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Argentina Sells Arms Abroad To Help Pay Foreign Debt

September 12, 1988

BUENOS AIRES, Argentina (AP) _ Better known for its beef and grain, Argentina also produces jets and tanks and hopes to sell them abroad to help pay off its $56 billion foreign debt.

Arms sales have topped $75 million, and that is a fraction of what this primarily agricultural nation could receive if the United States decides to buy a jet trainer called the Pampa and Ecuador goes ahead with its purchase of TAM medium tanks.

An intermediate-range rocket also is being developed with financial aid from Egypt, conventional submarines are being built with technical assistance from West Germany, and negotiations are under way with an Italian company to co-produce military helicopters.

″We’re not trying to convert ourselves into a huge exporter of weapons,″ Jose Maria Llados, secretary of production at the Ministry of Defense, said in an interview. ″What we’re trying to do is ... take advantage of our existing industrial capacity.″

Argentina has produced artillery and munitions for decades, mostly for its own use. The big projects - drone aircraft, submarines, jets, tanks, rockets - were begun by the military governments of the 1970s and early 1980s.

Following the defeat by Britain in the 1982 Falklands War and the election of civilian Raul Alfonsin as president in October 1983, the military budget has been halved to about $1.5 billion. Funding for weapons projects has dried up.

″With the industries in place, we had three choices: close them, export, or convert them″ to civilian use, Llados said.

″The preference ... was to export. We have a big foreign debt. We have to export in order to pay it.″

Interest alone on the $56 billion owed to foreign governments, banks and lending institutions is a burden. This year interest payments will total about $4.6 billion.

Argentina’s edge in arms sales is that it can - because of its technical infrastructure, educated work force and low wages in comparison with developed countries - produce relatively sophisticated weapons at a low cost.

The package of 56 medium tanks and 18 armored personnel carriers Ecuador is considering buying is priced at about $108 million, Llados said.

The single-engine, two-seater IA-63 Pampa jet trainer costs about $3.5 million.

″It’s a lot of plane for the money,″ a U.S. Embassy official said. ″We are interested.″

The U.S. Air Force is seeking to replace its T-37 jet trainers that date back 30 years. The potential multi-billion-dollar U.S. contract, avidly sought by several countries including Italy and Belgium, could call for more than 500 planes.

Representatives of New York-based Grumman Corp. met recently with officials of the Argentine Aerospace Material Factory to test the Pampa. If chosen by the U.S. Air Force, it would be built in the United States under a licensing agreement.

Argentina can produce only three or four Pampas a month. U.S. parts, including the engine and avionics systems, comprise more than half the value of the plane.

A purchase decision is not expected until next year at the earliest.

The Alfonsin government has not stressed arms sales, which last year amounted to about $20 million, Llados said. In 1984, arms exports totaled about $77 million, according to the London-based International Institute for Strategic Studies.

Both leading candidates in next year’s presidential elections, Carlos Menem of the opposition Peronist Party and Eduardo Angeloz of the ruling Radical Civic Union, favor arms sales as a way to generate foreign exchange, aides said.

Argentina would like to follow the lead of neighboring Brazil, whose 1987 sales of $369 million ranked it ninth among arms exporting countries, according to a recent report by the Stockholm International Peace Research Institute.

The United States led the list with 1987 sales of $12.3 billion.

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