Russia grants Armenia $200mn loan to purchase armament

By bne IntelliNews February 22, 2016

Russia will give Armenia a ten-year $200mn loan to purchase Russian Smerch multiple rocket launcher systems, Igla missiles, bomb throwers, sniper rifles, armoured vehicles and other ammunitions, according to Interfax.

Armenia is a member of the Russia-led defence organisation Collective Security Treaty Organisation (CSTO) and depends on Russia for armament and military personnel to defend its borders against neighbouring Azerbaijan, with which it has been in a state of frozen conflict since 1994 over the breakaway region of Nagorno-Karabakh. Furthermore, Armenia borders Nato member country Turkey, and is therefore instrumental to the Kremlin to maintain a buffer zone against the security organisation.

It is unclear whether this loan is new or a reaffirmation of an older pledge made by Russia to lend Armenia $200mn. In July 2015, Russia reportedly offered to lend Armenia $200mn to modernise its military equipment and personnel, but the Russian military equipment was reportedly never received.

At an early February press conference in Yerevan, Deputy Finance Minister Pavel Safaryan reportedly told journalists that Yerevan was having trouble obtaining loans from Russia, but Defence Minister Seyran Ohanyan later issued a statement saying that the agreement with Russia was still standing.

The economic crisis in Russia might mean that it could be too strapped for cash to honour some of its previous financial commitments to its allies.

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