Procurement: Is The Credit Slut Back?


February 14, 2010:  Sri Lanka has borrowed $300 million from Russia to buy weapons and military equipment. Last Summer, some $200 million worth of similar deals, with China and Pakistan, were cancelled. This appears to be an effort to improve relations with India, which has frosty relations with Pakistan and China. Russia is a long time weapons supplier to India. Currently, Sri Lanka spends about $1.7 billion a year on defense. About a year ago, a two decade long civil war ended, and the government wants to reorganize its forces for peacekeeping, to ensure that its Tamil minority does not reorganize and start another war.

During the civil war, China was the principal arms supplier, with Ukraine, the United States, Russia Pakistan and India also supplying critical items (radars, fighter-bombers, and electronic items in general). Sri Lanka is an island nation, that is politically unstable at the moment,  off the southern tip of India. In the last few years, Russia has become flush enough to return to its Cold War custom of offering to finance its weapons exports (often on terms that were too generous, resulting in billions of dollars worth of uncollectable debt.)



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