ARMS DEALER SAYS POLICE MOVING AWAY FROM US WEAPONS

C O N F I D E N T I A L SAN SALVADOR 000813

SIPDIS

E.O. 12958: DECL: 08/28/2029
TAGS: ETTC ASEC MCAP PARM ES
SUBJECT: ARMS DEALER SAYS POLICE MOVING AWAY FROM US WEAPONS

Classified By: CHARGE D'AFFAIRES ROBERT BLAU, REASON 1.4(D)


1. (C) SUMMARY. According to one of El Salvador's largest
arms dealers, the National Civil Police (PNC) is moving away
from US-made weaponry and shifting suppliers to a prominent
backer of President Funes. The Salvadoran military, however,
remains committed to purchasing US-made equipment. Neither
move is surprising, given the political ties involved in the
Salvadoran arms business and the PNC's well-documented
financial difficulties. END SUMMARY.


2. (C) During a Blue Lantern check (septel) Jose Miguel Diaz,
General Manager of Centrum, one of El Salvador's two largest
arms dealers, told Econoff that Centrum expected to lose most
of its business with the National Civil Police (PNC). Before
the change of government, Diaz said, Centrum had been the
largest supplier of weapons to the PNC, but the new
administration had already backed away from signing several
contracts that had been initiated under the previous
government. He added that some of their contacts within the
PNC had advised them not to expect any new business. Because
of this, Diaz was unsure whether Centrum would remain in
business, and he remarked throughout the conversation that he
expected "to be unemployed by December."


3. (C) According to Diaz, this shift was mostly political.
Centrum's owner, Gustavo Lopez Davidson, is a former member
of COENA, the executive committee of ARENA. Now that the
FMLN was in power, Diaz advised Centrum was hearing most of
the PNC business would go to Miguel Menendez, owner of the
security company COSASE and close friend of President Funes.
Menedez, he said, owned his own ammunition factory, but that
Menendez's small import business was mostly focused on
"crappy Argentine revolvers." Even before the change of
government, Diaz acknowledged, the PNC had been moving away
from US weaponry in favor of equipment from Brazil,
Argentina, and Israel because they could buy it more cheaply
and get it faster.


4. (C) Diaz said the new Ministry of Defense still planned to
buy mostly US-made equipment, and had even expressed interest
in buying some of the weapons the new PNC leadership had
refused. Centrum's competitor, (American-run) AMK Trading,
dominates military sales, however, and Diaz did not think
Centrum could win enough military contracts to compensate for
the loss of police business.


5. (C) Separately, Diaz advised that the Ministry of Defense
had been blocking import licenses for carbines and other
"automatic rifles" for the PNC. Diaz confided that one
Ministry of Defense source told him the military was worried
about the sheer number of "assault rifles" the PNC was
ordering, since under current regulations only the special
operations units of the PNC may have automatic rifles.


6. (C) COMMENT: Centrum's business model had been based on
its owner's ties to ARENA, so it is not surprising that the
company is losing contracts in the new administration in
favor of one of the most prominent "Friends of Mauricio."
The PNC had also previously complained to INL about the
length of time it took to get US-made weaponry and munitions.
While part of this was because of our export license
process, most of it was because of Centrum's frequent
inability to correctly complete their license paperwork.
BLAU