Crime Threat Driving Latin American Defense Spending.

• Author: Tadjdeh, Yasmin

Latin American defense spending has been rocked by declining budgets due to economic turmoil, but efforts to counter threats from transnational criminal organizations are helping to buoy sales.

"In Latin America the main threat is coming from these international criminal organizations--drug traffickers, gangs and... insurgents in some countries," said Bill Ostrove, an analyst at Forecast International, a Newtown, Connecticut-based market consulting firm. "Their defense picture is a little bit different than some areas of the world that are more concerned about power projection."

Heavy, expensive weapon systems such as fighter jets, tanks and destroyers are not needed by Latin American militaries, said a Forecast International report titled, "2017 Global Defense Spending Snapshot."

"Equipment that excels in counter-insurgency and rapid reaction environments will be purchased," it said. "Such equipment includes small arms, helicopters, patrol boats, armored vehicles, trucks and communications equipment."

Data collected by the firm shows that defense spending in the region reached a low of about $55 billion in 2016, and then started to recover in 2017 to about $61 billion, Ostrove said.

"We're expecting that sort of steady upswing to continue over the next two years," he said. The organization expects spending to reach $64 billion in 2018 and $76 billion by 2022, he added.

Latin America was hit hard by economic downturns over the past several years, Ostrove noted. The continent relies heavily on natural resource exports to bolster its economies. Copper is a lucrative export for Chile, as is oil for Venezuela and Mexico, he noted.

"As economic activity slowed down in the rest of the world, there was lower demand for those goods and so their economies were hurt," he said. "That created an environment where... governments had less money to spend on all projects, including defense."

The biggest spender in the region by far is Brazil, he said. The country makes up a little less than half of all defense spending in the region. Colombia is the second largest and focuses on equipment that can help the government fight insurgents, he said.

Last year, the Revolutionary Armed Forces of Colombia, or FARC, the country's largest rebel group, signed a peace treaty with the government. However, the country is "still fighting elements of FARC that have refused to give up and there are other groups, such as ELN [the National Liberation Army], that they continue...