Rheinmetall is a German company that last year partnered with the state group Ukraine Defense Industry to open an armored manufacturing and repair center.
It recently announced that it will also build and operate a munitions factory on Ukrainian soil through a company that will have it as the majority shareholder with 51% of the shares. Rheinmetall is not a company, as such believes the Libertad Avanza deputy, Rocío Bonacci, it must be Tandanor, Fabricaciones Militares, the Space Vehicles company VENG or the FADEA Aircraft Factory.
Nor is it an industry run by militaries
,
as promoted by the Secretary of National Strategy, Brigadier Jorge Antelo (who, among his mysterious functions in the Chief of the Cabinet of Ministers, is also a member of the new FADEA board) and the Ministry of Defense staff.
The existence of a Secretary of Research, Industrial Policy and Production for Defense
refers us to a Soviet vision
or - at least - to the idea of import substitution. Incredible. They are statists in a libertarian government.
President Javier Milei is carrying out a “cultural battle” for capitalism and its success is so great that even Cristina Fernández de Kirchner says she supports a new privatization model. YPF is his lighthouse. A breakthrough. She ends up being more privatizing than some of the President's own in his cabinet and political force.
The German giant is willing to take risks in Ukraine, a country subjected to bombing. Of course, Rheinmetall has adopted such a decision because there is a business prospect.
An expansion plan offered to its investors to make money.
No one will accept to invest in Argentine state companies in the condition they are in today, with the legal-legal framework, the local macroeconomic conditions and with such precarious management that it does not even know how to outline an attractive business plan. We have to fix all this.
Argentina has more risk than Ukraine. That's our reputation.
According to Thomas Scheetz, from 1994 to the present Argentine military spending was about US$100 billion. Two loans from the International Monetary Fund. In almost 30 years,
the average personnel expense was 80%
. In this series, current military spending in dollars was unstable.
There were 9 years with expenses between 4,000 and 5,500 million dollars, 14 years pivoting at 3,000 and 5 years around 1,000. This implies that we had 9 years spending like Chile; 14, like Peru and; 5 years among those who spend the least in South America.
But the persistence of personnel spending is striking. Immovable. As the international standard is 60% in that area, 20% in operations and maintenance and 20% in acquisitions of capital goods,
defense has only been a salary expenditure
consuming capital stock with minimal operations.
An anarcho-capitalist would eliminate this expense instantly
and privatize its function with mercenaries or with a protection alliance with some power. He would be cheaper for us and we would perhaps have a better defense. Of course, two politically unviable options today.
According to Scheetz, military spending accrued in 2022 was about US$5 billion. If the optimal standard for defense had been followed, this would have meant spending that year US$ 3,000 million on personnel, US$ 1,000 on operations and maintenance and US$ 1,000 million on acquisitions (the equivalent of obtaining a new submarine).
There is no doubt that military spending will liquidate this year. But if the structural reforms were carried out while maintaining an administration in accordance with the indicated parameters, then yes, only then could we be in a position to have an attractive scale of demand for goods and services and
companies in the sector could take a leap to be subject to of interest to be privatized.
We have to be realists. All operations and maintenance expenses in 2022 were about US$300 million and capital goods expenditure was US$150 million. Marginal numbers. Lockheed Martin left FADEA because of this. With these numbers, would Rheinmetall be interested in being a minority partner in Military Fabrications? You would have to ask Bonacci and Antelo.
Defense needs chainsaw.
End the “fat” of its anachronistic military bureaucracy.
You don't have to invent anything extraordinary. Have a new design of forces in accordance with the threats and financial possibilities of obtaining, sustaining and enlisting them, closing units, resizing complementary services, concentrating deployment, using reserves to reduce the active professional staff as much as possible, changing doctrine, having an operational reform that end with redundancies, a logistics reform to optimize costs and lay off a lot of civil and military personnel so that spending in that area is reduced by quantity and not by salary.
Less earning well than many earning little.
Recently, the US Army announced a personnel reduction of 5% (24,000 less) for technical reasons that would be impossible to achieve here, for now, due to resistance to change and professional ignorance and the interests of the current conduct of the defense.
We need about 35,000 less.
This is the secret and the only possible path. You cannot be half capitalist or libertarian. Four months of inaction have already been lost with a Minister in pure disguise, many selfies and too much Instagram.