With World Bank Loan in Hand, Argentina Moves Ahead to Reorganize Its Military

ARGENTINA moved closer to the long-promised reform of its defense complex this week with the reorganization of three Defense Ministry departments.The reorganization follows last month's news of a $250 million World Bank loan to the Argentine government for the restructuring and privatization of the country's defense industries. It also follows within a month of a highly publicized trial in which the leaders of a December military rebellion by the so-called "painted faces," were convicted by both civilian and military courts. "The reform should begin today," Military Affairs Secretary Juan Ferreira Pinho said Tuesday in a telephone interview. It is "a new phase, with more implementation rather than planning." Appointed Monday as secretary for military affairs, a newly created post within the Defense Ministry, Mr. Pinho is responsible for three factories that make explosives, munitions, and weapons. These will not be sold to private investors but may take on outside partners. Another new secretariat will oversee the privatization of steel, petrochemicals, shipping, and other factories that belong to the defense establishment. The two new departments replace three former ones. Political analysts say the reform is coming because of pressure from President Carlos Saul Menem, who is reported to be unhappy with the slow pace of defense restructuring. Altogether, the armed forces own part or all of 33 companies employing 33,000 people, though many layoffs are now expected. The restructuring is to be completed by the end of 1992. "The international and regional political situation is leading the armed forces to change their objectives, mission, and reality," says Pinho, referring to the spread of democracy and growing regional economic integration. Beginning in the 1940s, Argentines felt they must be able to produce their own defense equipment, but this idea has changed, especially as the military has played a smaller political role. Argentina has experienced six military coups since 1930. The last one, in 1976, led to a violent internal war and the 1982 Falklands War with Britain, which was a disaster for Argentina. When civilian President Raul Alfonsin came to office in 1983, he made drastic defense cuts. The World Bank loan, details of which must still be worked out, is to be disbursed sometime after June 1992, says Ana Kessler, the Defense Ministry's new undersecretary for restructuring and management. Until then, the government hopes to obtain a loan from private banks to fund the restructuring. The privatizations, she says, should bring in from $5 billion to $10 billion and will also provide considerable savings. With the savings and inflow of funds, the ministry plans to reequip the armed forces. Pinho says the objective is to reduce the size of the military, make it more agile and less geographically spread out, and to use budget resources more efficiently.