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The Trouble With Brazil’s Expanding Arms Trade

Defense One

April, 2017

Brazilian-made weapons – whether firearms, ammunition or cluster munitions – are turning up with alarming frequency in some of the world’s most fragile countries. This is not so surprising; Brazil has ranked among the top global producers of small arms and ammunition for two decades. Between 2005 and 2015, for example, the Latin American giant exported all manner of weaponry to more than 100 countries, according to United Nations customs data.

What makes Brazil’s “arms seller” credentials awkward is the country’s simultaneous claim to be a global peace broker. To be fair, the country has a hard-earned reputation for preventing conflict and building peace close to home and overseas, having participated in nearly fifty UN-led peacekeeping missions. Yet there is misalignment between the government’s stated foreign policy and its aggressive attempts to expand arms sales. To fix this, Brazil needs to increase transparency in arms licensing and transfers, improve enforcement of end-use compliance, and ratify the Arms Trade Treaty, or ATT.

The arms industry is big business in Brazil. If all defense products are considered — aircraft, ammunition, small arms, light weapons, cluster munitions, and more — the sector amounts to roughly $60 billion annually, of which about $350 million involves exports of small arms and ammunition. While many industrial sectors have faced shortfalls and cuts during Brazil’s ongoing economic recession, the defense industry has been ring-fenced as a budget priority. Total military spending by Brazil’s Ministry of Defense jumped to $27.4 billion in 2016, a 36-percent increase on the previous year.

The export and use of these weapons generate disproportionate costs, not least a severe human toll in armed conflicts and violent crime around the globe.

Take the case of Brazilian-made armaments that have repeatedly turned up in Yemen’s two-year-old civil war. Over the past 18 months, the Saudi-led coalition has used cluster munitions manufactured by Avibras Indústria Aeroespacial at least three times. One attack reportedly killed two civilians in December 2016, while rockets launched in October 2015 and February 2017 injured non-combatants, including children. More than 100 countries ban the manufacture, stockpiling, and sale of these types of weapons because of their indiscriminate impact on civilian lives and infrastructure. Brazil is not one of them.

Meanwhile, Brazilian firearms manufacturer Taurus, Latin America’s largest, has run into trouble for suspicious deals in the Middle East. Former Taurus executives are being investigated by federal prosecutors for their role in selling 8,000 firearms diverted to the Arabian Peninsula. According to a UN Security Council panel of experts, the weapons were shipped to a blacklisted Yemeni arms dealer after a UN-imposed arms embargo went into effect in April 2015.

Taurus has also run into trouble in North and South America. The firm was the subject of a multi-million dollar class-action lawsuit over defective firearms in Florida, where it has owned and operated a manufacturing facility since the 1980s. Taurus is also facing evidence of similar product defects in Brazil – some that reportedly led to the unintentional injury and death of police officers. These incidents, along with a struggling economy, have hastened efforts to open up law enforcement procurement from foreign vendors.

Like other companies, Taurus’ bottom line has suffered. In a recent earnings report, the firearms manufacturer claimed a net loss of $32 million on $259 million in revenue for 2016, though that is better than the previous year, when it lost nearly $80 million. Despite these setbacks, Taurus announced that it had exported 710,357 firearms in 2016, a 27-percent increase over 2015 and the most in its 77-year history. Its chief customers last year included the U.S., as well as Argentina, Bangladesh, France, and South Africa. The company expects even more exports in 2017.

The rise of Brazil’s military-industrial complex has followed a steady, planned trajectory. During the dictatorship era (1964-85), local weapons companies were heavily subsidized by the military regime. Decades later, during the Dilma administration, new legislation granted tax breaks and concessions to Brazil’s major firms, including Embraer, Avibras, Taurus and Condor, among others. From 2008 to 2015, Brazil’s national development bank granted roughly $70.5 million in low-interest loans to Brazilian defense manufacturers. In a bid to stimulate the sagging economy, Brazil’s Ministry of Defense also announced a new policy to allow national development bank financing for foreign purchasers of Brazilian military products.

The recent expansion of Brazil’s defense sector was enthusiastically supported by a small clutch of politicians. Weapons companies aggressively courted members of Brazil’s national Congress and state legislatures, with 30 candidates receiving $530,000 in contributions during the most recent presidential campaign in 2014. Twenty-one were elected. Nearly $200,000 alone was passed on to 16 politicians from a single firm, the Brazilian Cartridge Company, the country’s premier firearms ammunition producer and one of the largest in the world. These same lawmakers are also hoping to loosen domestic gun legislation to vastly facilitate gun access to Brazilians – this in a country with about 42,000 gun deaths a year.

The expansion of Brazilian weapons transfers to repressive governments is at odds with the country’s avowedly non-interventionist and peaceful foreign policy. Brazil’s Ministry of Foreign Affairs prides itself on its commitment to conflict prevention and peacebuilding inside and outside of the UN. Apart from its engagement in the Mediterranean during World War II, Brazil has steered clear of major conflict and military engagement for more than a century. The country is a determined supporter of multilateral solutions to the world’s major conflicts, as its support to the UN’s Department of Peacekeeping and Peacebuilding Support Office demonstrates.

For a while, it appeared that Brazil might rein in its defense exports and introduce more stringent controls over end users. In 2013, the country was among the first states to sign the Arms Trade Treaty. This instrument is the world’s first legally binding treaty on arms and munitions exports, requiring the application of human-rights criteria when deciding whether to approve a transfer. But the ATT has yet to be ratified by Brazil’s lower house of Congress. Federal and state politicians supported by the country’s vibrant gun lobby intend to keep it that way, and are stonewalling progress.

Just as worrying, there are signs that Brazil’s Ministry of Foreign Affairs is attempting to scale up the country’s arms exports. The Ministry recently circulated a strategic commercial plan (“Planejamento Estratégico de Promoção Comercial”, or PEPCOM 2017) to its embassies and consulates around the world. The Ministry advises Brazilian diplomats to ratchet up their efforts to sell military equipment, among other products. Such sales would include a range of Brazilian weaponry – from fighter planes to firearms and cluster munitions.

The plan urges Brazilian defense firms to conquer foreign markets. It calls on the Ministry’s Department of Trade and Investment Promotion (in conjunction with the Ministry of Defense and industry associations) to mobilize defense industry delegations to visit Europe, Asia, Africa and the Middle East. While sovereign states are of course entitled to promote their commercial interests abroad, the request for Brazil’s diplomatic corps to promote military sales could complicate (and potentially undermine) its diplomatic activities in other countries, especially fragile ones. Back in Brasília, Congress is also looking to push through a bill this year that would make it easier for foreign companies to participate directly in Brazil’s defense sector.

Brazil’s arms export policies are outdated and at odds with the country’s long standing foreign policy commitment to preventing conflict and promoting peace. At a time of global instability, the scaling-up of arms exports could generate destabilizing effects abroad. More positively, the Brazilian Ministry of Defense has started reviewing the country’s export policies, including issues related to due diligence and end-use certification. Brazil also initiated bilateral consultations with the United States on responsible arms export controls.

These are important steps. The next obvious one is that Brazil’s Ministry of Foreign Affairs devote more energy to endorsing the ratification of the ATT. The failure to do so could damage the country’s credentials while undermining the security of innocents.