PERU-USSR: IMPLICATIONS OF THE MILITARY RELATIONSHIP

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83S00855R000200150006-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 25
• Document Creation Date: December 21, 2016
• Document Release Date: May 2, 2008
• Sequence Number: 6
• Publication Date: December 1, 1982
• Content Type: REPORT

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Directorate of Secret
Intelligence
Peru-USSR:
Implications of the
Military Relationship
OSD review completed
DIA review
completed.
Secret .
ALA 82-10174
December 1982
Copy 35 5
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Directorate of
Intelligence
Peru-USSR:
Implications of the
Military Relationship
OSD review completed
This paper was prepared b
Office of African and Latin American Analysis. It
was coordinated with the Directorate of Operations
and the National Intelligence Council. Comments and
queries are welcome and may be directed to the
Chief, South America Division,
Secret
ALA 82-10174
December 1982
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Peru-USSR:
Implications of the
Military Relationship
Key Judgments In the early 1970s, Peru, frustrated in its efforts to purchase modern US
Information available military equipment, turned to the USSR as its primary arms supplier.
as of 28 December 1982 Lima demanded increasingly sophisticated weapons because of its long-
was used in this report.
standing rivalry with Chile and Ecuador, and its perceived need to match
or outclass neighboring military forces. We believe that Moscow, by
getting established in this new market, hoped in the long run to gain some
leverage on Peru's foreign and domestic policies, and to earn foreign
exchange. The Soviets probably also hoped that their arms-supply relation-
ship with Peru would create opportunities for expanding military sales to
other South American countries.
Lima-and to a lesser degree Moscow-appear to have achieved some of
their aims through this continuing relationship. Peru's Soviet hardware has
made its armored and air forces superior to those of its neighbors.
Moscow's gains include the sale of approxi-
mately $1.2 billion worth of hardware and technical assistance, exposure of
thousands of Peruvian military personnel to Soviet training, the presence of
Soviet advisers and technicians in Peru, and a virtually captive market for
spare parts and maintenance services.
We judge that the diplomatic, political, and economic impact of the Soviet
military aid has been relatively small. Moscow has had little success
influencing Lima's behavior in the diplomatic arena. Peruvian armed
forces personnel trained in the USSR have not shown significant pro-Soviet
leanings, Soviet advisers in Peru to our knowledge have no clout outside the
military, and the advisers have drawn criticism from the Peruvian military
for their reluctance to share technical expertise. We also believe that Soviet
influence resulting from intelligence liaison has been limited. Regionally,
Moscow has been unable to capitalize on its Peruvian connection to induce
other South American military establishments to purchase weapons from
the USSRJ
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Secret
ALA 82-10174
December 1982
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We believe the heavy Peruvian commitment in both money and training, as
well as the attractive financing that Moscow offers to arms clients, point
toward a continued Peru-USSR military relationship-including purchases
of new Soviet-made equipment-over at least the next several years.
Nonetheless, Lima's recently reported decisions to buy fighter aircraft
from France and armored vehicles from the United States-while simulta-
neously continuing to order additional weapons from Moscow-in our view
reflect the Peruvians' pragmatism toward their relationship with the
Soviets. On balance, we judge that recent developments have prompted a
shift away from nearly exclusive reliance on Soviet military assistance and
have at least somewhat increased opportunities for Western military sales.
We believe that Lima, desiring the best available weapons but constrained
by finances and anxious to avoid depending too heavily on any one foreign
nation for military assistance, will play potential sellers off against one
another in the newly competitive environment.
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Military Aid as a Source of Influence
6
Benefits and Drawbacks: The Peruvian Perspective
7
Cost-Effective Weapons
7
Problems With Maintenance and Spare Parts
8
Continuing Access to New Weapons Systems
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Peru-USSR:
Implications of the
Military Relationship
The arms supplier-client relationship between the
Soviet Union and Peru is 10 years old. This presents
an appropriate benchmark to assess the depth of the
military links between the two countries and the
spillover effect in other areas. In addition, partly
because of the pro-West civilian administration in
Peru since 1980 and partly because of the increasingly
obvious limitations of an almost exclusive military
relationship with Moscow, greater-but still circum-
scribed-opportunities are now emerging for Western
military sales to Peru.
This study identifies the motives that led to the Peru-
USSR military connection and examines the benefits
to both parties. The study also treats, from the
Peruvian perspective, the perceived strengths and
weaknesses of Lima's arms commitment to Moscow
and projects the potential for, and the contraints on,
Western military sales in the next few years
Even before the 1968 coup, which brought leftist
Army officers to power, the US refusal to approve a
sale of relatively advanced F-5A interceptor aircraft
to the Peruvian Air Force had prompted the purchase
of the French Mirage 5. Under the revolutionary
military government of 1968-75, seizure of US fishing
boats inside Peru's claimed 200-nautical-mile territo-
rial limit led to a cutoff of US arms sales, and Lima's
expropriation of foreign-owned enterprises further
strained relations between the two countries
Peru's shift to non-US military suppliers-initially
West European countries and later the USSR-in our
view reflected pragmatic as well as ideological consid-
erations. Peru began buying from the Soviets in 1973
at least partly because Moscow offered quick delivery
of relatively sophisticated weapons at low prices and
on easy payment terms. As the only Soviet military
client in South America, Peru demonstrated its deter-
mination to circumvent US-imposed limits and pursue
an independent foreign policy. Concurrent Peruvian
diplomatic moves, such as exchanging ambassadors
with Soviet Bloc nations and joining the Nonaligned
Movement, underscored Lima's resolve to change
During the 1970s Peru received major military assist-
ance from the USSR, which largely supplanted the
Peruvian armed forces' former reliance on US aid.
While Peru has remained generally pro-Western in
both its domestic and foreign policies, the Peruvian-
Soviet military link-involving weapons sales, train-
ing, and advice-has become institutionalized.
The Shift Toward Moscow
Lima's turn toward Moscow for military assistance in
our estimation resulted both from restrictive US
arms-sales policy and the Peruvian military's increas-
ingly radical nationalism. Under these influences,
Peru's military rulers, feeling excessively dependent
on an unreliable arms supplier and threatened by
longstanding rivalries with neighboring Andean coun-
tries, sought to diversify their sources of foreign
military equipment and training.
direction.
The more centrist military regime that took over in
1975, partly because of inefficiencies and failures in
domestic revolutionary programs, moderated Peru's
international stance but nonetheless accepted greatly
increased military aid from Moscow. The civilian
government elected in 1980, while continuing the
Soviet military connection, has generally reaffirmed
Peru's pro-Western orientation. In the UN, for exam-
ple, despite Soviet attempts to garner support, Peru in
both 1981 and 1982 voted in favor of General Assem-
bly resolutions condemning Soviet intervention in
Afghanistan. In 1982, Lima's UN representative vot-
ed to reject the credentials of the Soviet-backed
regime in Kampuchea.
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South America
Falkland Islands
(/slas Mai mas)
(administered by U.K.,
claimed by Argentina)
South
Atlantic
Ocean
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Soviet Assistance
Peru's turn toward Moscow resulted, between 1973
and 1980, in the purchase of a wide variety of Soviet-
manufactured equipment, which now comprises much
of Peru's inventory of major air and land weapons.
Purchases from the USSR included: fighter-bomber
and transport aircraft; troop-carrying helicopters;
medium tanks; air defense and field artillery; surface-
to-air, air-to-surface, and antitank missiles; other
combat and combat support vehicles; and related
electronic and support equipment. Only the more anti-
Communist Navy fended off Soviet sales efforts and
chose to rely on older US and European-supplied
ships while ordering new submarines from West
Germany and frigates from Italy. The Army and Air
Force have acquired some Western-made items since
1973, including French tanks, US and West German
armored personnel carriers, and US artillery pieces,
but these purchases represent a small fraction of total
procurement expenditures.
Procurement of Soviet weapons has made Peru
dependent on the USSR for training, maintenance,
and spare parts. We believe that most of the Peruvian
military personnel trained in the USSR have studied
technical subjects related to use or maintenance of
advisers also have provided technical training and
support in Peru since the mid-1970s, according to US
Embassy and military attache reports from Lima.
The US Intelligence Community estimates that some
2,000 to 3,000 Peruvian military and intelligence
personnel have trained in the USSR since the mid-
1970s,
However, the annual number of trainees in the USSR
has declined sharply from hundreds in the late 1970s
to only a few dozen in recent months
Table 1
Major Soviet Weapons and Equipment in Peruvian
Inventory a
Tanks
Artillery
AS-7 air-to-surface
SU-22 fighter-bomber 49
AN-26 short-range transport 16
MI-8 medium-lift helicopter 29
MI-6 heavy-lift helicopter 6
SA-3 surface-to-air (launcher) 30
SA-7 surface-to-air 270
AT-3 antitank (launcher) 99
T-55 medium tank 300
M-46 130-mm field gun 36
D-30 122-mm howitzer 36 25X1
BM-21 122-mm self-propelled rocket launcher 12
ZSU-23-4 23-mm self-propelled 40
antiaircraft gun
a Does not include other armored vehicles, utility vehicles, smaller
weapons, radars, and other equipment.
The Peruvians' need for continuing technical assist-
ance has resulted in approximately 150 Soviet mili-
tary advisers and technicians being stationed in Peru,
according to the US Embassy, raising the total of
Soviet diplomatic, economic, and military representa-
tives to about 350. Neither government publicly ac-
knowledges the presence of the military assistance
personnel, who mainly perform supply and mainte-
nance functions, according to the US Embassy and
attaches in Lima, and are not known to be assigned to
specific problems or install new equipment
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In recent years, Peruvians have assumed many of the
instructional duties previously performed by Soviet
advisers, and training in the USSR has been limited
to specialized personnel. Last year, for example
the number o
Soviets assigned to an Air Force missile group had
been reduced from 12 to four because they were
providing only occasional technical assistance while
Peruvians were setting up their own program of
instruction in missile operations and maintenance.
Although Peru and the USSR have divergent inter-
ests, international alignments, and political and eco-
nomic systems, each government perceives benefits
from military and intelligence cooperation.
Peru: Regional and Domestic Security
The Peruvians have sought increasingly sophisticated
weapons, according to Embassy and attache report-
ing, mainly for defense against their traditional,
neighboring adversaries, but also to help suppress a
domestic insurgency and to satisfy a politically influ-
ential military establishment
External Threats. Above all, Embassy
reports indicate that Peru aspires to strengthen its
military forces and increase their mobility enough to
fight a successful two-front war, if necessary, with
Chile and Ecuador. As a result, the Peruvian military
now nearly equals in manpower and weaponry the
combined forces of both these countries. Furthermore,
the it
Force aims to stay well ahead of both the Chileans
and the Ecuadoreans in aircraft technology.
We believe that Peru's recently reported decision to
buy 26 new Mirage 2000 interceptors from France
was motivated partly by its neighbors' recent pur-
chases of sophisticated fighter planes. We also judge
Table 2
Military Balance: Peru-Chile-Ecuador
Army personnel
75,000
53,000
27,600
Navy personnel
21,000
20,800
3,800
Air Force personnel
40,000
15,300
4,200
Tanks
466
270
195
Other armored vehicles
475
561
120
Field artillery
419
290
96
Naval combatants
(including missile
patrol boats)
22
13
14
Submarines
(including combat-
capable trainers)
Helicopters
that future potential military sales to the region-for
instance, of main battle tanks to Chile-could have
similar repercussions in Lima.
Although Peruvian military planners worry most
about Chile and Ecuador, we believe that any major
military modernization in other neighboring countries
would also fuel anxieties in Lima. Colombia, for
example, is shopping for air defense weapons and
fighter aircraft, according to the US Defense Attache
in Bogota. Lima might view such acquisitions as a
threat to Peru's thinly patrolled jungle border with
Internal Conflict. While Peru's perceived need for
military hardware relates mainly to external defense,
growing official concern over domestic terrorism and
the Army's increasingly active role in combating the
insurgents could nromot or lend uraencv to additional
procurement.
Army contingency plans call for search-and-destroy
operations by airmobile infantry units. In our view,
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Lima views Santiago as the chief potential adversary,
even though we and the US Embassy believe that
there is only a low risk of an unprovoked attack by
Chile, most of whose military strength is deployed
against Argentina. Peru's fear stems from Chile's
conquest of territory in southern Peru and occupation
of Lima a century ago. This habitual anxiety is today
heightened by a perceived threat from the well-
trained and -equipped Chilean armored and air
1978-has purchased major military equipment, in-
cluding tanks and fighter aircraft. By last year Chile
had received some 25 to 30 French AMX-30 main
battle tanks, which are more modern and capable-
though less numerous-than Peru's Soviet-built
forces.
Concern over the security of its northern border, in
the isolated Amazon region, has also given impetus to
Peru's military buildup. The region has been the
focus of a long-smoldering territorial dispute with
Ecuador, which erupted in full-scale military hostil-
ities four decades ago and a briefer conflict last year.
Despite clear overall superiority of its forces, Lima
believes-with some justification-that tactical air
superiority, as well as helicopters to deploy and
support troops, are needed to guarantee its control
Chile and Ecuador have aggravated concerns in Lima
by acquiring new weapons equaling or surpassing the
capability of those in the Peruvian arsenal. The US
Embassy in Santiago notes that over the past several
years Chile-mainly preparing for possible clashes
with Argentina following an increase of tension in
Chile also has bought 16
new French Mirage 50 fighters, which can at least
match the performance of any aircraft currently
operated by Peru.
Ecuador, according to the US Mission in Quito, is
also strengthening its defenses following its setback in
the 1981 border clash with Peru. The Ecuadorean
military recently took delivery of 12 Israeli Kfir
fighters, roughly equivalent in performance to Peru's
aging French-built Mirage 5 interceptors. A recent
acquisition of integrated air defense radars will fur-
ther enhance Ecuadorean capabilities against the
Peruvian Air Force.
such operations would require the armed forces to
maintain and perhaps expand their largely Soviet-
made inventory of helicopters.
The government also reportedly has authorized acqui-
sitions of new materiel for Peru's underequipped
police forces which, despite having primary responsi-
bility for suppressing terrorism, have had little success
in this mission.
Political and Economic Realities. Because of Peru's
foreign currency shortage and fiscal deficit, financing
will be the most serious constraint on arms purchases
and the austerity rogram designed to deal with them
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We judge that Belaunde-whose pre-
vious administration in 1968 became one of eight
ousted from office this century by military coup-has
acceded to procurement requests by top officers main-
ly to forestall discontent in the armed forces.
Belaunde, we estimate, would rather hold back other
categories of spending to sustain the arms budget than
risk having the military reenter the political arena.
The officially estimated defense budget for 1982 as
reported by the US Defense Attache-about $903
million-represents a slight increase over the 1981
allocation. Moreover, the Air Force's reported choice
of the Mirage 2000s-the highest priced fighter
These actions indicate to us that civilian economic
decisionmakers will allow the military at least some
expensive procurement, provided that this can be
financed over many years.
USSR: A South American Opening
We believe that in Peru, as elsewhere in South
America, the USSR hopes-through diplomacy,
trade, and aid-to gain respectability, backing for its
international policies, and economic benefits.
Military Aid as a Source of Influence. Moscow, in
our judgment, regards the well-developed military
link with Peru as the strongest element in their
bilateral relations and intends to preserve it. The
likelihood of the Soviets' attaining significant influ-
ence on Peruvian foreign and domestic policies, on the
other hand, has diminished since 1975-when the
military government began to loosen its ties with
Communist countries-and even more since the elec-
We believe, however, that the institutionalized Peru-
USSR relationship has enough momentum to survive
these changes. In our judgment, Lima's continuing
need to keep open the supply line from Moscow and
service a large military debt to the USSR still gives
the Soviets some leverage on Peru's procurement
In addition to ensuring continuation of the Peruvian
military relationship, the Soviets, we believe, hope to
use Peru as an example for establishing military
assistance ties to other countries in the re ion, al-
though so far this goal has eluded them.
the Bolivian Air 25X1
Force, which was described as eager to buy new
fighter aircraft, had sent representatives to Peru for a
showing of a Soviet-model fighter. To promote such
military sales, Moscow was said by the US Embassy
in Lima last year to be considering the installation. in
Peru of a regional service center for Soviet equipment,
making it more attractive to potential buyers.
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believe is still outstanding. A top policymaker in Lima 25X1
told visiting US officials several months ago that
Moscow had cut off spare parts to the Air Force-
albeit only temporarily-after being notified that
Peru would be unable to meet a payment on its debt to
the USSR. He added that the Soviets had not re-
sponded to a Peruvian request for debt rescheduling,
whereas twice before-in 1978 and 1981-they had
agreed to postpone repayments on the principal.
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We believe that the Army and Air Force have
compelling practical reasons for maintaining their
connection with the USSR. Overall, Soviet military
aid has created a favorable impression in Lima that
will help Moscow make additional military sales.
Peruvian officers generally believe that their Soviet-
made hardware gives good value for the price and 25X1
access to at least some advanced technology that the
West may be unwilling to sell. These perceived advan-
tages more than offset negative impressions stemming
from problems with spare parts and maintenance and
Peruvian suspicions about the activities of Soviet
In Search of Economic Gain. Economic consider-
ations appear to be a secondary-though still signifi-
cant-concern to Moscow. The USSR has continued
to offer Peru concessionary financing on new arms
sales to preserve the military-assistance relationship.
Last year, for example, when the Peruvians were
considering a purchase of fighter interceptors from
several alternate suppliers including the United
States,
the USSR was offering fighters financed
by a 10-year loan at 2-percent interest with a two-
year deferral of initial payment; by contrast, he said, a
French aircraft manufacturer was asking for a down-
payment of 30 percent.
Nonetheless, we judge that Moscow, in addition to
seeking local and regional influence, hopes that for-
eign currency earned from arms sales to Peru and
other established military clients will in the long run
help to offset declining revenues from nonmilitary
exports. Moscow has shown signs of impatience at
Peru's difficulties in paying off its previously contract-
ed $1.2 billion debt to the Soviets, most of which we
personnel in Peru.
Cost-Effective Weapons
While most weapons in the Peruvian inventory do not
represent the latest Soviet technology-with a few
exceptions, such as the AS-9 air-to-surface missiles
delivered last year-we and the US Embassy in Lima
judge that Peru's military leadership nonetheless finds
them to be cost effective relative to comparable
Western weapons. For example, last year the Army
commander told a US Latin American specialist
while on a visit to Washington that Peru's T-55
tanks-of early 1950s design-were excellent equip-
ment, that they had cost one-fourth as much as a US
model, and that the Soviet credit terms were gener-
ous.
Peruvian
officials are generally satisfied with the flight
performance of their supersonic SU-22 fighter-bomb-
ers. The attractive price tag on an SU-22 purchase by
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Soviet-built T-55 medium tank
of the Peruvian Army on
Lima two years ago
as $150 million for 16 aircraft at
favorable repayment terms-was said
to outweigh some Peruvian dissatisfaction with previ-
ously acquired fighters of the same type. Both the
tank and the airplane have been deemed acceptable
despite having outdated electronic components in-
cluding radios and fire-control systems, which,
the Peruvian military has
made equivalents.
Problems With Maintenance and Spare Parts
We note that Peruvian officers who work directly with
Soviet equipment are concerned about quality and
maintenance and sometimes draw unfavorable com-
parisons with Western-manufactured equipment. For
example, attache sources have indicated that Soviet
aircraft and radars show far more corrosion than
similar models supplied by the West; the problem
reportedly caused the grounding of some fighter
planes
The most persistent maintenance problem in both the
Air Force and the Arm~
has been limited availability of
spare parts, which the Peruvians consequently are
trying to buy elsewhere or produce locally. The Air
Force's complement of SU-22 fighters
and replacements reportedly take up to three years to
arrive from the USSR. As a result, the Air Force is
said to be seeking alternate suppliers. Last year F-
in Lima that the Army had begun
ma nu acturing parts for its T-55 tanks, to become less
dependent on Moscow.
The requirement to send components back to the
USSR for major mechanical maintenance-a costly
and time-consuming procedure-has led the Peruvi-
ans to seek advanced technical training and complex
tools from Moscow to service the equipment locally. A
Peruvian officer told a US attache two years ago that
periodic overhauls of jet-fighter engines in the USSR
cost Peru $500,000 each, and servicing an engine of a
transport plane or helicopter cost $250,000. Including
overseas shipment, the job normally took one year,
requiring the Air Force to keep many spare engines on
Because of these problems, Peru
negotiated a transfer-of-tec no ogy agreement
with the USSR more than two years ago, which
provided for training of Peruvian technicians in main-
tenance of SU-22 fighter engines and the eventual
manufacture of related tools, special equipment, and
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Soviet-built SU-22fighter-
bomber and MI-6 heavy trans-
port helicopter, both of the Pe-
ruvian Air Force, at an airfield
spare parts in Peru.
the Air Force maintenance depot, under Soviet a vis-
ers' guidance, is scheduled to have an SU-22 engine-
maintenance facility operational by the end of this
yea
We believe that the Peruvians may have made techni-
cal aid a precondition for further arms procurement
from the USSR, mainly because they suspect the
Soviets of deliberately restricting the supply of parts
and thus trying to influence Peru's politics and diplo-
macy. A Peruvian military officer told a US counter-
part in Panama two years ago that he and other
officers believed that the Soviets as a matter of policy
delayed delivery and limited the quantity of replace-
ment parts destined for Peru.
Continuing Access to New Weapons Systems
Despite the Peruvians' misgivings, they have reason to
keep open their channels to Moscow, where they know
they can buy advanced weapons that might not be
available from alternate suppliers.
the Air Force already has agreed to
purchase 14 Soviet MI-25 attack helicopters-an
export version of the MI-24-which are among the
world's most potent rotary-wing gunships and the first
aircraft of this type acquired by any South American
country. Delivery of the MI-25s, reportedly scheduled
for 1983 and 1984, will both significantly expand
Peru's tactical ground attack capability and demon-
strate Lima's continuing interest in Moscow as a
The Peruvians also appear interested in replacing
Soviet-supplied items lost in accidents or in combat
and, in some cases, augmenting substantially the
stock of weapons acquired from Moscow. Peru recent-
ly bought five new MI-8 troop-transport helicopters
which
have arrived in the country.
1150 new T-55 tanks
were scheduled for delivery to the Army this year; a
concurrent report appeared in a leading European
journal on military affairs. Although we have not
confirmed this acquisition, it would be a reasonable
step because, according to the US Embassy, Peru
needs more tanks to equip a newly formed armored
division, roughly equivalent to a US brigade. The
reported number of T-55s would approximately satis-
fy this requirement.
The Navy, which until now has refused to do business
with Moscow, could at some point use the Soviet
procurement option as a bargaining chip in talks with
weapons supplier.
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Impact of Soviet Training
The willingness of Peruvian military officers to con-
tinue their connection with Moscow may have been
enhanced by Soviet training, although technical rath-
er than political reasons are dominant. Despite the
political indoctrination included in the longer Soviet
training courses, we believe that the Peruvian military
establishment remains basically conservative and na-
tionalistic. The Embassy noted two years ago that
officers advocating radical domestic policies had been
purged from the military as it retrenched its earlier
revolutionary programs. Some officers who trained in
the USSR have said that they felt imprisoned during
their stay there, formed no friendships, and were
eager to return home. Nonetheless, we judge that even
politically conservative personnel who have become
skilled in using or maintaining Soviet-made equip-
ment may prefer to continue buying from Moscow
rather than adapt their skills to Western hardware.
Furthermore, while the current military leadership
has had little firsthand exposure to Soviet instruction,
Peruvians with such experience will assume influen-
tial posts by the late 1980s and probably will advocate
continuing assistance from the USSR.
Peruvian military attitudes toward the Soviet pres-
ence in Peru vary, according to attache reports, but
most officers consider it necessary as long as Lima
relies on Soviet-made hardware. In contrast to the
frequently noted problems with replacements and
factory service, an Army officer recently told a US
counterpart that Soviet technicians in Peru would not
let equipment fail and appeared to be striving to
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Concern Over Clandestine Operations
Senior Peruvian officials, civilian as well as military,
suspect Soviet personnel in Peru of covert intelligence
collection or supporting terrorists.
In addition to the advisers, the US
Embassy notes that more than 800 Soviet seamen
assigned to the fishing fleet transit Peru each month,
raising the Soviets' visibility in the Lima-Callao area
and-we judge-aggravating the Peruvians' suspi-
cions.
We believe, however, that Moscow's larger equities in
its relations with the government in Lima and the
Peruvian terrorists' Maoist ideology make it highly
unlikely that the Soviets have aided the insurgency.
The Soviets have used their embassies in countries
such as Mexico to cultivate contacts and funnel
support to regional leftists operating elsewhere in
Latin America. Moscow may be exploiting its pres-
ence in Peru in a similar fashion, but we have no hard
evidence of such activities. We have not identified any
significant increase in the number of foreign Latin
American leftists in Peru since the Soviet buildup
exiled radicals from Argentina, Chile, and
Uruguay have concentrated in Central America and
Europe, where they have easier access to international
leftist connections, rather than in the Andean region.
The recent performance of US-made weapons in the
Middle East, the superiority of modern Western
technology demonstrated in the Falklands, and the
current political climate in Lima appear to have
increased Peruvian Air Force and Army willingness to
procure equipment from the West, including the
United States, although in our judgment this trend is
likely to benefit European suppliers at least as much
as US firms. The Air Force's reported decision to buy
French Mirage 2000 interceptors indicates some 25X1
movement away from nearly exclusive dependence on
Soviet equipment, but it also implies that the United
States is unlikely to resume its former role as Peru's
principal military supplier.
Political and Diplomatic Climate
President Belaunde, according to Embassy reporting,
has clearly expressed to armed forces leaders his
preference for closer ties with the United States, and
we believe this will affect military sales. Although
Peruvian armed forces commanders make military
from nearly exclusive reliance on Soviet military
assistance and have at least somewhat increased
I
procurement decisions and strongly influence budget-
ing and appropriations, civilian officials allocate the
government's limited foreign exchange holdings.
Moreover, according to the Embassy, Israeli military
successes in Lebanon impressed Peruvian military 25X1
leaders with the advantages of high-technology weap-
ons, many of them US built. On balance, we judge
that recent developments have prompted a shift away
opportunities for Western military sales.
This shift, albeit modest, appears to be reflected in the
attitudes of several high-ranking officers. The com-
manding general of the Army, politically the most
influential service, told the US Ambassador early this
year that he personally admired the quality and
performance of US-made equipment and that he
wanted to increase training of Peruvian personnel in
US military institutions. The US Army Attache
expects the next Army commander, slated to take
There are also at least a few signs of thawing attitudes
toward the United States in the Air Force. An officer
previously viewed by the Embassy as the most anti-
US general in the Air Force has become much
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friendlier to Embassy personnel this year. The present
Air Force commander reportedly dislikes the United
States and is scheduled to retain his post until next
year, but the officer in line to succeed him-as a high
official predicted to the US Ambassador early this
year-is more likely to procure US aircraft and thus
reduce Air Force dependence on the USSR.
A European Breakthrough
Peru's biggest new weapons transaction-the recently
reported decision to purchase 26 Mirage 2000 fighter
aircraft (24 interceptors and two trainers) from
France-in our view confirms the expanded opportu-
nity for Western suppliers. The purchase also illus-
trates how Peruvian procurement priorities are likely
to determine future choices of military contractors.
According to the Embassy in Lima, once it became
apparent that the United States would not sell Peru
the Air Force's first choice of a new interceptor-the
F-16A-the Peruvians' list of alternatives included
the French Mirage 2000, the US F-16/79, and-
though at a much lower priority-the Soviet MIG-23.
The reported decision this year to buy the Mirage
strongly suggests that Peruvian leaders rated perform-
ance and advanced technology above other factors.
According to the US Air Attache, the Peruvians
picked the Mirage 2000 primarily because of its
advanced turbofan jet engine, newer and more capa-
ble than the power plant in the F-16/79.
Political sensitivities of Peruvian leaders also played a
key role in the choice of the Mirage 2000 as an
alternative to the unavailable F-16A. Washington's
failure to respond to Peru's request for price and
availability data on the F-16A-thereby signaling
unwillingness to permit export of the aircraft to
Peru-in the US Ambassador's view, handicapped
further US efforts to compete for the fighter sale. A
subsequent offer of the F-16/79, according to the Air
Attache, prompted at least some Peruvian officials to
disparage it as a second-rate airplane, contributing to
its rejection in favor of the Mirage. Another factor
probably working against the F-16/79 was Washing-
ton's widely publicized decision to sell the more
In our view, financing was another important variable
favoring the French plane over the US candidate
A Substantial Shopping List
While the United States thus has lost the interceptor
contract, some other large Peruvian military sales
could go to US firms
the US manufacturer of the
CH-47 heavy-lift helicopter had been asked to submit
a bid on a Peruvian Army contract for six of these
aircraft. Possible Air Force acquisitions from US
companies include transport and tanker aircraft, heli-
copters, and air defense radars, according to the US
Embassy
the
Peruvians are interested in buying 263 US-made
M 113 armored personnel carriers, to augment their
force of 150 and-we judge-to support the numer-
ous Soviet and French tanks in the inventory. Financ-
ing may prove an obstacle in this case, however,
illustrating what we view as US suppliers' biggest
European and other non-Communist suppliers also
have promising opportunities in Peru, aside from the
lucrative Mirage sale
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iren asked to bid on a $400 million contract
to build a Peruvian naval base-a contract for which
Japanese and Canadian businessmen may compete.
European manufacturers are also assisting Peru in
taking first steps toward the establishment of a do-
mestic arms industry-a long-term goal probably
suggested to the Peruvians by the successful examples
of Brazil, Argentina, and Chile. An Italian firm has
agreed to coproduce advanced trainer aircraft with a
Peruvian Government enterprise at a plant near
Lima, for sale to the military and for export. The
recent launching of a missile frigate, part of a joint
project with another Italian company, indicates signif-
icant Peruvian progress in using foreign assistance to
develop domestic production of sophisticated weapons.
Constraints on Peru's Options
The primary obstacles to any major Peruvian shift to
Western-made equipment are the combined factors of
financing and feasibility. According to the US Em-
bassy, Moscow is almost certain to offer more attrac-
tive financing for new weapons purchases to the
fiscally strapped government in Lima than US or
Western suppliers could. To afford major procure-
ment contracts, Peru-currently under an IMF re-
striction on new medium-term government borrow-
ing-almost certainly will be forced to seek long-term
loans.
The Air Attache has noted that US manufacturers
will find it difficult or impossible to arrange such
lenient financing. Although some European firms
appear able to provide the legally stipulated repay-
ment period, we doubt that they can match Soviet
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Other practical considerations will also inhibit Peru
from rapidly shifting to non-Soviet suppliers. Diversi-
fying sources of large items such as aircraft or tanks
in our view would complicate Peruvian military logis-
tics, already judged by the Embassy as deficient. In
addition, diversification would require retraining of
personnel and might introduce the problem of lack of
operational compatibility-for example, between ra-
dios manufactured in different countries-that could
impair Peruvian forces' capabilities.
Furthermore, Peru's Soviet-made equipment inven-
tory requires a continuing supply of parts and service,
more readily available from Moscow than elsewhere.
The example of Egypt, which broke its military supply
and advisory relationship with the USSR a decade
ago, in our opinion has shown that sophisticated
Soviet military hardware can be maintained with help
from non-Soviet sources only with difficulty and at
increased cost
Outlook and Implications for the United States
On balance, we judge that significant Soviet military
assistance to Peru will continue at least over the
medium term and that this aid probably will include
major acquisitions such as new tanks or helicopters.
We believe that the existing Peruvian investment in
training and logistics for Soviet-made equipment will
predispose the Air Force and Army to procure more
hardware from Moscow. In addition, Peru will almost
certainly want to keep the supply line open for parts
and services related to equipment already purchased,
which in our view will probably remain in service for
at least another decade.
Although the Soviets may want to raise prices and
tighten up financial terms on future military con-
tracts, we believe that their desire to maintain the
arms-supply relationship with Peru will lead them to
continue to offer concessionary financing, which-
even at increased prices-will in many instances
enable Moscow to underbid Western suppliers. In
addition, we judge that the Soviets will more readily
agree to loan extensions-in our view likely to be
required by Peru's economic difficulties-if the Peru-
vians concurrently place new orders with Moscow.
The pro-Western civilian leadership can be expected
to exert some restraining influence on the military's
buying from the Soviets but is likely to go along with
its higher priority procurement requests-from what-
ever supplier-to assure armed forces loyalty to the
government
We believe that Western countries do have improved
prospects in the Peruvian military market, although
there is little chance that the USSR will be displaced
as Lima's major source of military assistance. Argen-
tina's defeat in the Falklands, according to US Em-
bassy reports, has convinced Peruvian
officers o eir need for sophisticated equipment. The
reported choice of Mirage 2000 interceptors indicates
to us that, in at least some cases of future arms
procurement, Lima may seek the most advanced
technology-generally recognized to be the strongest
attraction of Western equipment-even if this means
passing up the lowest price, quickest delivery, or best
financing, which the Soviets usually can offer.
Furthermore, according to Embassy~re-
porting from Lima, the embargo on arms exports to
Buenos Aires by leading Western suppliers during the
Falklands conflict is likely to motivate Peru to diversi-
fy foreign military suppliers as a hedge against possi-
ble supply cutoffs. Coproduction of armaments in
Peru and related transfers of technology might offer
additional long-term business opportunities to West-
ern firms-especially, as the Embassy points out,
because such arrangements could help offset the high
cost of financing arms procurement from the West
compared with the USSR. The interest of the Peruvi-
an Army's commanding general in sending more
personnel to US military schools further reflects
Lima's movement toward diversifying its military
relationships.
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We doubt that over the next two to three years the
USSR will succeed in using its military-assistance
relationship with Peru as a means of penetrating other
South American arms markets. Even if Moscow tries
to promote the maintenance facilities being installed
in Peru as a regional service center for Soviet-made
weapons, neighboring states like Chile or Ecuador
would see little point in depending on services to be
performed within the national borders of a military
rival. While Soviet arms transfers to Peru might spur
these other Andean countries to compensate by in-
creasing purchases of foreign weaponry, we judge that
they would prefer to buy from traditional Western
military suppliers. Other military establishments in
the region also are strongly pro-West. Barring dra-
matic internal changes, we estimate that for the
period under examination they will be likely to make
only selective weapons purchases-if any-from
Moscow.
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