I think there are a few misunderstandings here, some of them caused by a lack of understanding, the others due to insuffficient research and little familiarity with the subject. Brazil's dissuasion capability is lagging behind that of other nations in the region (such as Colombia's and Venezuela's.) As Brazilian investments in South America grew in recent years, concerns began to mount that the country lacked of means other than diplomacy and regualr arbitration to protect those interests. The case of Ecuador's decision not to pay Brazil a $245 million loan is a proof of that (and we have a large set of examples that begin with Argentina imposing trade barriers to the absurd expulsion of some Brazilian companies from Bolivian soil in 2005.) As a result of that, President Lula signed in October 2008 a decree in which the state redefined the concept of external aggression and the government set new guidelines for a strategy of national mobilisation in the event of inter-state war. This was spearheaded by Minister Mangabeira Unger, who last year sent the draft for the so-called National Mobilisation Strategy to Lula. What the government is doing here is not engaging on an arms race to equal that of Venezuela's, as the Bloomberg story seem to suggest, but to update and upgrade its aging dissuasion and response defence capabilities.
The above-mentioned decree, while giving Brazil the necessary legal framework to pursue military operations abroad for the first time, signals a gradual departure from its traditional pacifist posture. This does not mean at all that Brazil is engaged on weaponry purchases of the scale of Venezuela. The reasons why Brazil is doing this is because the strategic resources the country counts with are bigger than the government previously thought, and protection is required given their remote location (the heavy oil is located off-shore, the best quality iron-ore is in the Amazon, and the newest hydropower compounds are in the middle of the jungle, etc.)
According to people who recently briefed me on this issue, defence spending is likely to accelerate through the end of 2010. The Air Force and the Navy need to renew their fleets. In addition, the relocation of troops from the south to the Amazon is a plan that's been under study since 2006, partly because of Bolivia's announcement that it would receive aid from Venezuela to set up military bases along Bolivian borders. This is not new. Furthermore, the army must be rethinking this redeployment plan after this week's ruling by the Supreme Court on the bordering of several indigenous reserves that run along the country's borders with Venezuela and Guyana (in the Amazon basin.)
Thus, the recent steps taken by Brazil shouldn't be seen as an arms race effort, nor as a way to win more influence in the region through a military build-up. The Brazilians are likely to maintain their pacifist stance.