Russia will provide Armenia with a fresh $100 million loan that will be spent on the purchase of more Russian weapons for the Armenian military, it was announced on Thursday.
The Armenian government formally approved a relevant draft loan agreement with Moscow at a weekly meeting chaired by Prime Minister Karen Karapetian.
The upcoming agreement posted on the government’s website says the funding is aimed at “further developing and reinforcing friendly relations” between the two states. It stipulates that the Russian loan will carry an annual interest rate of 3 percent and be repayable in 20 years, with a 5-year grace period.
The government did not publicize an annex to the deal that lists the types of Russian-made military hardware which the Armenian side will be able to buy with the loan.
Two years ago, the Russian government already lent Yerevan $200 million for arms acquisitions from Russian manufacturers. It subsequently publicized a long list of weapons covered by the deal. Those included, among other things, Smerch multiple-launch rocket system, TOS-1A thermobaric rockets, anti-tank weapons and shoulder-fired surface-to-air missiles.
The Armenian military demonstrated Smerch systems as well as several other new weapons at a September 2016 parade in Yerevan.
Defense Minister Vigen Sargsian announced on October 2 that the arms supplies financed from the $200 million loan will be completed by the end of this year. Other officials in Yerevan said earlier that 18 supply contracts were signed with the Russians as part of the 2015 deal.
Armenia buys Russian weapons at internal Russian prices that are set well below international market-based levels. The South Caucasus country is entitled to such discounts because of its bilateral military alliance with Russia and membership in the Collective Security Treaty Organization (CSTO), a Russian-led security bloc comprising six ex-Soviet republics.
Yerevan announced the impending release of the $100 million loan one week after the Armenian parliament ratified a Russia-Armenian agreement on a joint military force based in Armenia. Under that accord signed late last year, “the united group of troops” is tasked with “ensuring military security in the region.”
The close military ties with Yerevan have not stopped Moscow from selling billions of dollars worth of heavy weapons to Azerbaijan in the past several years. Russian arms sales to Baku continued even after unusually strong criticism voiced by Armenian leaders following the April 2016 fighting in Nagorno-Karabakh. In July this year, President Serzh Sarkisian reiterated Yerevan’s discontent with the Russian-Azerbaijani arms dealings while seemingly downplaying their impact on the military balance in the Karabakh conflict.