The announcement was made by the U.S. Defense Security Cooperation Agency, which notified the U.S. Congress of the Chilean request last week.

Chile has had longstanding political and economic ties with the United States. As the country's strongest trade partner, the United States has boosted bilateral trade ties by 154 percent in the last three years.

The United States' dominance in the arms market, however, has dwindled with the South American country preferring European defense suppliers in recent years.

This latest foreign military sale, however, is expected to tilt that balance, primarily benefiting U.S. defense contractors Boeing, Raytheon and Thales Raytheon Systems.

The contracts will include Sentinel Radar systems, HMMWV-based Avenger fires units and Stinger anti-aircraft missiles, as well as 100 AIM 120C-7 Advanced Medium Range Air-to-Air Missiles.

Those missiles alone -- estimated at $145 million -- are expected to support Chile's designs to buy a fleet of U.S. made F-16 fighter jets.

"Chile intends to use these assets and services to modernize its armed forces and expand its existing air defense architecture to counter threats posed by air attack," defpro reported this week.

"According to the DSCA, these systems will contribute to the Chilean military's goal of updating its capability while further enhancing greater interoperability between Chile and the U.S. and other allies," it added.

Should the sale be completed, Chile will join Brazil as the only nations in South America to own such medium-range air-to-air missiles, capable of destroying planes up to 60 miles away.

A decade ago Peru purchased a Russian model of the same weapon, stirring a balance of military power controversy in Peru.

The Pentagon denies similar allegations regarding Chile's missiles purchase.

"This sale will contribute to U.S. foreign policy and its national safety," a Pentagon statement said. "It will help improve the security of a friendly country that has been and will continue to be an important force in political stability and economic progress in South America."

Experts say Ecuador, Venezuela and Brazil are also eyeing similar military hardware, but not from the United States. Local media said the arms search was focused on Russian, French and Chinese manufacturers.

U.S. Secretary of State Hillary Clinton recently expressed concern over such prospective purchases, saying they signaled the start of a regional arms race. Latin American leaders, however, have denied the claim.

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