Last year President Luiz Inacio Lula da Silva announced a government-led revival of the armaments industry, which peaked during dictatorship years in the 1970s and 1980s but slumped at the end of the Iran-Iraq war in 1988.

Lula's comments have indicated the aim of the defense industry's revival is three-fold: to open a new source of export revenue; to make Brazil self-sufficient in some of the frequently used equipment within its burgeoning armed forces, and to reassert the country's pre-eminence in Latin America.

Brazil has campaigned for a permanent seat on the Security Council as part of the effort to assume a leadership role in the region. Diplomacy and good manners have kept Brazil's neighbors quiet about Lula's ambitions, but a proactive foreign policy has involved vigorous contacts with distant partners like China, Iran and Russia.

Lula's recent arms-shopping initiatives have also put extra emphasis on purchases accompanied by transfer of technology. Current talks with France include agreement on the joint manufacture of a nuclear-powered submarine, with French help.

This week Brazil announced it would enlist the help of Fiat Iveco to manufacture 2,044 armored vehicles after a $3.5 billion contract signed under Lula's National Defense Strategy program.

General Enzo Martins Peri, commander in chief of the Brazilian army, said a new armored vehicle prototype, Guarani, will take over the old Urutu model that was manufactured in Brazil and exported widely in Latin America, Africa and the Middle East. It was not immediately clear what components in the new vehicle will be based on Italian technology.

Brazil has already announced targets for exporting the manufactured vehicles.

Peri said the development of the new vehicle would contribute to "self sufficiency, as much as possible, in the manufacturing of military hardware," MercoPress reported.

The 18-ton diesel-powered Guarani prototype can carry 11 fighters and can be equipped either with a heavy machine gun or a light cannon.

Meanwhile, the military has indicated plans to acquire new weapons or equipment to build up its inventory. New purchases are likely to include anti-aircraft missile batteries from Russia or China or both, drones from Israel and satellite radar systems to help improve efficiency of border patrols.

The government has indicated it needs to build up military forces along the country's borders as well as to strengthen defense of the newly discovered offshore oil fields that are set to turn Brazil into one of the largest oil producers and exporters within the next 10 years.

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