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Indonesia, Russia seal defence deal on Putin visit

JAKARTA (Reuters) - Indonesia sealed on Thursday a $1 billion deal to purchase Russian tanks, helicopters and submarines during a visit by President Vladimir Putin, marking a further sign of Moscow’s growing re-engagement in the region.

Russia's President Vladimir Putin (L) shakes hands with Indonesia's President Susilo Bambang Yudhoyono before their meeting in Jakarta September 6, 2007. REUTERS/Dita Alangkara/Pool

The visit by Putin, the first to Indonesia by a Russian or Soviet leader in around five decades, is also due to see the signing of billions of dollars in mining and energy deals.

Russia, one of the world’s leading arms traders with annual sales topping $5 billion in bumper years, wants to break into new markets and to rebuild its influence in Asia where Washington, and now increasingly China, have held sway in recent years.

“We have agreed to expand cooperation in areas we consider most important such as energy and mining, aviation, communications and others,” Putin said after the talks with President Susilo Bambang Yudhoyono at the presidential palace.

“There’s a good perspective to work together in the military and technical fields,” he added.

Indonesia plans to purchase 10 transport helicopters, five assault helicopters, 20 amphibious tanks and two submarines from Russia, which will provide state credit facilities, Defence Ministry spokesman Edy Butar Butar told Reuters on Tuesday.

Indonesia agreed last week to buy six Russian combat aircraft from plane manufacturer Sukhoi in a deal worth $335 million, but so far no banks had agreed to finance the deal, Butar Butar said.

Weapons for the Sukhoi fighter jets were part of the $1 billion deal, Butar Butar said.

Jakarta turned to Russia and East European countries for weapons several years ago when it was under an arms embargo by the United States. Washington later restored military ties and lifted the arms embargo as a reward for Jakarta’s cooperation with the U.S. war on terrorism.


Indonesian Defence Minister Juwono Sudarsono said that there were fewer strings attached to arms deals with Russia.

“Requirements for purchasing arms from Western countries are complicated, with pre-conditions attached such as human rights, accountability, not to mention licensing,” he told reporters, adding that the United States had not been consulted on the deal.

“In our past experience with Britain, we were not allowed to use Scorpion tanks in Aceh, even though we were facing armed separatists.”

The Indonesian government and Aceh rebels signed a peace agreement in 2005 ending a separatist war of about three decades.

Susan Stahl, press attache at the U.S. Embassy in Jakarta, said that since the U.S. lifted military restrictions in 2005, it had sold $45.76 million of aircraft spare parts and support.

Dewi Fortuna Anwar, a political analyst and former Indonesian presidential adviser, said the Putin visit and accompanying deals marked “a new era” in Indonesia-Russia relations.

“These are very significant developments which bring back memories of the late 1950s and early 1960s when the Soviet Union was a major player in Indonesia’s development,” she added.

Makmur Keliat, a defence expert at the University of Indonesia, played down concerns over the regional military balance, adding that the Indonesian military was weaker than some neighbours.

“Two submarines and a dozen of tanks won’t throw the regional security off balance.”

Putin, who is due to fly to Sydney on Thursday evening for the Asia-Pacific Economic Cooperation (APEC) forum, said in an editorial in Indonesian newspapers that he would like to see joint trade grow to $1 billion a year from $600 million now.

On energy, Russian state-owned oil company LukOil and Indonesia’s state-owned firm Pertamina signed an exploration agreement in East Kalimantan, on Borneo island, and in Papua.

Indonesia’s state-owned miner, PT Aneka Tambang Tbk, also signed a $1.5 billion deal for an aluminium project in Kalimantan with Russia’s United Company Rusal.