On the eve of the presidential elections in Argentina (the second round will be held on November 19), a commercial negotiation with the neighboring country is stirring up behind the scenes in the diplomatic and military spheres. IVECO (also known as Iveco Defence Vehicles) is lobbying the government, particularly the Minister of Defense, José Múcio, to ensure that Brazil closes the terms for the sale of the Guarani armoured vehicles produced in Sete Lagoas (MG) to the Argentine Army by the end of November. By terms, we mean, above all, financing from the BNDES, a fundamental condition for Argentina to be able to finalize the order.
According to Relatório Reservado (RR), in an attempt to make the operation viable, the company and the Brazilian government are already working on the possibility of splitting up the order. In this case, the bank would finance a first tranche, involving the sale of half of the 161 vehicles originally planned – which would mean a contract worth around R$1 billion.
The timing is fundamental. The negotiation was directly linked to the October 22 elections (with the leadership of government candidate Sergio Massa, the situation has improved) in Argentina. IDV is trying to create a fait accompli, a hedge in case opposition candidate Javier Milei wins the elections. During the campaign, the far-right candidate has repeated that he will considerably increase spending on defense.
He even talks about returning to levels of 30 years ago, when the country invested almost 2.5% of GDP in the sector – today, this figure is no more than 0.8%. However, with regard specifically to the project to buy new armored vehicles for the army, Milei is incognito. So far, he has given no clues as to what he intends to do.
The risk is that, once elected, he will see the operation more as his political than military uniform. The deal was reasonably stamped as an agreement between Lula and Alberto Fernandez, above all because of the guarantee of funding from the BNDES.
The negotiations to close the contract are complex. They involve not only Iveco, the manufacturer of the armored vehicles, but also diplomatic and military channels between the two countries. The Brazilian Army is directly involved in the negotiations.
In May, the commander of the Army, General Tomás Miguel Paiva, was in Buenos Aires to discuss the matter with his Argentine counterpart, General Guilherme Pereda. In addition to working on an important operation for the Brazilian defense industry, the Army has a special interest in the agreement: the holder of the rights to the Guarani, the institution could collect up to R$140 million in royalties if the 161 vehicles are sold.
In time: there is an additional component to this plot. In IDV’s view, the Lula government has a “debt” to honor. In July of this year, Itamaraty’s Department of Strategic Affairs, Defense and Disarmament vetoed the negotiation of 450 Guarani vehicles for Ukraine. The vehicles were to be converted into armored ambulances.
To this day, the reasons for the decision have not been clarified by the Brazilian government. The Foreign Affairs and National Defense Committee of the Chamber of Deputies has already asked Itamaraty to explain the reasons for the veto. The fact is that IDV missed out on a contract worth up to R$3.5 billion.