Latin America's Murky Arms Trade ; Investigators Suspect Vladimiro Montesinos's Swiss Accounts Are Loaded with Money from Illegal Deals

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Investigations into Peru's fugitive former spy chief Vladimiro Montesinos - the mysterious power behind the 10-year regime of former President Alberto Fujimori - are like a window opening onto the world of shady arms sales.

Peruvian investigators, with help from abroad, are figuring out how 10,000 Kalashnikovs from Jordan were diverted to Colombia. And why Peru decided to buy some decrepit MIGs from Belarus. The picture becoming clearer with each new Swiss bank account found is a landscape of corruption and kickbacks surrounding legal arms transactions.

But there is some positive news amid the revelations of dark doings in Peru: Arms purchases in general across Latin America have either dropped off substantially - as in Central America - or have settled at moderate levels, driven by modernization demands. Gone are the days when mutual suspicions among neighbors fed a South American arms race, or when Central America's ideological wars fueled a tremendous arms buildup.

In a survey of transfers of major conventional weapons over the past decade, the Stockholm International Peace Research Institute shows a steep dropoff in arms purchases by Central American countries, with South American countries spending about $1 billion a year since the mid-90s. This makes Latin America the world's developing region with the lowest military expenditure, according to a 1998 report by the Economic Commission for Latin America and the Caribbean, in Santiago, Chile.

The SIPRI study even shows one South American country, Bolivia, coming in 148th out of 149 countries for 1995-99 arms expenditures, spending less than $500,000 during the period.

But the discovery of more than $75 million in Swiss bank accounts linked to the former director of Peru's much-feared spy agency, the National Intelligence Service or SIN, points out how a country's legal arms purchases can turn into a fount of corruption. When basic democratic principles of transparency and accountability are disregarded amid claims of "national security" and "military secrecy," experts here say, the door to influence peddling and illegal enrichment slides wide open.

"We're always told that [arms purchasing] is a national security issue and is only the business of those in uniform," says Cesar San Martin, a criminal-law professor at the Peruvian University of Applied Sciences in Lima. "But we're seeing that transparency is absolutely essential in all aspects of the arms trade." When Congress and an informed civil society have a role in overseeing arms purchasing and sales, he adds, "the kind of problem we're facing now can be greatly reduced."

Commissions from a $1 billion purchase of arms from Belarus and Russia in 1996 - mostly involving old MIG fighter jets and spare parts - were the major source of the Montesinos wealth now coming to light, a Peruvian congressional investigation is finding. Evidence is supporting press reports, denied at the time, of the arms deal that Montesinos, a former military official and Mr. Fujimori's chief advisor, made a deal first with Belarus for obsolete jets. When those planes proved lacking in spare parts Belarus could not provide, Montesinos negotiated an additional purchase with Russia. It appears both deals involved multimillion- dollar commissions that went to Swiss accounts.

Peruvian investigators are also taking a closer look at a case of arms diversion that is casting strong light on proliferating arms trafficking in the region - much of it to feed the Colombian conflict's insatiable appetite for weapons. …