Colombia’s internal and external defense and security structure includes the Army, Navy (Marines and Coast Guard), Air Force, and the National Police. Real military spending increased from USD 2.6 billion in 2001 to USD 9 billion in 2009. On average, the total military spending is 5 percent of Colombia’s total GDP. Under Plan Colombia, significant U.S. funding, technical assistance, and equipment support has been provided to Colombian-led counter narcotic programs for drug eradication and interdiction, and expansion of the capacity of Colombian military and police. The current format of Plan Colombia is due to expire in 2012, with the consequent nationalization of military programs by the Colombian government. Significant cuts on spending and a shift to mainly drug eradication are expected. However, the Colombian government will intensify military actions and spending to fight narco terrorism, and insure security gains through its police force, especially to develop security surveillance and enforcement in remote and isolated regions of the country.
Through the Foreign Military Sales Trust Fund, the U.S. Department of Defense (DOD) provides equipment and training to the Colombian military and police through military assistance programming. The Department of State (DOS), military sales, and the international narcotics control program are other sources of funding. The Office of Aviation and Narcotics Affairs has been the main source of funding for equipment acquisition in Colombia since 1990, through private military consulting firms such as DynCorp. These firms operate through an open market competitive bidding system. However U.S. funding is expected to significantly decrease from at a rate of 10% over the next five years, from USD 55 million in 2009 to USD 45 million in 2010.. The Colombian congress approved Law 80 of 1993, under which procurement of goods and services for security and national defense made in Colombia by local manufacturers, must be purchased over goods made by foreign manufacturers and exporters. In 2002, the Colombian government created a Wealth Tax to collect USD 800 million from large companies or wealthy individuals, 70% of which was used to increase 2002-2003 defense spending. A similar tax in 2007-2011 is expected to collect up to USD 3.7 billion, of which a significant portion should fund defense spending. Through the Colombian Ministry of Finance, the Colombian National House Fund will increase funding of military equipment acquisition over the next five years, up to USD 115 million in 2012 from USD 36 million in 2010. The Colombian Army receives 60% of funding, followed by the Air Force with 25% and the Police with 10%.
The U.S. has had a privileged relationship with Colombia in regards to military equipment acquisitions, with few competitors. The Colombian military tends to use standardized equipment and values relationship, trust and familiarity with equipment (as exemplified by their consistent use of the same type of rifles). However, other foreign manufacturers are gaining market share. Colombia imported USD 213.6 million worth of arms, ammunitions, parts and accessories in 2010, with a 45% increase over 2009 from 16% from 2006 over 2009. Although Colombia imported USD78.7 million of this equipment from the U.S., a 12% increase over 2009; USD 39 million from Israel, a 64% increase over 2009; and, USD37 million from Italia, a 693% increase over 2009. For this segment only, Colombian exports topped USD 4 million worldwide, mainly to the U.S. (USD 2 million), Israel (USD 1 million).
The Colombian military keeps high standards for its equipment, which historically was a great opportunity for American products. However, U.S. could lose market share in the future due to pricing and more competitive bidding from foreign manufacturers. According to the Office of Aviation and Narcotics Affairs’ Aviation Unit (N.A.U.)’s Director, U.S. made equipment is already losing market share for personal arms, with more rifles currently being bought from Australia, Belgium and Russia.
Sub-Sector Best Prospects
The Colombian government will buy eight Blackhawks helicopters (USD 6 million) for the Army and 6 for the Air Force over the next two years. Best prospects include trucks and light armored vehicles (LAV), engines and turbine, military apparel and footwear, fixed-wing and rotary wing aircraft helmets, anti-IEDs (improvised explosive devices), IED and mine detectors, body armor and personal body armor equipment, handheld navigation systems, Unmanned Aircraft Vehicles (UAV), GPS, modern communication systems (MCS), IT-structure platforms, logistics software solutions and software applications, flight simulators, air cruise control, and marine and coastal surveillance systems.
In regards to services, there is a significant need for security assistance, maintenance and assistance to the Army, Police and Air Force. Helicopter and fixed-wing aircraft maintenance and repair services are especially in need. Colombia imported USD 157 million worth of aircraft and helicopter parts in 2010; USD 125 million from the U.S. or 87% from 98% in 2007; USD 8 million from Israel or 5.4% from 0.5% in 2007; USD 6 million from Russia and USD 4 million from the U.K. The Colombian military has potential in the fields of specialized training for all new communications systems, medical training, and environmental training for hazardous material (HAZMAT) management, transport, process and dispose of HAZMAT, expertise in demolition, technical support for reconnaissance and analysis, and security operations.