Russia to Loan Armenia $200 Million for Arms

Moscow is to give Armenia a $200 million loan to purchase sophisticated Russian weapons at a discount, officials in Yerevan said on Thursday.

Armenia, which hosts a Russian military base, has been shaken by nearly two weeks of protests over plans by a Russian-owned company to hike electricity prices in the small Caucasus country. 

Armenia's deputy defense minister Ara Nazaryan told a parliament session that Russia would provide Yerevan with a 13-year loan of $200 million (180 million euros) at a three percent interest rate.

The money will be spent to purchase modern Russian weapons at a discount in 2015-2017, he said before the parliament ratified the credit agreement with Moscow.

But some opposition politicians in Armenia criticised the deal, claiming the Kremlin was pulling Yerevan into an arms race with foe Azerbaijan, which bought $1 billion worth of tanks, artillery cannons and rocket launchers from Moscow in 2013.

"Russia is selling super-modern weapons to Armenia's enemy Azerbaijan and thus is dragging Armenia into an arms race," opposition Heritage party lawmaker Zaruhi Postanjyan said in parliament.

"Armenia is now forced to take a Russian loan to restore military balance in the region," she said.

Armenia and Azerbaijan have been locked in a longstanding conflict over the disputed Nagorny Karabakh region.

Yerevan-backed ethnic Armenian separatists seized Karabakh from Baku during the 1990s conflict that left some 30,000 dead.

Despite years of negotiations, Azerbaijan and Armenia have not signed a final peace deal.

The predominantly Armenian-populated region is internationally recognized as part of Azerbaijan.

Some in Armenia see the Russian loan as a concession after nearly two weeks of protests in a country where former master Russia owns some of the most prized assets including the power distribution firm.

Both Armenian activists and President Serzh Sarkisian denied the rallies against a planned hike in electricity prices were anti-Russian.

But grievances against Moscow have long been building and rippled to the surface during the rallies which started on June 19 but have largely died down by now, observers say.