Peru plans to increase its defense budget and work to modernize its defense forces. Defense officials want to increase operational levels and conduct better training, including live-fire training and a joint-service exercise. The proposed 2005 budget has added $115 million from last year for a total of $965 million with the expected 2006 budget to be over $1 billion; defense officials say they need between $1 and $1.15 billion over the next few years and $1.3 billion over the longer term. Future funding is expected to come from royalties from mining and natural gas operations. Over the past few years, Peru has had to cut back on both training and maintenance due to national budget difficulties.

Peru's navy currently has two former Italian Navy Lupo-class frigates coming to it that are currently undergoing refitting in Italy. Peru wants two more frigates, either more Lupos or French Maestrale-class frigates, and will make a commitment early next year. The French are also offering increased training for Peru's Mirage 2000 pilots and maintenance crews. Peru operates a fleet of 8 single-seat and 2 dual-seat Mirage 2000 fighters and the planes will need an overhaul and upgrades in 2005. The Mirage 2000 has a range of around 1500 kilometers and a maximum speed of 2300 kilometers per hour. 

The Russian government has offered Peru a $250 million credit towards refurbishing the Air Force's Russian-made aircraft. Peru is focusing on issuing contracts for work on Antonov An-28 and An-32 transport planes and Mil Mi-17, Mi-25, and Mi-26 helicopters. The Russians are also offering to sell or lease up to five An-32 transport aircraft, five Mi-17 and five M-35M attack helicopters, with a trade-in of the 10 Peruvian Mi-25 helicopters as partial credit. Later in 2005, the Peruvians expect to issue a contract for overhaul and upgrades on their Mig-29 fighters and Su-25 ground attack aircraft to extend their life through 2020-2025. Peru has 18 Mig-29 fighters and 18 Su-25 aircraft in its fleet. Doug Mohney