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CHISINAU -- The Moldovan Defense Ministry says it will annul a controversial deal to sell weapons to Armenia that was sharply criticized by Azerbaijan, RFE/RL's Moldovan Service reports.

The announcement was made in a statement posted on the ministry's website. It said, "the implementation of the deal to sell Moldovan Army assets to the Republic of Armenia has been stopped, and the contract is currently in the process of being annulled."

It added that the Defense Ministry "will not make any public statements about the deal with Armenia until the contract has been thoroughly investigated." It's unclear what weaponry Moldova had agreed to sell to Armenia.

Earlier this year, the Moldovan Communist Party said Chisinau was selling functional weapons to Armenia and warned of a likely "political scandal" with Baku.

The Moldovan government dismissed the warning, saying the "army materiel" involved in the deal could not be used in combat.

Official Yerevan has declined to deny or confirm the reports about the arms sales.

"In the interests of national security, details regarding the quantity and types of weapons and the party selling them are not subject to publication," Armenian Defense Ministry spokesman Davit Karapetian said on September 23.

Pressure From Baku

The Azerbaijani government reacted negatively to the reported arms deliveries and Moldovan Ambassador to Azerbaijan Igor Bodiu was summoned to the Foreign Ministry in Baku to provide explanations.

Bodiu afterward described the deal as an "unfortunate mistake" that damaged his country's relations with Azerbaijan.

Moldova and Azerbaijan are part of the GUAM grouping of four ex-Soviet states that has acted as a counterweight to Russia in the larger Commonwealth of Independent States.

Azerbaijani President Ilham Aliyev was reported to have raised the matter with Moldovan Prime Minister Vlad Filat when the two met in Warsaw on the sidelines of a European Union summit on September 28. Filat was quoted as saying that he was invited to visit Baku "in order to continue the discussion."

Azerbaijan has spent billions of dollars in oil revenue to buy weapons that it hopes will enable it to eventually win back its breakaway region of Nagorno-Karabakh and other Armenian-controlled territory in Azerbaijan. It plans to boost military spending to $3.3 billion this year, up from $2.15 billion a year ago.

By comparison, Armenia's defense budget for 2011 is projected to reach about $400 million.

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