WASHINGTON, Sept. 17 (UPI) -- On his way back from an Asia-Pacific regional summit, Russian President Vladimir Putin took another step toward his goal of restoring the glory days of Russia's arms export business by inking a $1.2 billion line of credit with Indonesia.
The deal will provide the chance for Indonesia to buy 22 Russian-made helicopters, 20 tanks and two submarines. No actual contracts for arms deliveries were signed, however.
The deal comes just weeks after the Marks-2007 Aerospace exhibition in Russia where it was announced Indonesia would buy six Suhoi jet fighters. That announcement, Aug. 21, called for Indonesia to buy three Su-27SKM and three Su-30MK2 aircraft. Delivery was scheduled for between 2008 and 2010. The deal, at $335 million, is the largest defense contract ever between Russia and Indonesia, said Rosoboronexport, Russia’s state arms exporter. Indonesia is already using two Sukhoi Su-27 SK and two Sukhoi Su-30 MK.
Although the Sukhoi aircraft got much of the attention, it is the submarine order that raises eyebrows among military planners in the region.
Indonesia plans to buy four Kilo-class submarines and two slightly smaller Lada-class submarines, and its navy reportedly wants to buy up to 12 boats by 2024, finances allowing.
The diesel-powered Kilo boats are among the quietest conventionally powered submarines in service anywhere and capable of being equipped with advanced weaponry, including anti-ship and land-attack cruise missiles with a range of up to 275 kilometeres. They would be the most advanced conventional submarines in Southeast Asia.
Indonesia's desire to acquire new submarines is not entirely a surprise. Its military had wanted to replace its two German-built submarines as far back as the 1990s, but the 1997 Asian financial crisis put that on hold. Indonesia's recovery has been relatively slow, and is not entirely complete, which helps explain generous terms of the Russian deal which is payable over 15 years.
Under the deal, Indonesia will not pay interest on the loan for 15 years. Russia can certainly afford to offer Indonesia generous terms, given that it is raking in windfall oil and gas revenues with global oil prices still around an extraordinary $70 a barrel.
The purchase of the Russian military weapons is to be paid for by Indonesian energy resources. In that regard, Putin also announced new agreements on prospecting for new oil and gas deposits between Russian independent oil major LUKoil and Indonesia's state-owned Pertamina Corp.
However, not everything is easy terms for Indonesia. The Sukhoi fighter buy is dependent on foreign banks giving the country a loan, as it cannot afford the aircraft, the Indonesian Ministry of Defense directorate of procurement announced Aug. 29.
Indonesian defense sources indicated, however, that a number of foreign banks — from Russia and South Korea — have already been approached to fund the $350-million Sukhoi deal.
The significance of the Indonesian deal extends beyond Indonesia. It is further evidence that Russia is firmly back on the world stage as a major weapons exporter; something that has not always been the case since the end of the Cold War. Having already struck major deals with China and India, Russia plans to expand its range of customers in Asia.
Of course, Russia owes some thanks to the United States for its market opportunities. Indonesia is a country that once relied heavily on U.S. military equipment but which has sought to diversify supply since the United States embargoed military exports after reports of human rights abuses and the killing of an American missionary. The agreement will deepen military links between Russia and Indonesia and will reduce Indonesia's dependence on U.S. military supplies.
Though U.S. restrictions were lifted earlier this year, Indonesia plans to buy a great deal more Russian equipment.
In case anyone had any doubts about why that was, Juwono Sudarsono, the country's defense minister, told reporters in Jakarta, "Requirements for purchasing arms from Western countries are complicated, with preconditions attached, such as human rights, accountability, not to mention licensing."
Sudarsono said that he was glad to be able to "reduce dependence on the United States." Since the lifting of the U.S. embargo in 2005, Indonesia has mostly obtained spare parts and technical support from the United States, once its primary arms supplier.
In a historical sense, the deal represents a back to the future move, reaffirming a once huge but long-atrophied weapons buying relationship between Indonesia and Russia.
Diplomatic relations between Indonesia and the then-Soviet Union were established 57 years ago. Soviet General Secretary Nikita Khrushchev was warmly received in Jakarta in 1960, and later on, Soviet weapons began to pour into Indonesia.
Within a few years TNI, the Indonesia military, was receiving the most advanced weapons from the Soviets, and became the first noncommunist state to acquire the Soviet MiG-21, then the Warsaw Pact’s most advanced jet fighter.
The Indonesian Air Force also received several Illyushin transport planes and Tu-16 bombers which could reach Australia without refueling. In short, Indonesia became the strongest military power in South East Asia.
But the arms flow to Indonesia stopped when President Sukarno was replaced by Suharto. For two decades, there was no high level contact between Indonesia and the Soviet Union. Only after the perestroika reforms introduced by Mikhail Gorbachev did Suharto visit Moscow in 1989.
Slowly, relations between the two countries regained ground. In 1997, a year before he was forced to resign amid popular demands for reform, Suharto sent a letter of intent to buy a squadron of Sukhoi jet fighters. This came on the heel of the U.S. Congress’ decision to impose an embargo on arms sales to Jakarta. There was no choice for Suharto other than turning to Russia. The purchase only materialized seven years later and not without controversy.
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(David Isenberg is a defense analyst and a member of the Coalition for a Realistic Foreign Policy. He is an adjunct scholar with the Cato Institute, contributor to the Straus Military Reform Project, a research fellow at the Independent Institute, and a U.S. Navy veteran. The views expressed are his own.)
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(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)
