PROSPECTS FOR SOVIET ARMS DELIVERIES TO ARGENTINA (NIC 4604-83)

Created: 7/1/1983

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CIA HISTORICAL REVIEW PWWM RELEASE AS

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INTERAGENCY INTELLIGENCE3

PROSPECTS FOR SOVIET ARMS DELIVERIES TO ARGENTINA Key Judgments

uBeforegeological differences between Argentina's military regime and Moscow were partially overshadowed by commercial and political considerations on both sides. Argentina viewed the Soviet Union as an Importantupplier for Us nuclear program,alued source of ad hoc support in international forums on human rights issues. Offers by the USSR to sell arms, in part to reduce Its trade deficit with Argentina, consistently ran afoul of Argentine fears of political contamination.

The partial US grain embargo imposed in0 and Soviet backlno

liVJFu* War,0Vel.the FalUand Is,andsledn expsnslw of IT^rtS^ afJinut1onilateral tensions that had existed in the months before the war. Argentina profited from the partial embargo, massively expanding grain exports to the USSR. Soviet propaganda and other support for Argentina during the South Atlantic war contrasted favorably in Argentine eyes with US support for the United Kingdom. Soviet efforts to htd HmUeTsuSl ommercial advantages, however, have

Thin Interagency Intelligence Aeeeeament van requested bu the Annlatnnt Secretary of State for Interamerican Affairs. It vol prepared urter the aucpioe* of the national Intelligence Officer for Latinl^rioa. Thii

ecurity Agency; thei^^tiatiwi of the Army, Navy, Air Force, and

Renewed efforts to use arms salesechanism to expand Soviet influence and presence in Argentina while reducing the bilateral trade Imbalance have not succeeded. Apart from the persistent and deeply rooted ideological constraints, Argentine military leaders have been satisfied with the performance of Western weapons, and they have access to Western suppliers outside the United States. Moreover, they doubt the quality of the Soviet systems, and they recognize the huge logistic problems that acquisition of major Soviets systems would create. Argentine hesistancy about Soviet arms could change substantially, however,rgentina were to encounter major problems in obtaining equipment that military leaders considered vital to compensate for losses suffered and weaknesses exposed during the Falklands war.

Moscow will continue to poseistant but powerful supporter of Argentine interests, hoping for trade advantages and arms sales. We doubt, however, that the Soviets harbor expectationsramatic Improvement in political relations, given existing ideological differences.

Argentina will continue to use the specter of closer Argentine-Soviet relations, including possible arms deals,ever in its dealings with the United States and its Western allies. If the Argentines should become convinced that they will be denied long-term access to the kinds of Western weapons they desire, they would probably expand military ties with the Soviets incrementally. Small purchases of selected Items would fulfill some military needs and send the desired signal to the West without requiring the long-term presence of Soviet technicians. Onlyast resort would the Argentines move to major purchases that wouldong time arms relationship with the Soviets.

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_irrnrT nun hi ii

DISCUSSION

Jthat brought the current Argentine military regime to

power the inherent ideological differences between Moscow and Argentina's strongly anti-Communistestablishment have been partially overshadowed by commercial and political considerations on both sides.

he Soviets concentrated on building state-to-state relations with Argentina in an attempt to exploit serious Argentine-US disagreements over human rights and nuclear proliferation. For its part,W! ^tmttm preserving Its Soviet market sincearge positive trade balance. Furthermore, as the military's human rights practices brought increasing isolation from Argentina's erstwhile allies in the West, the Soviet Union and its allies provided valuable support to Argentina on human rights votesnternational forums.

uc5 ad cooperation, the relationship was expanded toole for the Sovietsupplier for Argentina's nuclear program. However, persistent efforts by the Soviets to pressure the Argentines Into purchasing more Soviet goods. Including arms, to even out the trade balance were unsuccessful. While enjoying the connerdal and political advantage of the relationship, the Argentines remained extremely wary of possible political contamination that could resultilitary relationship or any inordinate in-country Soviet presence.

Recent Developments

Since0 two events have given added importance to Soviet-Argentine political relations:

he partial US grain embargo that followed the Soviet invasion of Afghanistan.

-- The Falklands war.

The US partial grain embargo led to an intensification of the Soviet-Argentine cofTrnercial nexus, with Argentina steppings an alternate supplier. The Soviets became Argentina's primary trading partner,ong Term Grain Agreement was signed, followed by an accord on Soviet meat purchases. rgentine exports quadrupled6 billion (two-thirds of which were grain and sorghum,ercent soybeans, andercent meat). 1 they nearly doubled In value0 billion. owever, the USSR cut its Imports froa Argentina by almost half7 billion.

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Meanwhile, Argentina's Imports from the USSR remained relatively insignificant. esult, the Soviets saw their trade deficit with

e" "wdred million dollars to

l!BU'l bnHon. This

has led Moscow to press the Argentines to purchase more Soviet goods.

sufferedsetb4ck in the months before the Falklands war when President 6altier1 moved Argentina solidly into the western camp and began strongly criticizing Soviet policies. The war, however, presented the

E t groundhe faceSupport for the United Kingdom. While Soviet actions during the war were limited to

pro-Argentine propaganda and the provision of some Intelligence Information

f? ,Cbdrably In Argentine eyes with the US role in Argentina's humiliating defeat.

Soviet net gainsesult of the war are difficult to gauge, but they may Include some diminution of the tensions that existed before the conflict. This factor, combined with Argentina's pressing need to preserve Its Soviet markets, has helped produce since the Falklands war:

A civil aviation agreement that expands Aeroflot service to include Argentina.

Increased Argentine purchases of Soviet capital goods by Argentine state companies and Soviet participationnother Argentine hydroelectric project.

In3 an Argentine commitment to make counterpurchases equivalent to at least ten percent of the value of the Soviet imports.

Sovift Arms Offers

nce,tneoscow has been trying to establish an armsas the most efficient way to build influence and reduce Itswith Argentina. Late last year the Soviets made severalto the Argentines asking them to list what military equipmentwant to

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in

llo far havesuch Soviet offers. MehTiiXjJ cTJ rgentine military establishment-trained In the United States and other Western countries-would be reluctant, for

Surchasw "beclule"reasonS' to turn toBaJor

They have been satisfied with the performance of Western arms.

They have secured alternate Western suppliers.

They harbor doubts about the quality of Soviet systems.

A switch to major Soviet systems would create huge loqlstic

The position of the military could change substantially, however, 1f

In obtaining the equipment senior

officers believe the military needs to make up for losses incurred and weaknesses demonstrated during the Falklands war. The Argentine Army hasriority on upgrading its battlefield air defenserJtfejl gap during the Falklands conflict-as well as on obtaining additional helicopters. The Air Force seeks additional ground attack aircraft.

Thus far the Argentines have tried to obtain desired equipment without turning to the Soviets.* The Army is negotiating for French helicopters and is interested in ordering some French Roland mobile antiaircraft weapon systems which they found to be successful in the Falklands conflict. The Air Force, however, has been unsuccessful in Its efforts toky/hawk combat aircraft currently embargoed under US law.

If the Argentines turned to the Soviets for fighter aircraft, Moscow most

lttcr fMMch Peru W) or thelogger (which Is available in both interceptor and ground attack versions). Both are export models in series production and could be delivered faster than any other new aircraft sought by Argentina.

Soviet prices for combat aircraft have been rising since thena now are roughly equivalent to those of comparable Western hardware. Although Moscow is showing an increasing reluctance to discount Its weaponry to Third World customers, the Soviets might be willing to offereavy discount for political reasons. Soviet credit terns are still the most

* See the annexuller treatment of this Issueetailed assessment of potential suppliers other than the Soviets.

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liberal to be found, but have tightened somewhatecent years. Soviet customers now typically pay interestercenteriod of five to seven years. Generally the Soviets Insist on hard currency for arms and will barter only for strategic coowodltles.

To date the advantages the Soviets offer with respect to rapid delivery and credit terms have not been sufficient to overcome Argentine reservations:

-- Significant time and additional Investment would be required to get the aircraft into service and keep them operational.

Soviet Jet engines are not fuel efficient and require much more frequent overhaul than Western alternatives.

-- Argentina would remain dependent on the USSR for spare parts and any major maintenance and overhaul operations.

Outlook

We believe that the Soviets hope their support during the Falklands conflict has made dealings with Moscow more attractive to the Argentines. We think the USSR will continue to cultivate its imageistant but powerful supporter of Argentina's regional interests and to press for additional trade concessions. Moreover, the Soviets will continue to push arms sales but. In deference to Argentine sensitivities, may employ Intermediaries. In keeping with the pattern elsewhere in the Third World, Moscow could enlist its East European alliesountry like Libya to play this role.

Despite their hopes and their persistent pursuit of strengthened ties, we do not believe the Soviets harbor any Illusions aboutramatic breakthrough in the near future. They are well aware of the Ideological differences at work and recognize that the Initiative for any significant improvement In relations must come from Buenos Aires.

For now, Argentina sees its relationship with the Sovietsiplomatic lever on the West, especially the United States. In our view, Buenos Aires probably calculates that the specter of growing Soviet influence In Argentina will have an important short-term payoff fn persuading the United States to end its embargo and to press London to resume negotiations on the Falklands dispute.

Argentina's wariness of the Soviets is deeply ingrained and actsignificant constraint. Nonetheless, If the Argentines become convinced that they will be denied long-term access to Western military equipmenthe quantity or at the level of sophistication they believe they need, we believe they could be compelled to purchase Soviet weapons. They could be further inpelled to do soey believed the United States -as blocking purchases from other countries, or did not intend to lift arm sales restrictions.

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Even so, the Argentines would,ur view, probably choose an incremental approach to expanding Military ties with the Soviets. Buenos Aires would probably begin with snail purchases of selected equipment, perhaps Including antiaircraft missiles or electronics gear. Such purchases, whileefense need andlear signal to the West, would not require the politically risky long-term presence of Soviet technical personnelrgentina. urther step, Buenos Aires might also accept Moscow's offer to placeMI6Argentinaear or so for test flights. Onlyast resort,ur judgment, would the Argentines commit themselvesong-term arms relationship with the Soviets.

ANNEX

Argentina's Military Needs and Potential Suppliers

Despite persistent rumors and signals that Argentina, with the considerable trade balance it enjoys with Moscow, would purchase Soviet arms Argent ne arms negotiations and shopping patterns since the Falklands conflict suggest that Buenos Aires has not had difficulty In securing completion of deliveries from Its traditional suppliers and that It contlSuesto lookcluding the United Klngdom-for weaponry. Argentina, however not signed any major arms contracts since the Falklinds war and appears to bl trying to broaden its range of suppliers, particularly those who might dependably support Argentina's needs evenhe event of an embargo.

Prospective Suppliers

road raTVe%tem equipment

of the types it seeks, although payment problems may frustrate some arms deals Buenos Aires Is highly Interested in Exocets and other air-launched missiles for Its aircraft. Some Exocets came with the Super Etendards,ew more may have been provided by middlemen or cooperative governments. But

f source:aslu^lts to Israel about the Gabriel, of which an air-launched version has been developed.

(SWs) are ^in9 SOu9nt several places. TheP ha!Jbeen ch,osen t0 equip the West German Meko frigates (the first If Ii Argentine hands and the second is scheduled to arrive in late July) French Defense Ministry sources indicatedid-November that

West German Harder tracked chassis with the Argentine TAM tank. This simplifies spares and maintenance, and possibly permits saving some money by part a1 local production. Argentina appears close toozen Swiss

a,rcraf5 9uns andave purchasedontraves Skyguard radar fire-control systems to go with them.

A possible new arms connection is Romania, the Warsaw Pact's maverick arms supplier. It reportedly has delivered artillery gun tubes to Argentina, and there appear to be ongoing Argentine-Romanian discussions on the Soviet-designedAM and the French Puma helicopter, which Romania makes under license. Argentina has probably decided to buy French-made Pumas, but could look to Romania for spares in the event of an embargo.

South Africa is another potential ams supplier. outh African broker has suggested that an Argentine firm cooperatearketing the new Southm gun (an advanced fieldplece, probably designed In cooperation with Israel's Soltam firm and possibly Incorporating Space Research Corporation range-enhancing technology). Although South Africa has

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an established arms relationship with Chile,s avidly seeking exports for Its growing military Industry, and this approach Might be an opening gambit. Like Israel, South Africa has had to develop an ants Industry under embargo conditions, starting from what were primarily French production licenses. Moreover, the level of Israeli-South African technical cooperationigh.

The Argentines have probably followed their European naval purchasing commission's recommendation against equipping their new frigates with British Sea King helicopters. They are discussing thepossiblyroduction license) and theith the Italians.

The Aircraft Problem

Argentina's first priority after the Falklands was to make up war losses, particularlyrontline combat aircraft. To this end, Buenos Aires purchased (during thc war) the last two dozen of Israel's Nesher (Mirage III) Inventory, and probably all of Tel Aviv's remaining Mirage spares as well. Argentina also bought theeruvian Mirageoaned during the war. France has now delivered the balance of the Super Etendard carrier strike planes (with Exocet missiles) ordered before the war, bringing Argentina's inventory toircraft andndissiles. Replacementosses, however, has not been possible; Washington learned of Israel's attempts tosenezuelan Intermediary and the deal fell through.

Western Options. ogistic and absorption standpoint, French combat aircraft remain the Argentines' best choice for force improvement:

warplanes are widely exported, making it possible to acquire used Mirage Ills andairly cheaply from many sources, particularly in the Middle East, where many states are going for theirmoreof combat aircraft. Moreover, parts for Mirages would be available from other countries if France, for the sake of Us relations with Britain, were forced to delay or embargo parts shipments.

Argentine Air Force already has training, ground handling, maintenance, and overhaul experience with Dassault aircraft, and Israeli and French advisers and technicians already insoon toprovide assistance. The Mirage family, moreover,igh degree of cwrroonality of components between models.

French aircraft are available. On the low end of the price scale, Dassault has prototyped an Improved Mirage 3NG (new generation) strike aircraft; It has betterore powerful engine, and greater maneuverability than its predecessor. Because Itollow-on aircraft, it could be put into production quickly. Another relatively low-cost option would be the, which is availablenterceptor, attack, armed trainer, and reconnaissance

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craft.South Africa, A Fr4nceParticular economic Imperatives to sell more Super Etendards; the French Navy's

wd ^ntina to datehe only export rtlZ*%* ircraft. Iraq however, may also obtain some Super Etendards. Dassault would like to extend the Super Etendard production run Into atnd might be willing to offer better than usual terms. On the high end of the technological/price

roduction. Thistype mults1on aircraft, and an offer to Argentina might carry with it, like the sale toeproduction arrangement. Britain, however, might lodge strong objections to advancing Argentine air capabilities to this level.

-France hasery forthcoming arms supplier In the Third World. It has been known to delay arms deliveries to, or actually draw down the inventory of. Its own forces In order to satisfy export orders. Paris also claims the sacredness of -prior contract" even France, for example, not only continued arms deliveries to Iraq after It attacked Iran, but also made fresh arms deals with Baghdad. In addition, the French usually provide government-backed financing for their military sales. Overseas arms sales account forercent of total exports and an even larger percentage in monetary terms, and the arms Industry accounts forercent of the Industrial workforce.

mayrench-Argentine aircraft deal in the works. of OFEMA, the French Government's military aircraftexport agency, wasrgentina last December. We dowhat matters were discussed, butny event France canupon to offer stiff competition to any movement bySoviet combat

Ihe 1on9fT everal alternatives that Argentinato improve Its air forces at the lowest possible cost. It

-Extending the range of its existing Mirage aircraft by modifyinq them for air refueling, either by adapting the -buddy" system to the Mirages (in which one aircraft refuels two others) or by fitting probes to the Mirages and modifying civil's with tanks and refueling drogues. Israeli expertise would be available to support this project.

the combat power of the aircraft it now has bymunitions (air-to-ground and air-to-air missiles,and electronics. Again, Israel offers considerablecombat experience In this

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"hpvS 9 Vace(flt "J'ch the Argentine aviation Industryro^K; fH* fBTOJl*n9 Hlrage-III orooling

1i for that matter, similar Kfir airframe tooling"anufacture of the Miragewould be particularly attractive In that it

SJjiJ^If 5aif/nJthe

IViltt incMnedo- aircraft co-production with clients (India excepted) or to provide them with in-country heavy maintenance or overhaul capabilities.

to offfrJtacE^K. Jwhlch Peru bought) or thelogger, whichin both interceptor and ground attack versions. Both aircraftmode series production, and could be delivered faster thannew airplane sought by Argentina. Used Fitters or Floggers couldavailable even more rapidly. Current production rates areerFitters, and roughlynofthljfor all nSgger

Soviet prices for combat aircraft (and other major weapon systems)rising since the, and haveoint whereequivalent to those of comparable Western hardware. Althoughllyea^ dlscount to get the Soviet foot in the Argentineh" shwm an Increasing disinclination toiDZ to niri VorH Where once the USSR granted armsFer??nt* discou"ts now probably average about 20

thV 3re "ade Ams sales account for aroundercent

SnhSJ? ncy earnings, which are badly needed to buy sophisticated Western tolling for Soviet industry.

t^hrfnli^^T'S rfdi!JTs.arene11beral to be found, butyearS" oviet customers pay

ercent-though some areoercent-and repayment periods have declined from ten years or more to five to seven

Kerand

have

-^P'te rapid delivery, significant time and additional Investment would be required between acquiring the aircraft and getting them Into service, and in keeping them operational.

-Soviet combat equipment is designed for high-Intensity conflict. Soviet units typically train at lower levels than their Western counterparts, and usually use only about one-fifth of their equipment; the rest is held to keep combat readiness high. For a

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military establishment trained to operatehe Western node, where all the equipmentsed hard to maintain personnel proficiency, Soviet equipment has drawbacks. Soviet Jet aircraft engines, for example, are good for onlyours between major overhauls, compared toours typical of Western units. Hor are they designed with fuel efficiency In mind. If the Argentines haveife-cycle cost analysis of Soviet aircraft, they may find them no bargain. We have no definitive reporting on what the Peruvian experience has been (and doubtless it has been shared with the Argentines) but It Is worth noting that Una, falling to getrom the United States, has bought the French0 rather than turning to the

The Soviet system of weapons support for export customersn extension of the system that supports Moscow's own forces. Itighly centralized, with maintenance and overhaul being done as far to the rear as possible. Only minimal amounts of spares are supplied to the operating units. Although thisufficient for Soviet forces, for the export customer this means long distances between the weapon and Its support and delays In restoring equipment to operational status. As noted, the Soviets rarely If ever provide the client with major maintenance and overhaul facilities. While this createsleverage for the Soviets, the Argentines would find It an additional constraintiew of their recent embargo experience.

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