Indonesia, Russia cozy up over arms
sales By David Isenberg
The
four-day Indo Defense Expo 2004 arms show in Jakarta
last week turned out to be one of those shindigs where
everyone, both buyers and sellers, was a winner. But the
future benefit for the people of Indonesia and the
Southeast Asian region remains to be seen.
The
arms show was held in the Indonesian capital from
November 24-27, and foreign arms makers were there in
force. This was only to be expected, as the
international arms market has been a buyers' market for
several years, and no niche is too small be overlooked.
The expo, the first to be hosted in Jakarta, featured
about 250 participants from around the world.
The largest stand at the expo was Russia's state
arms-exporting company Rosoboronexport, which
facilitated last year's sale of four Sukhoi fighters to
Indonesia. More than 20 other Russian armaments
companies also displayed their products there.
During the show, an official of Russia's Sukhoi
Air Holding, a military-aircraft-building company,
announced that it will be able to export 80-100 "Su"
fighters to the Asia-Pacific region in the next
five-year period, excluding already concluded contracts.
All but completed is a US$250 million contract on the
delivery to Indonesia in 2005 of eight fighters - six
Su-27SK and two Su-30MK aircraft - an adviser to the
company's director general Alexei Poveshchenko told the
Russian news agency Itar-Tass. The Indonesian air force
will then have 12 such super-modern warplanes.
The Indonesian military also expressed interest
in purchasing Russian long- and medium-range air-defense
systems, such as the TOP-M1 and BUK-M1-2 systems.
Russia has a long history of weapons trade with
Indonesia. In the past, Indonesia has procured 14
submarines, missile carriers and torpedo boats from the
country. In 2000, Indonesia bought 12 BTR-80 armored
personnel carriers, 16 Mi-2 and four Mi-8 helicopters,
9,000 Kalashnikov submachine-guns and ammunition from
Russia.
Moreover, Russia is willing to sell its
wares on other than a strictly cash basis. Russian
officials have said they are willing to take payment on
a counter-trade basis, meaning they would accept goods
such as rubber, tin and palm oil that are in high demand
in Russia.
And consistent with its
no-money-down, easy-financing approach, an official from
Rosoboronexport said on Monday that taking into account
the interest shown in Russian weapons at the show,
Russia could offer Indonesia a special arms sales and
military-technical cooperation program.
"We are
prepared to draw up a targeted program of
military-technical cooperation with Indonesia if that
country makes such proposals," Nikolay Dimidyuk from
Rosoboronexport told MosNews. "Indonesia showed
exceptional and unprecedented interest in the weapons
and military hardware on display at the exhibition," he
said.
During the show, the Indonesian army also
expressed interest in buying artillery cannons from
Poland to replace similar weapons that have not been
operational since 2003.
Other countries
represented at the expo were Canada, France, Germany,
Malaysia, the Netherlands, Singapore and South Korea.
Other firms that were present included DaimlerChrysler
AG, which was exhibiting its Unimog and Atego transport
trucks, and Daewoo, which already has carried out a $60
million overhaul of an Indonesian submarine and is in
discussions to refit a second such vessel.
Although no specific deals with Indonesia were
announced at the show, suppliers won't have long to
wait. All deals will be made in January, when Indonesia
invites potential weapons suppliers to the island of
Bali for a roundtable discussion on the country's future
military needs. Invited to the event are suppliers from
Russia, the Czech Republic, Poland, Germany, the
Netherlands and South Korea.
Indonesia's
military has suffered in terms of new equipment and
technology upgrades due to the 1999 embargo on arms
sales that the United States imposed after Indonesian
troops and their proxy militias killed nearly 1,500
people in East Timor. According to officials at the
Indonesian Ministry of Defense, 70% of the country's
current military equipment was imported from the US. The
embargo, which has left US A-4, F-5 and F-16 planes in
need of spare parts, has made it difficult for Indonesia
to upgrade its military capabilities.
To remedy
that, Juwono Sudarsono, Indonesia's new defense
minister, is expected to visit the US early next year to
lobby for an end to the embargo, part of fresh moves to
improve relations. But given the reality of the embargo,
Indonesia has been looking for alternative arms
suppliers over the past few years, particularly among
Eastern European countries and their long-established
arms industries, which often offer better terms than US
suppliers.
The only US company in the exhibition
was the San Francisco-based American Technologies
Network Corp, which supplies night-vision goggles and
similar products.
While the arms embargo is bad
news for US weapons manufacturers, it has been manna
from heaven for non-US arms suppliers, both major and
minor. Back in May, for example, the Indonesian navy
indicated its plans for a counter-trade deal in which it
would acquire two submarines from the South Korean navy
in exchange for 30 Indonesian-built CN-236
twin-turboprop transport aircraft.
In addition,
the United Kingdom has supplied Hawk jets and armored
personnel carriers, which have been used in the
country's troubled Aceh province despite bilateral
agreements designed to ensure that the equipment is not
used against separatist forces.
In August
then-Indonesian president Megawati Sukarnoputri said the
government would buy more Russian warplanes in the near
future. Megawati, who visited Russia in 2003 to sign a
$192 million deal for four Sukhoi jet fighters and two
Mi-35 military helicopters, planned to increase them
into one squadron each. Under the terms of that deal,
palm oil and other barter transactions were a major part
of the payment; Russia was paid only $26 million in
cash.
In October the Netherlands shipyard Royal
Schelde and Thales announced that it had signed several
contracts for the delivery of a wide range of products
that are to be installed on the two corvettes Royal
Schelde will build for the Indonesian navy. The value of
the contracts amounts to approximately $79.7 million.
David Isenberg, a senior analyst with
the Washington-based British American Security
Information Council (BASIC), has a wide background in
arms control and national-security issues. The views
expressed are his own.
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