China is now on race to be world’s new arm supplier. This is how you survive in global capitalism.

http://asia.nikkei.com/Politics-Economy/International-Relations/Argentina-turns-to-China-for-arms-supply

April 9, 2015 1:00 pm JST
China’s military footprint

Argentina turns to China for arms supply

KAMILIA LAHRICHI, Contributing writer

Argentine President Cristina Fernandez de Kirchner with Chinese President Xi Jinping after signing agreements at the Great Hall of the People in Beijing, Feb. 4 © Reuters

BUENOS AIRES — Argentina, under siege by Western creditors and short on foreign currency, has turned to China for help modernizing its decrepit defense systems, as part of its strengthening ties with the Asian power.

     Chinese President Xi Jinping and his Argentine counterpart, Cristina Fernandez de Kirchner, signed numerous investment and trade agreements during her three-day visit to Beijing in February — a trip made notorious by her quip on Twitter about Chinese accents.

     Among the deals was a $1 billion order for Chinese military supplies, such as armored personnel carriers, fighter jets and navy vessels. Agustin Rossi, Argentina’s minister of defense, said in March that the FC-1/JF-17 fighter jet made by China’s Chengdu Aircraft Corporation suited the needs of the country’s air force.

     The two nations also agreed to exchange military officers. In addition, China will build field hospitals in Argentina.

     In March, the Argentine Congress approved China’s first overseas satellite tracking station. The $300 million base is to be built in Argentina’s southern Neuquen province and will begin operations in 2016.

     For China, these deals mark a major step in growing its defense industry’s market share and influence in Latin America. The fact that Argentina has primarily relied on American military systems in the past makes it an even bigger coup.

Modernizing defense industry

Argentina, which defaulted on its debts in 2001 and became a pariah in global financial markets, has been strengthening its ties with China, which came to its rescue last July with an $11 billion currency swap.

     It makes financial sense for the cash-strapped military to buy from China. Chinese suppliers offered very attractive financing options, said Roberto De Luise, undersecretary of international affairs at Argentina’s defense ministry, in an interview in July 2014.

     This is not the first time Argentina’s military has bought Chinese military products. In 2011, it ordered Z-11 light helicopters from China’s Avicopter.

     Up until now, the U.S. had been Argentina’s top arms supplier. American exports amounted to about 80% of Argentina’s total arms imports, according to a 2013 report by U.K. research company Strategic Defense Intelligence.

     The new deals mean China, one of the largest and fastest-growing arms suppliers in the world, is set to become a crucial military partner for Argentina.

Domestic opposition

Kirchner told Congress in March that her country should look to China as a strategic partner. “The world will be different in five years’ time, and in five years, China will become the world’s most important economic actor.”

     Yet, Argentine opposition parties fear the satellite base in the country’s south could be used to strengthen China’s defense and draw the South American nation into a confrontation with the U.S.

     “Argentina is a strategic [location] because it is located between two oceans,” opposition legislator Elisa Carrio said. “We are handing over this [asset] without thinking, without reasoning for a minute.”

     Pablo Lopez, head of a left-wing party, said the military agreements with China had “semi-colonial features” that he feared would lead to “de-industrialisation, financial dependence, the worsening of the trade deficit, the import of manpower.”

Strategic alliance

A Stockholm International Peace Research Institute report released in March shows China is the world’s third-largest arms supplier. Its arms exports increased 143% from 2010 to 2014.

     Military sales to Argentina gave Chinese defense companies the opportunity to improve their product offering, explained Evan Ellis, research professor of Latin American studies at the U.S. Army War College’s Strategic Studies Institute.

     He says it enables Beijing to “work iteratively with foreign partners to identify and eliminate defects, adapt their systems to local conditions, incorporate partner technologies and manufacturing processes, and gain experience in providing maintenance, spares, and training support in multiple foreign contexts.”

     In addition, the exchange of Argentine and Chinese military officers will boost technology transfer and information sharing.

Emblematic of this important alliance, vessels from China’s People’s Liberation Army docked at Buenos Aires in October 2013 for the first time as part of a regional tour.

Yet, Ellis says concerns in Argentina may be overblown. He says it would not be in China’s interest to establish a permanent military presence in Argentina, as it would only undercut its broader economic objectives by antagonizing the U.S.

He says, however, this could change if a war breaks out in the South China or East China seas, where the U.S. would support Japan or Taiwan.

In such a scenario, it could be logical for China to have a military base in the South American country, given the combination of Argentina’s importance as a food exporter to China, its relatively short distance from the U.S. and its relationship with Beijing.

Raising eyebrows

The U.K. will be watching China’s growing military relationship with Argentina closely. The Chinese fighter jets Argentina plans to buy from China can be used to attack the contested Falkland Islands — which Argentina refers to as Islas Malvinas.

In 1982, the two countries fought a 10-week war after Argentina invaded the islands, a British overseas territory. The Latin American nation surrendered after a swift conflict but it still claims sovereignty over the archipelago.

More worrisome for the British, President Xi appears to be sympathetic to Argentina’s claim, referring to China’s experience in the South China and East China seas.

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