The United States has approved a potential $1.5 billion foreign military sale to support the design and construction of facilities at Peru’s main naval base in Callao, a major port city near Lima and less than 50 miles from a Chinese-owned commercial port.

The approval has been formally sent to the US Congress and is now subject to review. According to the US State Department, the proposed sale fits with US foreign policy goals.

The US Defense Security Cooperation Agency (DSCA) said the project is intended to strengthen the security of Peru, which it described as an important partner that supports political stability, peace and economic progress in South America.

The approved value of the sale is up to $1.5 billion, but US officials said the final contract could be lower. The exact cost will depend on negotiations between the Peruvian government and the contractors chosen to carry out the work.

The project focuses on relocating and redeveloping the Callao Naval Base, which sits next to Peru’s busiest commercial port. Plans for the new base date back to at least late 2024.

The move is meant to allow the commercial port to expand while reducing interaction between civilian and military operations.

US officials believe the new base will offer a safer and more efficient platform for current and future naval and logistical activities.

Peru has asked to purchase a wide range of non-major defence equipment and services. These include design over the full life of the project, construction, project and contract management, technical support, engineering studies and services, infrastructure and facility assessments, acquisition support, planning, surveys, programming, and long-term logistics and programme support.

US government and contractor staff would also provide engineering and construction oversight.

If the deal goes ahead, up to 20 US government or contractor personnel could be deployed to Peru for up to 10 years to manage and supervise the construction work.

The DSCA said the proposed sale would not change the regional military balance and added that Peru would have no difficulty absorbing the facilities and services into its armed forces.

The main contractor or contractors have not yet been selected and are expected to be chosen later through a competitive process.

US authorities said they are not aware of any offset agreements linked to the proposed sale, with any such arrangements to be decided during talks between Peru and the contractors.

The announcement comes as the US continues to raise concerns about China’s growing involvement in Peru’s port sector, particularly the $1.3 billion Chancay port built and operated by China’s state-owned COSCO Shipping, located just north of Callao.

US officials have previously warned that the port could, in the future, be used to host Chinese military vessels.

Despite this, Peru has maintained cooperative relations with both the US and China. China remains Peru’s largest trading partner, while the US has recently strengthened ties with the country by designating Peru a major non-NATO ally and appointing a new US ambassador.

The proposed sale will now undergo further congressional review before any contracts are finalised and work on the project can begin.

Reference: dsca