03 MANUFACTURE, SELECTION AND TESTING as a whole. Civil unrest both domestically and internationally has increased demand for police and crowd control equipment. The country’s hosting of major international events such as the World Cup in 2014 and the Olympics in 2016, meanwhile, saw Brazilian authorities invest heavily in law enforcement equipment and award lucrative contracts to domestic companies such as Condor Non-Lethal Technologies (Condor) for the supply of rubber bullets, tear gas, and electric shock weapons ahead of the events70. Over the past few decades, defence manufacturing in Brazil has been through several cycles of growth and stagnation, from its peak in the 1980s, through a period of decline in the 1990s, to a steady recovery during the 2000s. Over recent years, Brazil’s defence industrial base (IDB) has continued to strengthen, driven in part by a growing domestic and global demand for defence products, but also by government economic and diplomatic support for the sector. For decades, the Brazilian Government, like many others, has considered the defence industry as strategic to the country’s broader economic and foreign policy agenda. From this perspective, government officials view the export of Brazilian manufactured arms, not only as a tool of wealth creation but also as a means of closing the economic and political gap between Brazil and other more economically developed nations, by advancing technological development and projecting an image of modernity and military power. Like other defence companies, Brazilian manufacturers of law enforcement and security equipment have also benefited from government support as well as a steady rise in military expenditure and spending on public security and prisons more generally71. Among the many recipients of BNDES support, for example, have been manufacturers of police and security equipment including Taurus and Companhia Brasileira de Cartuchos (CBC) who between 2008 and 2015 received $16.7 and $2.9 million USD in low-interest loans respectively. More recently, BNDES, together with the Financier of Studies and Projects - Financiadora de Estudos e Projetos (FINEP) and other public agencies, have also provided financial support to manufacturers of law enforcement equipment through the Inova Aerodefesa programme. The scheme formed part of the Brazilian Government’s broader Inova Empresa scheme which provided financial support for companies across several sectors considered strategic by the Federal Government. The Aerodefesa part of the programme was intended to support research and innovation across a broad range of aerospace and defence projects. Among the various This perception of the arms industry as strategically important has encouraged successive governments to thematic lines supported by the programme were projects to encourage research and development of ‘Non- provide financial support to the sector, through a range of grants and low-interest loans64. Between, 2008 lethal technologies’ including, ‘jets and sprays; light grenades; tasers; shock sticks; sonic firing; hot waves; and 2015, for example, Brazil’s National Development Bank (BNDES) granted roughly $70.5 million USD in electric incapacitation pistols; other devices’72. In total 91 projects from 64 major Brazilian companies were low-interest loans to defence companies65. In addition to grants, defence manufacturers have also received selected for funding with resources from the Inova Aerodefesa programme, including the less lethal weapons government financial support in the form of tax relief. The Special Taxation Regime for the Defence Industry manufacturer Condor, who had previously already received over R$4 million in grants from FINEP to support (Retid), for example, is designed to encourage development in the ‘strategic area of defence’ by reducing the development of its ‘SPARK’ projectile electric-shock weapon73. Details released by FINEP reveal that the charges associated with production and incentivising innovation and the development of new products66. The approved business plans had a budget of R$8.6bn (approximately $3.7bn USD) - over three times more than Brazilian government estimates this incentive programme cost a total of R$ 327,570,975 from 2014 to 201867. was initially budgeted for the programme74. More recently, the defence sector has been further bolstered by the election of the conservative president Jair Bolsonaro, whose pro-military policies have helped to ensure continued support for the defence sector and have created a political environment that is sensitive to the industry’s demands. This combination of growing demand and government support has allowed Brazilian manufacturers of law enforcement equipment and weapons to rise in prominence with several companies establishing themselves internationally as market leaders. Indeed, such has been the success of companies such as Condor, CBC Together these factors have allowed Brazilian defence manufacturing to continue to grow, establishing Brazil and Taurus that these companies are now classified as EED’s, a designation more commonly reserved for as the predominant defence manufacturer in the region. According to a survey by the Secretary of Defence manufactures of conventional weapons and military equipment such as Indústria de Material Bélico do Brasil Products (SEPROD), in 2019 alone, there was an increase of 16% in the number of Defence Companies (ED) (IMBEL) and AVIBRAS75. and 11% of Strategic Defence Companies (EED) accredited, in comparison with 201868. The survey also revealed that during the same period there was a 21.8% increase in the number of companies taking advantage of the government’s Retid tax regime69. Although manufacturers of law enforcement equipment and weapons represent only a minority of defence In the process of compiling this report, Omega identified a total of 16 Brazilian companies involved in the manufacture of various types of law enforcement equipment and weapons including, chemical irritants, electric shock weapons, kinetic impact projectiles, handheld kinetic impact weapons, restraints, small arms and ammunition, and stun grenades (see map below). companies, their fortunes and the factors underpinning their success have largely mirrored those of the sector 24  25

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