The French daily La Tribune heralded, before Macron’s departure, that even when the stated purpose of the trip was to attend the G20 Summit and to reinforce ties and collaboration with Brazil, Argentina and Chile – France’s main trade partners in South America – the agenda also included advocating for sales of Scorpene type diesel-electric submarines developed by French ship builder Naval Group.

Macron flew first directly to Argentina, where he held meetings with President Javier Milei between Nov. 16 and 17. Local military sources, talking on condition of anonymity to describe internal deliberations, told Defense News that Macron pledged his support for Argentina’s plans to procure three Scorpene boats, worth $1.5 billion.

The Argentine Navy badly needs the boats, as the service has no fully working submarines, sending its specialist submariners to Peru for training and to keep proficiency.

According to the local sources, Argentine Defense Minister Luis Petri signed a letter of intent for the purchase during a visit to Paris in October, kicking off negotiations over the particulars.

Meanwhile, the government has asked parliament for authorization, within the budget law for 2025, to take a multiyear loan of $ 2.31 billion. This amount is intended to include both the procurement price of the three submarines, as well as a debt service of $800 million, roughly 55% of the value of the boats.

After Buenos Aires, Macron flew to Rio de Janeiro in Brazil for the G20 Summit, where he met the host, President Inazio “Lula” da Silva, to discuss a potential follow-on order for two additional Scorpene type boats.

Under a $10 billion deal agreed in 2009, Brazil ordered four submarines of the same type, a deal that is close to delivering all boats. The contract includes technology-transfer provisions, enabling the country to build components at home.

Brazil’s Scorpene type boats are locally built by Itaguai Construçoes Navais, jointly owned by the Brazilian government through Emgepron (59%) and Naval Group (41%), including a substantial number of components imported from France.

Finally, between Nov. 20 and Nov. 21 Macron also visited Chile, which was the first export customer of Scorpene submarines with an order for two boats in 1998. Chile is set to launch a tender in 2026, potentially worth $1 billion, aimed at replacing older, German-built submarines.

The latest development in the procurement saga is that a Letter of Intention (LoI) was expected to be signed by middle of October, but negotiations over the financial details are taking more time, these sources said, speaking on condition of anonymity to discuss sensitive deliberations.

While France is willing to grant favorable credit conditions, Argentina is having trouble satisfying loan guarantees demanded by banks involved in the deal due to the country’s troubled financial history, according to the sources.

The effort to buy new boats is driven by the fact that the Argentine Navy has virtually no serviceable submarine today. ARA San Juan, one of its two TR-1700 type boats built in Germany in the 1980s, was lost in South Atlantic waters near Cape Horn in November 2017. Meanwhile, refitting and upgrade work on sister ship ARA Santa Cruz, which started in 2016, has been suspended since 2020 and is now virtually cancelled.

ARA Salta, an aging German-built Type 209, remains in service only as a platform for basic training, as she boat cannot dive. For more advance specialist training Argentine crews are being currently sent to spend time with the Peruvian Navy.

Vicente García, an independent security and defense analyst based in Montevideo, Uruguay, says the Argentine sea service needs new submarines “without any doubt.” But the government should be mindful of cost, considering that the other military services also have modernization requirements, he added.

In that context, García said, an initial buy of pre-owned boats would make more sense.

Administrative reductions and cuts in social services pushed by President Javier Milei have yet to prove that they can grow the country’s fiscal liquidity, García added.

“Argentina’s country risk assessment remains high and with between 53% and 57% of the population under the line of poverty, there is a potential for social convulsion and political instability, which can lead to a deterioration of the economy.”

As F-16 fighter jets and P-3C maritime patrol aircraft have been recently acquired second-hand from Denmark and Norway, for the Air Force and Navy, respectively, the modernization of the fleet of TAM medium tanks of the Army has also gained momentum this year.

Besides submarines, the current shopping list also includes frigates for the Navy, wheeled armored vehicles for the Army, helicopters for the three services, and a new standard assault rifle.

According to military sources in Brasilia, who spoke to Defense News on condition of anonymity to discuss internal deliberations, the project remains “frozen” but not formally canceled.

“President da Silva has signed no executive order, neither to cancel the procurement of ATMOS 2000 nor for reopening the tender to select and negotiate another solution”, one source said.

The government in May picked Elbit to deliver 36 ATMOS 2000 self-propelled howitzers in a deal worth $210 million.

The sources said that both the Minister of Defense, Mr. José Múcio Monteiro, as well as the Army chief, Gen. Tomás Miguel Ribeiro Paiva, are working to unlock the project. They hope to persuade the left-wing president to proceed with the deal, which would provide two howitzer samples for testing.

Military officials believe picking another vendor would increase the delay and have a negative impact on several local companies, which have signed agreements with Elbit to participate in the production of parts and the final assembly of the weapons.

Officials at Brazil’s Ministry of Defense and the Army did not return a request for comment.

The decision to procure ATMOS 2000 capped a tender process for the service’s VBCOAP program, short for armored self-propelled howitzer in Portuguese. The other vendors competing under the tender were France’s KNDS with the Caesar, an alliance between Slovak Konštrukta Defense and the Czech Excalibur with Zuzana 2, and China’s NORINCO with the SH-15.

Meanwhile, tensions between Colombia’s government and Israel, also fueled by the Gaza war, have had no effect so far on an order for 18 Atmos 2000 worth $102 million, placed early in 2023 by the South American country.

The more detailed confirmation follows a hint from the president during a June 20 event in the capital. In front of attendees, Argentine President Javier Milei asked Defence Minister Luis Petri: “Is it true that we will have new toys?”

“Yes, Mr. President,” Petri replied. ”We will start receiving the modernized tanks this year.”

The program is expected to be worth $30 million and involve the modernization of 74 of Argentina’s existing 200-plus medium tanks by 2027. The initial budget for this effort is $3 million, but the government plans to allocate more money between fiscal 2025 and fiscal 2027, the sources said, speaking on the condition of anonymity because they were not authorized to discuss the program.

Argentina launched the tank upgrade project in 2010 under a cooperation agreement with Israel where Elbit Systems would provide technological support to the South American country. For its part, Argentine private firms involved in the metal mechanic sector would participate.

The initial budget was approved in 2021, and contracts were finalized by July 2023 following a technical and operational evaluation of the final prototype. Work started in late 2023.

“One of the main priorities of President Javier Milei is rebuilding the capabilities of Argentina’s armed forces, neglected by governments since the 1980s and 1990s, and even more after the financial meltdown of 2000,” according to Emilio Meneses, an independent analyst based in Santiago, Chile.

“Milei wants to make a difference. The recent procurement of F-16s, coupled with the decision to phase out older fighter jets like the A-4AR and the Super Etendard, confirms his priorities — and it is the same with the upgrade of the [medium tank],” Meneses told Defense News.

According to the military sources, the Army would like to modernize up to 50 more medium tanks over those already earmarked in the current program.

What are the upgrades?

The tank modernizations are expected to improve the 2CA2 medium tank’s detection, targeting, engagement and destructive capabilities. To that end, Elbit is providing a new fire control system and associated technology.

The main local subcontractor, IMPSA, which specializes in precision engineering and the production of components for nuclear reactors, is refurbishing and modifying the turrets, replacing the original hydraulic action system with a new, indigenously designed servo-electric version that includes improved stabilization and reaction.

IMPSA is also integrating the new fire control and subsystems provided by Elbit. These include the Israeli firm’s E-LAWS laser warning system, which can simultaneously detect up to 10 threats, establishing an order of priorities for engagement.

Each tank is to receive two COAPS-L sight systems — one for the tank commander position and one for the aimer — fitted with optronics for thermal detection and vision as well as laser range-finding. The systems provide a day and night, all-weather capacity for target acquisition and tracking. The driver position is being fitted with a thermal vision system.

They will also receive a new communications suite, both for internal and external communications, with data transfer capabilities, as well as an auxiliary generator to secure electricity supply for electronic systems.

The tank’s main weapon is not changing; it is currently a Rheinmetall-made RH-105-30 105mm gun, manufactured under license by the local state-owned firm Fabricaciones Militares.

Protection improvements are currently on hold. However, the plan is to use a custom-designed, add-on applique armor proposed by Israeli company IMI, which is now a part of Elbit.

Arsenal Battalion 602, the Army’s main maintenance and support center for mechanized equipment, will use its facilities at Boulogne-Sur-Mer to complete any remaining work, testing and acceptance efforts of the upgraded tanks.

The vessels are part of Peru’s ambitious program to modernize its naval surface fleet, which may involve the construction of 23 ships of different types, an effort potentially worth more than $3 billion. The South American country’s primary focus is to acquire six advanced multipurpose guided-missile frigates to replace the six aging frigates that currently serve as the Navy’s main surface combatants.

The finalized deal, which follows Peru’s pick of Hyundai Heavy Industries in March, will see the company provide both the designs and support for the construction of the vessels, with the delivery deadline set for 2029.

“We will mobilize our advanced technological capabilities and extensive experience to modernize and enhance the combat capabilities of the Peruvian Navy,” Joo Won-ho, the head of HD Hyundai Heavy Industries’ naval and special ship division, said after the signing of the contract.

HHI will be in charge of the ships’ designs as well as the provision and supply of tools, materials and technical support during construction. With this contract, the South Korean firm is expanding its footprint in a regional market traditionally dominated by European shipbuilders.

Peru is to receive a 3,400-ton guided-missile frigate, a 2,200-ton offshore patrol vessel and two 1,500-ton landing ships. The local state-owned firm Servicios Industriales de la Marina will participate in their construction at its shipyards in Callao.

“We will ensure that the SIMA shipyard, which has provided us with the opportunity to collaborate from the other side of the globe, possesses sufficient shipbuilding capacity and establish it as [our] hub for Central and South America,” Joo said.

Frigate replacement

The six 2,500-ton frigates the Navy wants to replace are based on the Italian Lupo-class design; two were built in Peru. For the most part, they have been in service for nearly five decades.

The Peruvian government approved the frigate replacement program in February 2023, with an initial budget of $161 million following studies and discussions that began in 2015. In July 2023, SIMA was named the prime contractor for the program. At the same time, it was unveiled the Spanish firm Escribano Mechanical and Engineering would serve as a subcontractor supporting weapons integration.

According to Lewis Mejias, an independent defense analyst based in Peru’s capital Lima, the contract confirms “the leadership of SIMA Peru as one of the most capable shipyards in the South Pacific. It will also open more opportunities for the participation of other local companies supplying systems, parts and services. This is one of the main targets of the government, with the aim to get advanced technology transferred and new jobs created, strengthening Peru’s industrial capacities not only in the maritime field but also beyond that field.”

A source in South Korea’s capital Seoul, speaking on the condition of anonymity to discuss specifics of the military program, told Defense News the frigate HHI is to produce is based on the hull of the Daegu-class frigate built for the South Korean Navy, but tailored to meet Peru’s needs. Those requirements including an enlarged stern to fit a hangar and allow for the flight of 12- to 14-ton helicopters.

It’s unclear if the Peruvian ship will include the same combined diesel-electric and gas propulsion of the South Korean vessels.

According to the source, the frigate will be fitted with a 3D active electronically scanned array radar, which Peru has not yet selected.

The South Korean company Hanwha is promoting the SAQ-600 combat management system, the SQS-250K towed array sonar and the SQS-240K hull-mounted sonar, the source said.

For weaponry, the source added, South Korea’s LIG Nex1 and Hanhwa are proposing the Haegung K-SAAM surface-to-air missile. LIG Nex 1 is offering the SSM-700K C-Star/Haesong anti-ship missile and the Sea Dragon/Haeryong land-attack cruise missile. The Peruvian Navy is expected to fit a gun to the frigate, either a 76mm/62-caliber or a 127mm/54-caliber option.

The head of the Air Force, Gen. Marcelo Kanitz Damasceno, and the chief executive of Embraer Defense and Security, João Bosco Costa Jr., attended the company’s announcement during the FIDAE air show, which runs April 9-14 in Santiago, Chile.

During the presentation, a backdrop showed a C-390 Millennium transport aircraft, a type in service with Brazil, labelled as a maritime patrol aircraft and carrying anti-ship missiles.

The Air Force has started looking for options to replace its P-3AM Orion maritime patrol aircraft beginning in 2031, a military source in the capital of Brasilia told Defense News.

Already, companies appear keen to win a potential contract. Apart from Embraer’s announcement, the American firm Boeing put out a news release just ahead of the air show that emphasized its history in supplying the region with defense platforms.

At the show itself, Tim Flood, Boeing’s senior regional director for international business development in Europe and the Americas, specifically pointed to Brazil as the first potential customer in the region for the P-8, according to an article from Janes.

French defense firm Airbus also attended the show, promoting its C-295 twin turboprop maritime patrol aircraft. The Air Force already operates 10 of them in a maritime search and rescue role.

“A decision is set to be made by 2026,” the military source told Defense News, speaking on the condition of anonymity due to the sensitivity of the topic. “If the idea of developing a C-390 MPA is favored, there will be no tender, and a contract will be awarded to Embraer soon instead.”

“If not, a tender for bids will run between 2026 and 2027. The target will be to acquire a minimum of six aircraft, spread in two batches, with [the cost] under current estimations — if P-8 or an equivalent is selected and ordered — amounting to $3 billion,” the source added. “Deliveries of the new MPAs would start in 2031, to be completed in 2036.″

Why now?

The exploration and refinement of substantial reserves of oil and natural gas in Brazil’s littoral areas in the late 1990s drove the country to bolster its maritime surveillance capability, with the Navy and Air Force both playing critical roles.

However, the Air Force’s maritime patrol fleet at the time — the small, twin-engine turboprop Embraer P-95 Bandeirante, a version of the Embraer C-95 Bandeirante fitted with a nose-mounted AN/APS-128 radar — lacked the necessary range and endurance, among other capacities.

In the early 2000s, Brazil purchased 12 former U.S. Navy P-3A maritime patrol aircraft. The transaction was followed by a contract award to the Spanish company CASA, a subsidiary of Airbus, to refurbish and upgrade the aircraft. The plan was to modernize eight of them to more closely match the P-3C, with the remaining set of four used as a source of spare parts. They would be known as P-3AM aircraft.

The work led to an increased range and a 16-hour endurance, as well as the fitting of a new mission system built around the Airbus-made Fully Integrated Tactical System. The aircraft also received electro-optical, acoustic and magnetic anomalies sensors. They were also integrated with Boeing’s AGM-84L Harpoon Block II anti-ship missiles.

The P-3AM began entering service in 2011, with the last one delivered in 2014.

But according to the military source, the P-3AM fleet’s maintenance costs have increased substantially in recent years. To keep the P-3AM fleet operating would require “a substantial investment,” the source added, plus they would need upgraded mission systems, driving the cost higher.

Noting “older platforms also have limitations for capability growth,” the source said Brazil decided “to procure a new aircraft with a larger life service span, and also with a wider margin to grow capacities in order to meet future requirements.” This approach, the source added, would be more cost-effective.

“Options are being explored, and the idea to develop an MPA version of C-390 is popular, but it is yet to be seen if it is technically and financially feasible. To bring other nations and firms onboard, as customers and industrial partners, may be necessary,” the military source said.

Denmark is replacing its F-16 fleet with new F-35 jets, both of which are made by the American company Lockheed Martin.

Argentine Defense Minister Luis Petri and his Danish counterpart Troels Lund Poulsen signed a letter of intent for the sale in Buenos Aires on March 26. The U.S. ambassador to Argentina, Marc Stanley, attended the event.

“Denmark is donating 19 F-16 jets to Ukraine, and the government has decided to sell 24 Danish F-16 jets to Argentina,” Lund Poulsen said in a statement, describing the transaction as a “possible sale.”

“The decision to sell the Danish jets to Argentina has been carried out in close collaboration with the American government, who has approved the sale of the US produced aircrafts,” the Danish Defence Ministry noted in the statement.

Local military sources in Buenos Aires, speaking to Defense News on the condition of anonymity due to the sensitivity of military deals, said Argentina will pay $320 million for the acquisition. They also said banks and the U.S. will provide loans to help finance the deal, which not only includes the aircraft but also weapon systems and other equipment made by U.S. businesses. Denmark is also set to provide simulators and a spares.

Those sources added that the final contract will be signed by the end of April in Copenhagen.

The U.S. Defense Security Cooperation Agency will manage the sale and transfer of weapon systems such as AIM-120 advanced medium-range air-to-air missiles, under the Pentagon’s Foreign Military Sales program.

Denmark’s Acquisition and Logistics Organisation will handle the transfer of surplus F-16s, while the Argentine military’s logistics directorate will surpervise the procurement process.

Negotiations for the deal, which began under Argentina’s previous government led by then-President Alberto Fernandez, also considered the procurement of newly built Chinese/Pakistani-made JF-17 fighter jets.

The potential acquisition of the JF-17 was rejected over concerns it could jeopardize relations with the U.S. military.

“It is very doubtful, actually unlikely, that the Ministry of Defense is going to receive the funding it needs to modernize and upgrade the capabilities of the military forces. The new government will soon come under the pressure and funding demands from other public sectors more important to voters, which will be impossible to ignore,” retired Argentine Army Col. Guillermo Lafferriere, an independent analyst based in Buenos Aires, told Defense News.

Indeed, during his Dec. 10 inauguration, President Javier Milei told the public to prepare for a painful shock adjustment with drastic public spending cuts. He has since appointed a new defense minister, Luis Petri, who worked as a lawyer and has security experience.

The president also brought on Patricia Bullrich, a longtime politician and first-round adversary from the coalition with the second most seats, as security minister. She held that same position during the administration of President Mauricio Macri, which lasted from 2015 to 2019, and is a staunch defender of military involvement in internal security.

During his campaign, Milei promised to modernize Argentina’s defense by improving military equipment and infrastructure, strengthening training, and adopting new technological and operational capabilities.

He also said his administration would review and update the country’s defense policy to better reflect the geopolitical environment. Milei has noted one focus of the new policy is to increase international collaboration to bolster Argentina’s relations with the United States and other Western nations.

And the new defense minister expressed an interest in sending Ukraine two Russian-made Mil Mi-17 helicopters currently in the Argentine Air Force’s inventory — another signal the nation is leaning Westward.

Lafferriere agreed the government should focus on improving the military, but warned a policy change will be a “tall challenge.”

“After several decades of being politically and financially neglected, the Argentine armed forces need not only to be reequipped but also to be reconverted. As they have fallen behind, their doctrine, organization and deployment are all today obsolete,” Lafferriere said. “The first step should be to make a deep review and update of the national defense policy. But I cannot see that the new government has the will to tackle such tall challenge, which has been avoided before by successive governments since the 1990s.”

But funding is also a problem, according to Sergio Eissa, the national training director at the Defense Ministry and a professor at the National Defense University in Buenos Aires. Eissa told Defense News that, after lawmakers rejected the previous government’s proposed budget for fiscal 2024, the new administration will likely have to use funding levels from fiscal 2023.

“The problem is that if the amount approved for 2023 is used, its real value will be a lot lower than it was in that year as a result of high inflation,” Eissa explained. “Before any modernization and development of military capabilities is undertaken, there is a need to revise the national policy of defense, to define the kind of armed forces and military capacities Argentina needs from now and toward the future. That must be the first step.”

The Associated Press contributed to this report.

The deal, unveiled Oct. 31, will see those F-16AM/BM Block 15/20 MLU aircraft modified to the M6.6 standard. A Lockheed spokesperson told Defense News the program will provide an advanced identification friend or foe capability and the Link 16 tactical communications system.

The upgrade work is to take place in Fort Worth, Texas, and Greenville, South Carolina, as well as at Chilean Air Force maintenance workshops at Santiago and Antofagasta, according to the Pentagon and Chilean military sources. Lockheed will complete the project by Nov. 30, 2032, the department’s announcement added.

The upgraded aircraft are expected to operate until the early 2040s, the sources told Defense News on the condition of anonymity due to the sensitivity of the topic. They added that the contract is simply the start of this upgrade program and that more spending and deals are likely.

Previous plans involved installation of active electronically scanned array radars, but that’s no longer the case because the current analogue radars on board the jets are now supplemented by situational and targeting data, provided in real time by E-3D Sentry airborne warning and control aircraft acquired from the U.K. in 2022.

In 2019, the Chilean Air Force requested funding to launch the F-16 upgrade program the next year. At the same time, the U.S. State Department was working on authorization for the export of related systems and parts to Chile. But the Chilean government denied the funding on technical and financial grounds, instead calling for the service to to request money in the 2021 national budget.

The State Department in 2020 approved related sales, but the Chilean government postponed the project amid the COVID-19 pandemic.

Chile ordered a total of 36 F-16 MLU jets from the Netherlands in two separate batches of 18 each in 2005 and 2009. Chile received the last aircraft in 2011. All the jets are serviceable, but two airframes are used for training technicians and ground crews.

The new platforms are to replace a fleet of 160 six-wheel drive Mowag Piranha armored vehicles, built locally under license by Cardoen Industries in the 1980s and assigned to infantry units in central Chile.

Several companies, including the United States’ General Dynamics Land Systems, Italy’s IVECO, Finland’s Patria, and Turkey’s Otokar and BMC, have expressed interest in the potential contract, worth $111.8 million.

Chile plans to award and finalize a contract within the first trimester of 2024.

The potential business derived from winning this contract goes beyond its initial financial worth, as the country is seeking more than 200 armored vehicles in the long term, according to military sources in Santiago, who spoke to Defense News on the condition of anonymity because they were not authorized to talk to the press.

The government had considered buying secondhand vehicles or local production under license, but it ultimately dropped that approach. Now, the requirements are for brand new vehicles with a maximum weight of 38 tons, with all equipment, including weapons and communications systems, fitted to the platform.

That maximum weight requirement — more than triple the 11-ton weight of the Piranha vehicles — reflects Chile’s expectation the new vehicle offer far higher levels of survivability and protection to the combat troops onboard.

The country also requires the vehicle meet the NATO STANAG 4569′s level 3 standard. That means the vehicle’s body must resist grenade and mine blasts with up to 8 kilograms of explosive, and resist impacts of 7.62mm х 51 armor-piercing bullets with a tungsten carbide core at a maximum distance of 30 meters with a velocity of 930 meters per second.

Chile also requires that same standard’s level 3A, which means the vehicle can survive a mine or improved explosive device blowing up under any wheel. In addition, the platform must meet level 3B specifications to survive the same type of explosion under the center of the vehicle’s hull.

The vehicle should use a Euro III diesel engine with a power of at least 550 horsepower and carry enough fuel to travel 500 kilometers (311 miles). It should also fit a driver, a radio operator, a commander and eight infantry riflemen.

The vehicles included in the anticipated order, besides four command post vehicles, should include a remote controlled weapons station featuring a M2 .50-caliber machine gun and a Mk 19 automatic grenade launcher. All vehicles are to be fitted with optional 7.62mm machine guns and two quadruple smoke grenade launchers.

Chile began considering a replacement for its Piranha vehicles in the early 2010s, but the transfer of half the fleet to the uniformed national police since 2018 added an urgency.

The police force, known as Carabineros, deployed their Piranha vehicles in a so-called macro-zone south in southern Chile, where Indigenous people of the Mapuche group are rebelling against the Chilean government’s use of land. The Army has also deployed its Piranha vehicles to the southern region, where special forces and infantry troops have supported the police there since 2020.

This first batch of new armored vehicles are to be assigned to the 1st Infantry Regiment “Buin,” based in Santiago. The regiment provides one mechanized infantry battalion to the Southern Cross, a joint Chilean-Argentine formation made available for U.N. peacekeeping and humanitarian operations.

But the future fleet’s headquarters is to be on Peldehue military camp, a large training ground north of Santiago. From there, the vehicles will be available for training infantry troops from other Chilean Army units.