A US$200-million loan: What weapons will Armenia buy from Russia?

Russia has endorsed a US$200 million concessional loan to Armenia for army equipment modernization that implies purchase of advanced weapons, first of all. It is difficult to say what weapons Armenia will buy from its strategic ally Russia on these funds, as access to such kind of information is limited. Some experts says the loan will be spent on artillery systems. Others think Armenia may buy standoff minefield detection systems and means to detect potential sabotage attacks, given the loan size, the needs of the Armenian army and the recent threats of sabotage attacks in the Karabakh conflict zone.

Armenia is Russia’s ally and a member of the Collective Security Treaty Organization (CSTO). It has a treaty of military and technical cooperation with Russia and buys advanced weapons on internal prices and directly from the producers, avoiding the red tape of Rosobornexport - major Russian specialized agency responsible for arms export. Given these circumstances, military expert Sergey Minasyan, deputy head of the Caucasus Institute, believes that Armenia may buy much more weapons from Russia for such amount than other countries.

No one will predict what type or quantity of weapons will be purchased. These are just suppositions based on Armenia’s geopolitical position in the region. Modernization of the Armenian army is an urgent task amid the country’s arms race with Azerbaijan over the Nagorno-Karabakh conflict. Baku buys advanced weapons from Russia – from armored vehicles up to aid defense systems – on market prices making several billion-dollar deals. Despite the widely rumored purchase of Iskander-M tactical ballistic missiles systems by Armenia, this issue remains in abeyance. The arms deals of Moscow and Baku cannot be arouse concern in Armenia–Karabakh’s security guarantee.  President of Armenia Serzh Sargsyan has repeatedly voiced that problem.

Perhaps, Sergey Minasyan says, artillery systems for various purposes and armored vehicles will be bought on the Russian loan. “Considering that Baku purchases weapons from Russia on market prices and there are certain corruption schemes, the weapons to be purchased by Armenia will strengthen significantly the power balance in the region,” the expert told EADaily.

According to David Haroutyunov, a military expert, it is hard to say how specifically Armenia will be using the Russian loan for modernization of the Armenian army. “There is no information on it. I tend to regard the information of the loan in the light of the protests against the electricity price hike in Yerevan. One of the protesters’ targets was the Electric Networks of Armenia – the subsidiary of Russian Inter RAO. The loan was announced to somehow ease the tensions,” he said.

Russia used such scheme in Ukraine at the height of developments in Maidan when Moscow actually announced a US$15 billion loan and gas price discount for Kiev in exchange for Yanukovych’s refusal to sign the Association Agreement with the European Union. In the case of Armenia, a week after the protests started in Yerevan, it was announced that Russia will provide a concessional loan for US$200 million to Armenia for army modernization,  Permyakov’s Case will be transferred to Armenia’s judiciary, and the Electric Networks of Armenia – the subsidiary of Inter RAO UES – will undergo an audit.

It is widely rumored in the media and among experts that Iskander-M systems may be delivered to Armenia and the loan is allegedly provided for the given purpose. Meantime, Haroutyunov says delivery of Iskander systems is a very delicate political issue. Such deal would allow Baku to blame Moscow for breaking the power balance in the region, as these are highly efficient systems. “We cannot say if Moscow is ready for it,” the expert said.

Russian military expert Vladimir Yevseev says the Russian loan will probably be spent on purchase of minefield detection systems and means to resist sabotage attacks. What makes experts suppose so is the needs of the Armenian army, configuration of forces in the Karabakh conflict zone and intensification of sabotage attempts there. “These are my suppositions. I can say nothing specific, as contract details are not available. We just think and compare  different factors, such as, for instance, the loan size that is not enough for purchase of missile systems.  I am speaking about the announced figures. Armenia and Russia may agree on delivery of weapons of various types and cost,” Yevseev told EADaily.

He thinks Armenia needs minefield detection systems, given the situation in the Karabakh conflict zone, where homing mines and mortars were used and sabotage attacks intensified yet in March.

“Therefore, I think, Armenia will take an interest in the systems to resist sabotage attacks, recognizance assets, and sniper guns. I talked to many Armenian military experts who say they are not concerned about the number of Azerbaijan’s tanks. But delivery of Solntsepek multiple launch rocket systems really matters. Armenia needs also sensing systems and heavy mortars, as Azerbaijan has shifted to sabotage attacks recently.  This is what will help Armenia reduce the scope of incidents on the border.  This will help upgrading the combat efficiency of the army too,” the expert said.

Meantime, Deputy Defense Minister of Armenia Ara Nazaryan said Russia’s US$200 million loan for modernization of the Armenian armed forces will not be spent for other purposes.  At today’s meeting of the parliament, Levon Zurabyan, the head of the oppositional Armenian National Congress faction, asked Nazaryan whether it is possible that the loan be used to subsidize the electricity price hikes, which was earlier announced by President Serzh Sargsyan.  In response, Nazaryan said no cent will be spent for other purposes. He said the agreement has a secret provision saying that Armenia will purchase weapons it has never had before.

The Russian loan was provided for 13 years with a 3-year grace period at the annual interest of 3%. Armenia will co-finance 10% of the total amount in terms of advanced payments. Nazaryan said the loan will be used in the period from 2015 to 2017. “This will enable Armenia to buy advanced weapons and ensure the power balance in the South Caucasus,” the deputy minister said.