Gun makers at defense fair seek opening of Brazil market

RIO DE JANEIRO (AP) — Gun makers and military industry companies from all over the world gathered in Rio de Janeiro for Latin America’s largest defense and security fair Tuesday, hoping to benefit from Brazil’s new far-right administration and President Jair Bolsonaro’s vow to loosen gun laws.

Brazil, whose gun market remains mostly closed to foreign firms, was expecting some 450 companies and nearly 200 delegations from 80 countries during the four-day expo, organizers said.

“This industry is very relevant for our economic growth,” Brazilian defense minister Fernando Azevedo e Silva said in his opening speech.

Brazil is the world’s third-largest gun manufacturer after the United States and China, according to Brazilian think tank Igarape.

The current administration has sent positive signals to both domestic and foreign companies. In January, soon after being sworn into office, Bolsonaro signed a decree, making it easier for many Brazilians to buy firearms. His party also plans to put forward new legislation that would loosen restrictions on carrying firearms and the number and type of guns civilians can own.

Bolsonaro made public security a centerpiece of his campaign, saying police officers who kill criminals should be decorated, not prosecuted, and promising to overhaul gun laws in the world’s murder capital.

Rio de Janeiro state Gov. Wilson Witzel adopted a similar stance. In an interview on Sunday Witzel said he had already met one of his flagship campaign promises: using sharpshooters to target criminals seen carrying large firearms.

For weapon and ammunition companies this intense focus on public security could represent a significant opportunity. Brazil’s state-run Industria de Material Belico do Brasil (IMBEL), linked to the Defense Ministry, says demand shot up 20 percent following the decree.

“We are seeing various foreign companies, new brands, coming to Brazil,” said Marcel Muniz Costa, the firm’s head of communications told the Associated Press.

Switzerland’s defense technology firm Ruag is one of them. “We are very hopeful with this new administration”, said Ruag Ammotec’s senior vice president, Martin Neujahr. The company has recently decided to make Brazil their new Latin America headquarters.

The company believes the market for small calibers and ammunitions in Brazil to be worth $50 million “or more than all other Latin American countries combined,” Neujahr said.

A representative for a foreign company at the fair, who asked to remain anonymous as to not compromise ongoing negotiation efforts with Brazil, said their prices were four to five time lower than its Brazilian competitors.

“We’re seeing a lot of interest from the police and the army,” the representative told The Associated Press.

But for this to happen, observers and market participants say Brazil must go further and put an end to the near-monopolies domestic companies have benefited from.

“National politicians, lobbyists and weapons manufacturers have also benefited handsomely from subsidies and tax breaks. As a result, Taurus, the country’s largest firearms maker, has enjoyed a virtual monopoly on the production of handguns and rifles,” Robert Muggah, Igarape’s research director, said in a statement.

A historic tie between domestic companies such as Taurus and the army, who must approve the arrival of any outside competitor in Brazil, has not helped the cause of foreign firms. And while President Bolsonaro is clear on wanting to widen access to guns in the country, he sends a dual message on foreign competition, says Brazilian institute Sou da Paz.

“He has traditional links with the army, a very nationalistic institution, which protects this idea that the defense industry is strategic”, said Felipe Angeli, advocacy coordinator at Sou da Paz.

Switzerland’s Ruag for instance has been trying to enter the Brazilian market for several years. Plans to open a new ammunition factory in the country was canceled in 2018, due to intense lobbying in Brazil and a concern in Switzerland that selling ammunitions in an already hyper-violent country could damage the company’s image, two sources told the Associated Press.

High-ranking officials including Brazil’s vice-president, defense and justice ministers were at Tuesday’s event.