Júlio Ottoboni
DefesaNet Special
The former Minister and responsible for the Brazilian “economic miracle” in the 70’s, Antônio Delfim Netto, sent a clear warning about the current lack of investment and attention to the defense and security industries in Brazil.
“People take this defense issue a little too lightly and they forget that within our territory we have everything other nations want. We must have the deterring capabilities necessary before they come and try to take our water”, he said before a crowded auditorium at the event organized by the Brazilian Association of Defense and Security Materials (Abimde) that happened last Tuesday (12th) at the Southwest Military Command auditorium in São Paulo.
The relevance of Netto’s statement goes beyond highlighting the launching of the study “Chain of Value and the Importance of The Defense and Security Industry in Brazil”, conducted by the University of São Paulo’s Faculty of Business and Economics along with the Economics Research Institute Foundation (Fipe) under professor Joaquim Guilhoto’s supervision.
The government, not the economists working for the government, tends to believe that defense can be dealt with later. Brazil exports water, we possess the two liquid wonders: oil and water. So we must have the bare minimum in terms of deterring capability”, the former Minister argued.
During his speech at the Abimde event, Netto yet again mentioned the dangers of not having the proper apparatus in a potential conflict or threat to our sovereignty, or even in case of foreign invasion. He said that the idea that a peaceful nation like Brazil has no risk of hostility, threats to its integrity and territory or even armed conflict is completely outdated. “The priorities of the defense industry go a little further than the more naive ones think”, he added.
With all these concerns in mind the members of Abimde want to show the citizens and politicians how important a strong defense industry is to the nation. The Minister of Defense, Jaques Wagner, did not attend the event, but sent a message that was read before the audience, in which he states, that “it is vital that society knows and understands the importance of Brazil’s defense industry”. However, Abimde’s president, Sami Hassuani admitted that “not even the government’s economics branch knows us. We are going to send them this research we made”.
According to Hassuani, even developing nations, which go through crisis and recession, never stop investing in the military. And that’s because they understand a country is based upon the triad – geopolitical sovereignty, economic wealth and exports. These three factors can be seen in all great global powers. “Great nations don’t let defense investments slide”, he highlighted.
The research conducted by USP and Fipe was based on data from the Brazilian Institute of Geography and Statistics (IBGE in Portuguese), the Ministry of Defense, estate Military Polices, the Federal Police and private security companies. The results are surprising, to say the least. In 2014, a grand total of R$ 110 billion were invested – R$ 25 in defense, R$ 7 billion in national security, R$ 47 billion in estates security and R$ 31 billion on private security. The government currently applies fewer resources than the private security sector. Over than R$ 8 billion are spent on inputs, another R$ 13 in primary inputs and an additional R$ 71 billion in tertiary activities, summing up to 3,7% of Brazil’s GDP in 2014 – R$ 202 billion total.
Another interesting data is that, while the GDP grew around 17% between 2009 and 2014, the defense sector had a mere 12,9% push forward.
“The national defense field is actually smaller than the private security one, and this phenomenon must be analyzed closely due to its importance”, said Professor Joaquim Guilhoto, who organized the study. According to his research, the defense sector has greater generating effects in average when compared to other fields. One of the reasons is because investing in this kind of market creates more jobs than most areas, and it is also one of the main paths to acquiring new technologies.
When asked about the economic initiatives promoted by the Unites States to draw attention of Brazilian aerospace and defense companies, both Delfim Netto and Sami Hassuani were evasive:
According to the former Minister, the Brazilian industrial cluster has no risk of shrinking due to American flirtations. “I don’t believe companies will move their business [to America] or that there will be much of an impact on our industry, each one has their own interests”, he said, avoiding dwelling on the subject. When presented with the information that many companies actually showed interest in going global and moving their activities to the US, Netto replied with irony: “probably the American consul did a good job analyzing the Brazilian degree of interest”.
Hassuani said that none of the Abimde members are on the Select USA initiative’s radar. Since he is also president of aviation company Avibras and attended the presentation at São José dos Campos (São Paulo estate) organized by Obama Administration officials, he said there was no interest in what the Americans offered: “the effects would be secondary, too far from our interests”, he emphasized.
