By Jung Sung-ki
Staff Reporter
Talks on the third phase arms-for-debt swap deal between South Korea and Russia have stalled over differences on a list of trade items and technology transfer issues, a military source said Monday.
Under the envisaged deal, Russia wants to make about half of its overdue loan payments worth $1.3 billion in weapon systems.
The two countries signed a memorandum of understanding (MOU) last December on the introduction of Russian equipment and the transfer of arms technology. Under the MOU, Russia will transfer five technologies related to submarine fuel cells and others to South Korea.
Moscow also pledged it would consider transferring technologies regarding long-range radar and a defense system against an electromagnetic pulse (EMP) attack.
Little progress has been made so far regarding the arms-for-debt exchange, however, as the two sides favor different items for the swap, said the source.
The two held two rounds of working-level negotiations over the issue in April but failed to yield tangible results, he said.
Unlike the previous two sets of arms-for-debt deals codenamed ``Brown Bear," Seoul now wants to receive more state-of-the-art arms technology from Moscow than end products, he said. It offered to introduce a few kinds of weapons systems, such as Kamov Ka-32 utility helicopters, IL-103 training aircraft and advanced sighting devices.
On the other hand, Moscow wants to send weapons such as T-80U Tanks, METIS-M anti-tank missiles, BMP infantry fighting vehicles and Murena-E hovercraft as it did under previous deals in 1995 and 2003, the source said.
Russians argue Seoul's demand for the Ka-32 and IL-103 originally developed to meet civilian needs does not satisfy a bilateral agreement on military technology cooperation, he said.
The Russian government sent a letter to South Korean Defense Minister Lee Sang-hee last month, calling on Seoul to include more weapons systems in its list of items for the swap, according to the source.
But Seoul officials insist the Russian claims are irrational since the Korean military has operated Ka-32 helicopters for military use and the IL-103 will also be used in training flights.
The Air Force operates seven Ka-32s; while the Maritime Police and the Korea Forest Service fly 34 more on search-and-rescue or firefighting missions.
The IL-103 is a small aircraft featuring a spacious cabin with excellent peripheral vision. It is designed for primary training, aerobatics and air patrols among others.
``Weapons systems from Russia have been proven in quality but there have also been frequent problems regarding logistics support,'' an official at the Ministry of National Defense said on condition of anonymity. ``We're also facing budget constraints. In fact, we have no room for purchasing weapons systems not necessarily required.''
Most of the aircraft and weapons systems used by the South Korean military are supplied by U.S. manufacturers, and Russian weaponry traditionally comprises a fairly small proportion.
``The talks with Russia are still under way and the two sides are trying to narrow their differences on the arms-for-debt swap. So it's early and wrong to say the talks are over,'' an officer of the Defense Acquisition Program Administration said.
He said the arms-for-debt swap would be a main item on the agenda for a scheduled summit between President Lee Myung-bak and his Russian counterpart Dmitry Medvedev in September.
Seoul's Foreign Ministry officials are worried the deadlock with the swap could affect Seoul-Moscow cooperation in the field of energy resources.
The Brown Bear project began as part of Seoul's efforts to retrieve loans extended to the former Soviet Union in 1991 to assist Russia's transformation into a market economy.
Following the landmark establishment of diplomatic ties between the two nations in 1990, one year before the Soviet Union collapsed, the Roh Tae-woo government extended the Kremlin $1 billion in bank loans and a $470 million commodities loan.
South Korea remains technically at war with communist North Korea after the 1950-53 Korean War, having never signed a peace treaty. The former Soviet Union backed North Korea during the Cold War era.
Moscow was required to repay the loans in five years with a three-year grace period. But as the Russian economy fell apart, Moscow fell behind on its payments.
In 1995, Moscow began providing weapons in lieu of cash under the first phase Brown Bear program. In the first three years of the program, Russia provided South Korea $210 million worth of modern arms such as T-80U tanks, METIS-M anti-tank missiles, Ka-32 transport helicopters, lgla portable anti-aircraft missiles 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 arms worth $534 million, including three Murena-E hovercraft and seven Ka-32s.
Russia's cash flow has been doing better in recent years, thanks largely to oil revenues. Last year, Moscow repaid about $70 million.
Reports said South Korea's Navy wants to introduce more than 30 Ka-32 helicopters to form an air wing for its 14,000-ton large-deck landing ship.
The utility helicopters would be mainly used supporting Marine Corps amphibious assault operations, according to reports.
The Hankyeoreh newspaper said the military recently allocated some $900 million for the purchase of 32 Ka helicopters under a mid-term force improvement program for 2009 to 2013.
The Navy dismissed the report, saying there was no plan yet to operate the Russian helicopters.
The Ka-32 is an autonomous high power-to-weight compact air transporter, which can operate independently of ground support. The main roles of the Ka-32 civil helicopter are as passenger and cargo transport; a flying crane for building construction; transport for bulky cargo up to 5t carried on an external sling; search and rescue; medical and emergency evacuation; loading and unloading ships at sea; and offshore operations.