SECRET UK EYES A
present lines but slightly expanded (and steering away from a rotary wing capability), and the land force expanding and becoming more mobile and flexible with perhaps a small field engineer capability. We continue to nurture the BDF and have recently secured a place for Belize on the 1993 ASC. Defence funding for the BDF has been earmarked for the next 3 years.
SOUTH AMERICA
REGIONAL DEVELOPMENTS
8.
Despite the harmful debt burden carried by SO many countries in the region, relations between the military and their civilian governments appear stable notwithstanding strains resulting from reduced defence budgets and a general loss of status of the military within society. MOD's primary interest in South America and the South Atlantic remains coloured by Falkland Islands and UK/Argentine relations. Our principle objectives in the region therefore remain the implementation of the security and confidence building measures agreed between the UK and Argentina, and to strengthen relations with countries in the region which are important in the Falkland Islands context, namely Argentina, Chile, Brazil and Uruguay. In this context, the return of our DA to Buenos Aires has significantly improved our intelligence cover of the Argentinian political and military
scene.
9.
There has been considerable improvement in Argentina's position internally, internationally and in bi-lateral relations with the UK during 1990/91. Internally, the democratic process has been consolidated and the economy shows a positive trend to recovery. In the wider international arena, Argentina has reversed her traditional isolationist stance by contributing to debates on such issues as human rights and by sending warships to the Gulf in support of the Allied Coalition.
Border disputes with Chile have been resolved. This has improved her relations with a number of countries, including, most significantly, with the USA.
10. In contrast to the general trend of South America where reduced defence budgets and high inflation are further reducing prospects for defence sales, Brazil and Chile continue to offer significant prospects. Brazil, with its strong industrial base and flourishing defence industries, has the potential to become a considerable military power. Visits by HM Ships to Brazil have been welcomed and routine aircraft diversions on the Ascension-Falklands route have been accepted without difficulty. Relations between the UK and Chile continue to flourish and although the latter welcomed a visit by the Falklands Island Guardship in September 1991, she remains sensitive to doing anything which would upset Argentina. Uruguay's unique position in the UK/Argentine/Falklands sense makes our relationship with her particularly important, and we continue to nurture her understanding of UK's policy towards the Falklands and to encourage her to help in forging links between the islands and the mainland.
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D-A
Secret UK EYES A