In the multibillion-dollar world of high-tech military aircraft sales, the announcement at the MAKS-2007 air show at Zhukovsky outside Moscow Tuesday that Sukhoi was going to conclude a memorandum of understanding with Jakarta is small potatoes. RIA Novosti said the deal would be worth $300 million and that it would be for three Su-27 SKM and three Su-30MK2 to be operated by the Indonesian air force. Buying only six planes for $300 million is peanuts in the international arms trade.
The deal didn't even have the novel impact or shock of a first-time breakthrough for Sukhoi into the Indonesian market. The RIA Novosti report noted that the Indonesian air force already operates two Su-27SK single-seat and two Su-30MKK twin-seat fighters that it bought in a 2003 contract worth $192 million. No wonder only the specialist press reported the deal.
Sukhoi announced the new sales at the MAKS-2007, Russia's premier international air show that is held every two years in the town of Zhukovsky outside Moscow. RIA Novosti noted that this year's highly successful show enjoyed the participation of more than 540 Russian companies and at least 240 foreign aviation-related companies from more than 100 other countries.
More sales to Indonesia may be coming. RIA Novosti quoted Indonesian Armed Forces Commander Air Marshal Djoko Suyanto as saying Jakarta wanted to buy at least one full squadron of 16 Sukhoi fighters to succeed its aging old force of U.S. F-16 fighters.
This is the way long-term international arms relationships can develop. A small sale, like the 2003 order for four Sukhois, can lead to a slightly bigger order for six more planes now. Then a full squadron of aircraft will be sold, and the next sale may make Sukhoi fighters the prime interceptor of Indonesia, displacing the U.S. defense contractors who have dominated that market for 40 years.
The Russian government of President Vladimir Putin and the United Aircraft Building Corp., which was created last year to rationalize the Russian aircraft industry, and which includes Sukhoi, are clearly already working hard to make that happen. Selling a top-line interceptor like a Sukhoi for only $50 million apiece, as the new order does, is a steal -- it is giving them away at bargain prices.
And the Russian government has already made clear it is ready to do far more. RIA Novosti also reported that Indonesia might try to negotiate a $1 billion loan from Russia "to pay for the fighters and finance the possible acquisition of a Russian-made Project 636 Kilo-class diesel submarine."
Subsidizing other countries to buy one's own arms is a widely accepted, long-established practice. The United States has been doing it for years to key allies such as Israel.
The practice cements the client nation far more firmly in the major power's camp, and it also acts as an indirect subsidy to the national defense contractors involved, keeping open production lines and lowering the unit costs of the aircraft or other weapons in question that are also being produced for the major nation's own armed forces. With its treasury bursting with the windfall profits from oil and gas exports when global energy prices remain sky high, the Kremlin can easily afford the sums involved.
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(Next: Sukhoi strengths and weaknesses)


