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December 8, 2016

Report: New legislative changes to affect Chilean defence procurements

The proposed legislative changes to the Copper Reserve Law are anticipated to cease the funds obtained by the Chilean Air Force, Army and Navy for the procurement of defence equipment, according to a report by Strategic Defence Intelligence (SDI).

The proposed legislative changes to the Copper Reserve Law are anticipated to cease the funds obtained by the Chilean Air Force, Army and Navy for the procurement of defence equipment, according to a report by Strategic Defence Intelligence (SDI).

Titled ‘Future of the Chilean Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2021’, the report analyses the impact of the new legislative changes on the Chilean defence sector between 2017 and 2021.

The Copper Reserve Law currently mandates Chile's state-owned Codelco to transfer 10% of the nation’s annual copper export revenues to the Chilean Armed Forces. However, the alleged misappropriation and misuse of such funds may lead to the termination of the provision, resulting in a decline in the nation’s spending on its military forces.

"The alleged misappropriation and misuse of such funds may lead to the termination of the provision, resulting in a decline in the nation’s spending on its military forces."

Chile imported EMB-314 Super Tucano aircraft from Brazil, Sirocco multi-role ships from France, and AAV7 armoured amphibious vehicles from the US during 2011-2015.

The Chilean Air Force has initiated modernisation and upgrade of its old aircraft and also expressed strong interest in acquiring an air-launched variant of the Indo-Russian Brahmos supersonic anti-ship cruise missile.

The deal, which is yet to obtain clearance from Russia, will enable Russia to enter the Chilean defence market, which is currently dominated by western suppliers, says the report.

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