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. Last Updated: 07/27/2016

Seoul Said to Accept Arms for Russian Debt

SEOUL -- South Korea has agreed to accept high-tech weapons such as jet fighters and missiles as partial payment for a $1.47 billion debt owed by Russia, the Yonhap news agency reported Thursday.

The initial weapons deal would be worth at least $100 million, the South Korean agency said in a dispatch from Moscow, quoting unnamed Russian defense-industry officials.

South Korea's Finance Ministry would not confirm the report but said only that officials in Seoul could expect to leave for Moscow this month for continuing negotiations on the loan issue.

In 1990, South Korea agreed to lend $3 billion in cash and goods to Moscow in a deal tied with establishing diplomatic ties with the then-Soviet Union, a close ally of Seoul's rival, communist North Korea.

Seoul stopped further disbursement in 1992 after providing $1.47 billion when Moscow failed to make interest payments. Russia took over the loans with the fall of the Soviet Union.

Terms of repayment have been under negotiation since then. South Korea was reported to be considering industrial goods, fishing rights in the Sea of Okhotsk, or land leases in Siberia in lieu of cash.

Russia has instead put forward its weapons, such as MiG-29 jet fighters, T-72 tanks and various types of missiles, and offered to develop weapons systems. It has also made partial interest payment with aluminum ingots.

South Korea, which purchases most of its weapons from U.S. manufacturers, has been reluctant to buy Russian weapons, because military experts said the two weapons systems are incompatible.

But South Korea has recently said that it may consider purchasing some Russian weapons in order to study the military capabilities of its rival, North Korea.

Virtually all North Korean weapons are Russian-made.