Spain sells less defence materiel to Latin American countries than it should, given the volume of trade.

• 2019 saw a recovery in Spanish arms sales to Latin America, surpassing 2018 figures, which were the lowest in a long time.

• In the last five years, Spain has sold 691.2 million euros worth of defence material to the region, 3.6% of its world arms exports.

• Mexico (24.8%), Ecuador (22.5%), Brazil (16.1%), Peru (14.4%) and Colombia (8.6%) are the five countries that purchased the most material from Spain in the last five years.

Airbus NH90 helicopter, final assembly at Airbus Military facilities in Spain [Airbus].

report SRA 2020 / Álvaro Fernández[PDF version].

Latin American countries constitute a area of clear commercial interest for Spain. However, despite being the seventh largest arms exporter in the world and therefore particularly active in this sector, Spain sells less defence material to Latin America and the Caribbean than it would be entitled to in terms of its overall export quota to the region.

While between 2014 and 2018 Spain's overall export of products to Latin America remained between 5.3% and 6.5% of its global exports, in the case of the arms sector it was around 3.2% in 2016 and 2017 and fell to 1.06% in 2018. It is to be expected that this minimum percentage will have risen again in 2019, a year for which there is still no official data complete, but in view of those of the first semester it would seem that it will not even be close to 3%.

The explanation for this lower weight of arms exports in Spain's overall exports to Latin America can be found in two facts. One is the lower budget devoted to the purchase of this subject of material by most Latin American countries, compared to some large buyers(in 2018 Spain's first customer was Germany - in turn the fourth largest exporter in the world -, which accounted for 33% of Spanish sales). The other is that Latin American nations have other important market options: the United States, Russia and China (first, second and fifth largest arms exporters in the world; France is the third).

In 2018 there was a significant drop in Spanish defence exports to Latin America, which amounted to 38.3 million euros, well below any of the previous years. The partial data for 2019 indicates a recovery, although without reaching the figures recorded in 2015, when a peak of €239.4 million was reached, or those of the previous years of 2016 and 2017, when they were €130.7 million and €139.3 million, respectively.

The decrease in 2018 corresponds to a lower purchase list from most Latin American customers. Of the five largest customers over the past five years, Colombia was the only one to maintain a similar level of purchases, amounting to €11 million. Colombia and the next largest buyer, Mexico, were the only ones to slightly increase their imports in 2017, although they were lower than in previous years. The reduction was significant for the next two customers in 2018, Brazil and Peru. This year marked a further reduction in imports from Ecuador, which has continuously cut its order book from Spain over the last five years.

The figures considered in this article only take into account defence material, not other subject material, which the administrative office considers separately, such as riot control material, hunting and sporting weapons, as well as dual-use technology products.

General and Latin American sales

Spain has around 130 companies dedicated to the arms sector. These include Airbus Military, Navantia and Indra, which are among the world's top 100 defence and security companies. Most of the sector are private companies, although there are some unique cases of public ownership, such as Navantia, dedicated to shipbuilding, both civil and military, created in 2005 when the assets of another public company, business , group IZAR, were spun off.

According to the official data of the administrative office of State for Trade, the issue of defence material exports has been increasing notably over the last few years. More than half of Spanish arms exports during 2018 and the first semester of 2019 were destined for countries belonging to NATO or the European Union. In 2017, exports exceeded 4.3 billion euros, after several years of increases in this market. In contrast, arms worth €3,720.4 million were sold in 2018, which was 14.4% less. In the first semester of 2019, however, an improvement was recorded, reaching €2,413 million, an increase of 41.5% compared to the same period last year.

In terms of trade with Latin America, between 2014 and 2018 Spain sold €691.2 million worth of military equipment to the region, representing 3.6 per cent of Spain's total arms exports of €19,042 million.

Over the five years as a whole, the leading importer was Mexico, which with purchases worth 171.4 million euros (of which 140.9 million euros corresponded to 2015 alone), acquired a quarter (24.8 per cent) of the defence materiel sold by Spain to Latin America over the five-year period. The second most important country was Ecuador, with 155.7 million and 22.5 per cent (slightly more than half -85.9 million- were purchases made in 2014 alone). It is followed by Brazil, which made more regular purchases over this time, with 111.8 million and 16.1%); Peru, with 99.5 million and 14.4% (the largest amount -78.4 million- was executed in 2017), and Colombia, with 59.5 million and 8.6%.

Some countries

Mexico has been the leading purchaser of Spanish defence material in the last five years (2014 and 2018) due to purchases made in 2015, when it acquired four transport aircraft, worth 127.2 million euros. In 2018 it only imported €10.1 million worth of parts, pieces and spare parts for Spanish-made aircraft, engine equipment for an aircraft derived from a European cooperation programme and instruments for an air surveillance system.

Brazil is one of the countries with the greatest diversity in the destination of its imports. In recent purchases, 19.7% went to private business , 74.2% to the Armed Forces and the remaining 5.9% to individuals. In 2018, it purchased 7.9 million euros worth of pistols, rifles and magazines for private individuals, as well as day sights, armoured vehicle parts, and Spanish and US-made aircraft parts for the Armed Forces.

Colombia imported in 2018 a total of 11 million euros in spare parts for the maintenance of artillery howitzers, artillery ammunition, spare parts for Spanish and US-made armoured vehicles, and parts for Spanish-made transport aircraft.

Until a few years ago, Venezuela was an important client for the Spanish arms industry. However, following the authoritarian drift taken by Nicolás Maduro's government, relations in this field have weakened. As recently as 2015, Spain sold 15.3 million euros worth of defence material to Maduro, in operations that were shrouded in controversy as some of the exported equipment could be used in the severe repression carried out against its citizens. Since then, with the increase in tensions between the Chavista regime and the United States or the European Union, a series of restrictions have been placed on the export of this subject material to Venezuela. Thus, sales went from having a value of 3.3 million euros in 2017 to just 44,000 euros in 2018, corresponding to payment for spare parts and parts for the modernisation of French-made armoured vehicles, in a transaction that was approved before the trade restrictions of this subject imposed by the EU.

The official data provided by administrative office distinguishes between authorised exports and realised exports. Authorisations do not always materialise in actual sales and sometimes these are executed in subsequent years. The difference is particularly notable in Venezuela, whose political status forced the restriction of exports to that country. In 2018, Spain suspended four licences already approved for Caracas, relating to helicopter maintenance and the provision of electro-optical supplies and systems. In addition, extensions to contracts for the modernisation of battle tanks were denied.

Bolivia and Nicaragua have stopped buying defence materiel from Spain: while between 2014 and 2018 they made no purchases, between 2007 and 2013 they imported 1.5 million and 62,000 euros, respectively.

Cuba, which had a peak in purchases in 2015 at €208,080, in 2018 spent €20,600 on pistols and pistol barrels for the police.