, mainly Guatemalans, to Mexico. This influx of refugees was part of a regional upheaval that Mexico feared might spread northward to Mexican soil. Given the situation, the nation's armed forces, which until the 1970s were one of the most poorly paid and ill-equipped in the Western Hemisphere, took on new significance.

As a result, Mexico launched an ambitious military modernization program with the goals of increasing the size of the armed forces, improving education and training, and upgrading military equipment. The plan had to be scaled back because of a serious international financial crisis and domestic economic distress in the 1980s, but important changes were realized. The number of armed services personnel doubled in less than two decades, reaching 175,000 in 1996. In addition to keeping independent regiments and battalions in garrisons throughout the country, the army formed an armored brigade, bringing its combat forces to six brigades. There was also an elite Presidential Guard brigade. The army also enlarged its inventory of armored vehicles, although it still had no tanks. The air force expanded by adding a jet fighter squadron, in addition to less sophisticated planes, and armed helicopters that have been used in counterinsurgency operations. The navy acquired modern patrol vessels to provide increased protection of offshore oil installations and the country's fishery resources.

Violence in nearby Central American countries slackened in the early 1990s. A 1994 peasant rebellion in the southernmost state of Chiapas, however, demonstrated the potential for revolutionary activity by people not sharing in the country's economic and social progress. Although the lightly armed insurgents inflicted relatively few casualties, troop units were heavily deployed in the area. The possibility that localized uprisings could become more widespread underscored the need for modern, well-trained armed forces to ensure the country's stability.

The government sets the overall size of the military budget, but the actual allocation of funds to various activities and purchases is largely determined within the defense ministries. Little information is made available on individual expenditure categories.

Because of exchange-rate variations and scarcity of data, it is difficult to establish budgetary trends and annual expenditures on defense. According to The Military Balance , the defense budget for 1996 was 16.6 billion new pesos (NMex$; for value of new peso--see Glossary), equivalent to US$3.0 billion. This figure compared to budget estimates of 1.577 trillion pesos (US$641 million) in 1989 and 1.908 trillion pesos (US$678 million) in 1990. No explanation was offered as to why the defense budget appears to have more than quadrupled between 1990 and 1996.

Data published by the United States Arms Control and Disarmament Agency (ACDA) show higher levels of spending on defense, which, according to ACDA figures, averaged about US$1.5 billion annually during the decade 1983-93. The peak levels of spending were between 1985 and 1987, when levels of about US$2 billion were recorded. As ACDA notes, data on military expenditures are of uneven accuracy and completeness. In addition to accuracy problems caused by sharp variations in exchange rates, capital spending and arms purchases may be omitted in official data.

Based on data from The Military Balance, military expenditures were 0.9 percent of gross domestic product (GDP) in 1995. Military expenditures amounted to US$17 per capita in that year, reversing a declining trend that saw per capita expenditures drop from US$20 in 1985 to US$13 in 1991. The economic burden of the Mexican military establishment is comparable to the average expenditure for Central American countries.

Because of the small size of the Mexican military, upgrades, parts, and maintenance are usually provided through a package negotiated at the time of the sale of the hardware or weapons system. Base maintenance and upgrades are performed entirely by the military using Mexican sources. Logistics are not as sophisticated as in the U.S., since the military is so small and there are few troop movements because of the absence of external threats.

Mexico will spend about $1 billion soon on various hardware. Mexico must replace its aging C-130A transports, and its ground vehicles also need updating. Its Air Force consists of obsolete F-5's. It's helicopter fleet also needs updating, and its naval fleet dates from World War II. It has very few blue water ships and will likely purchase more in order to protect its fishing grounds. The Mexican military also has requirements for ground radars, satellite communications, as well as night vision equipment.

The defense industry has a very decentralized and informal purchasing system. There are no formal public bids, and no written procurement regulations. Most requirements are sent out through informal channels, and it is necessary to be plugged into the largely hidden, word-of-mouth information network. For these reasons, most sales go through well-know Mexican companies which represent U.S. agents and companies in Mexico. The Ministry of National Defense and the Navy decide what they need and talk to various providers as necessary. They will almost always call the MLO at the U.S. Embassy, who will then contact U.S. suppliers. Once they decide (through a process totally internal to the ministry), they merely request funds from the President of Mexico and buy what they need.

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