Initially the production will meet domestic demand for the aircraft in Argentina's air force and the navy but government planners are looking ahead to Argentina entering defense export markets, analysts said.

The government-run FADEA aircraft factory in Cordoba, a former Lockheed Martin facility, plans to roll out at least 100 Pampa II training and combat aircraft in association with German Grob Aircraft AG over the next five years.

Plans are also afoot to produce a new upgraded model, tentatively called Pampa NG, industry reports said.

FADEA President Raul Arganaraz said the 100 units are planned to be built with several key components supplied by Grob.

The current FADEA operations employ more than 120 experts, technicians and workers but the labor force is set to increase as FADEA expands, officials said.

Argentina took over the aircraft maker formerly known as Lockheed Martin Aircraft Argentina and relaunched it in 2010 as Fabrica Argentina de Aviones "Brigadier San Martin" S.A.

The revival of the divested factory in agreement with the United States has also involved a wider quest for better and more competitive components.

These include the U.S.-made Honeywell engine for the Pampa range. Grob, too, says it is happy with the arrangements and plans to help FADEA build at least 60 advanced training and attack IA-63 Pampa II aircraft plus another 40 aircraft of the older version.

At least some of the new Pampa aircraft will join the inventory of Argentine naval forces, which want to be better equipped against increasingly powerful narcotics smuggling gangs.

It wasn't immediately how the upgrade aircraft will be priced. Argentine media reports said each aircraft could cost $9 million-$12 million. Whether that is a list price or the price to be paid by the Argentine military remains unclear.

The IA-63 is seen by the Argentine military as an answer to the well-resourced criminal gangs' increasing maneuverability. Results from government anti-narcotics efforts have been lackluster.

Meanwhile, FADEA is still pursuing plans to develop a next-generation Pampa NG that is likely to include an air-to-air refueling feature, redesigned air intakes, strengthened landing gear and a radar or laser rangefinder.

FADEA is also upgrading the Argentine air and naval forces' older Pampas to near Series II standard. Only about a dozen of the 16 still reported to be on the military inventory are operational.

Plans are also afoot for Argentina to enter into cooperation with Brazilian aircraft maker Embraer. Current trade tensions between the neighbors have put the project on the back burner.

Iraq is still rebuilding its security forces, which today they number some 900,000 people, including 650,000 employed by the interior ministry.

Baghdad allocated $14.6 billion, or about 15 percent of the budget, to security in 2012, second only to energy which takes up 20 percent as the country seeks to develop its oil sector and fix a chronic electricity shortage.

"This is the first exhibition since the fall of Saddam Hussein, as we need specialised companies to come to Baghdad to show their products to our ministries, so we choose the best," Deputy Interior Minister Adnan al-Assadi told AFP.

A pavilion at the Baghdad fairgrounds is hosting 40 companies from 13 countries, mainly from South Korea, China, Turkey and Bulgaria, for three days from Sunday, amid tight security measures that are paralysing the city, causing massive traffic jams.

Almost all Western countries, however, are absent from the expo.

South Korea and China are showcasing a full range of military equipment, from weapons of all calibres and military vehicles to communications, uniforms and riot gear.

"We came to win contracts, but also to develop our relations with this country, where we had the third-largest contingent in the multinational forces after the United States and Great Britain," said Lee Jong-Duk, director of international relations for the Korea Defence Industry Association.

Sang Choi, vice president of Korea Aerospace Industries, was hoping to sell Iraq 24 T-50 Golden Eagle aircraft which can be used in both training and combat.

"We made a proposal last year and we hope that the contract will be signed very soon. I am very optimistic," he said.

For Iraq, rebuilding its air force is a priority, and it has ordered 36 F-16 warplanes from the United States in pursuit of that goal.

Its air force virtually disappeared following the Gulf War in 1991, when it was destroyed or rendered inoperable by the international military coalition that pushed Saddam's forces out of Kuwait which he invaded the year before.

"We need many things but our budget is limited. Our principal concern is the air force and anti-air defence, while the interior ministry's is border protection and explosives detectors," Iraq's top military officer, Lieutenant General Babaker Zebari, told AFP.

In a highly competitive market, the Iraqi Raban al-Safina group began selling products from foreign companies three years ago, especially jamming equipment, robots to disarm bombs, and detection equipment.

"It is very important that we are here, because, dealing with terrorists, our country needs this type of equipment," said Ali Jawhar, an engineer in Raban al-Safina's electronics department.

Although Baghdad bought a large number of ADE 651 portable explosives detectors from a British company that turned out not to work, spending between $16,500 and $60,000 a unit, Raban al-Safina showed the HEDD1 detector sold by German firm Unival, which the BBC has reported is also ineffective.

"It is part of a programme for detecting explosive material," Hussein Ghanim, an engineer in the same department, said proudly.

The Iraqi army was considered one of the strongest in the Middle East before the 1980-1988 war with Iran, when it was almost exclusively equipped with weaponry from Soviet-bloc countries.

But since the 2003 US-led invasion, Baghdad has turned toward American equipment, from M-16 rifles to Abrams tanks and F-16s.

Bulgaria still sees opportunities for its military wares, however.