Seoul, Moscow Discuss Swapping Arms for Debts
By Jung Sung-ki
Staff Reporter
Defense officials from South Korea and Russia have discussed a potential arms-for-debt swap focused on military technology cooperation, the country's arms procurement agency said Wednesday.
The discussion was made at a working-level meeting on Sept. 10-12 between representatives from Seoul's Defense Acquisition Program Administration (DAPA) and their Russian counterparts, a DAPA spokesman said.
``The two sides discussed a range of issues on technology cooperation between the two militaries, including Russia's possible provision of weapons in lieu of making overdue loan payments,'' Cmdr. Park Sung-soo at DAPA's public affairs office said.
Park, however, dismissed a Chosun Ilbo report that DAPA officials have agreed to receive half of the remaining $1.3 billion debts in Russian weapons systems and the transfer of arms technology as contract offsets.
``The meeting in Moscow was designed for the two sides to exchange views on bilateral defense cooperation in a broad level, not to decide an arms deal,'' said Park. ``A decision on such a Korea-Russia arms-for-debt deal is to be made after consultations between related government ministries.''
South Korea and Russia have engaged in two rounds of the weapons-for-debt repayments deal, codenamed Brown Bear project, since 1995.
In 1991, South Korea and the Soviet Union established diplomatic ties, and the Roh Tae-woo government extended Moscow $1 billion in bank loans and a $470 million commodities loan.
Moscow was required to repay the loans over five years with a three-year grace period, but as the Russian economy fell apart, the Kremlin fell behind on its payments.
In the first phase of Brown Bear program from 1995 to 1998, Russia provided South Korea $210 million worth of modern arms such as T-80U tanks, METIS-M anti-tank missiles, Ka-32 helicopters, Igla portable anti-aircraft missiles, BMP infantry fighting vehicles and spare parts.
By 2003, interest had pushed Russia's debt to $2.24 billion. The Roh Moo-hyun government decided to write off $660 million of that in exchange for more arms and a pledge to pay the remaining $1.3 billion in cash over 22 years.
From 2003 to 2006, Seoul received six kinds of arms worth $534 million, including three Murena-E hovercraft and seven Ka-32s.
Despite better cash flow these days thanks to oil revenues, Russia still prefers to send arms instead of cash.
Reports said South Korea's Navy is looking at Russian-made Kamov Ka-32 utility helicopters to be used in exercises on the 14,000-ton Dokdo large-deck landing ship before the country's indigenous utility helicopters are produced in 2012.