beyondbrics

Since before Brazilian president Dilma Rousseff officially took office on January 1, there have been persistent reports that she will review some of the big ticket defence items approved by her predecessor, Luiz Inácio Lula da Silva.

These include a plan to review a proposal to buy 11 warships worth $6bn, according to Brazilian newspaper Folha de S. Paulo, and to rethink a plan to buy 36 fighter jets, according to Reuters.

A former Marxist guerrilla who was tortured by Brazil’s former military regime, it is ironic that Ms Rousseff now has power over the armed forces’ ability to purchase new toys.

But any decision by Ms Rousseff to delay or reverse defence spending is more likely to be motivated by the need to reduce Brazil’s fiscal deficit, which has doubled since 2008 to 2.74 per cent of gross domestic product.

If the warship purchase is delayed or abandoned, it will be a blow to the UK. Britain’s BAE Systems, Europe’s largest defence contractor, was keen to win the tender, in which Brazil planned to buy ships to protect its giant offshore oil field discoveries.

For Ms Rousseff, defence spending must look like a tempting area to cut at this point. Although Brazil plans to boost defence spending from 1.5 per cent of GDP to 2.2 per cent by 2030, it might be difficult to persuade Brazilians of the urgency of such an expansion in the near term. After all, as the country’s defence minister once said, Brazil is in the enviable position of being a big country with no enemies.

Yet as Brazil seeks to play a greater role in world affairs and trade, it will want to match its economic power with corresponding political and military clout.

Ms Rousseff may take aim at defence spending today but it is likely that when the national accounts return to equilibrium the admirals will get their ships and the air marshals their planes.