Subject: Russia moves to strengthen ties to Indonesia

also: ST: Jakarta, Moscow Rekindle Ties with a Bang; Tempo: Indonesian commander sees Russian arms deal thwarting embargoes; WP: Indonesia to Buy $1B in Arms From Russia

Los Angeles Times Friday, September 7, 2007

Russia moves to strengthen ties to Indonesia

In Jakarta, Putin announces the sale of advanced military hardware to the Southeast Asian nation as 'the future world order is being decided.'

By Paul Watson, Los Angeles Times Staff Writer

JAKARTA, INDONESIA -- Russian President Vladimir V. Putin on Thursday promised more than $1 billion in advanced weapons to Indonesia and pressed for closer military and economic ties to this longtime U.S. ally in Southeast Asia.

Putin, the first Russian leader to visit Indonesia since former Soviet Premier Nikita Khrushchev did so in the 1950s, agreed to provide two Kilo-class submarines, 20 amphibious tanks and 22 passenger and attack helicopters.

Under a separate agreement, Russia will sell Indonesia six Sukhoi jet fighters worth $335 million.

Indonesia is eager to do business with Russian arms makers, in part to limit the risk of being cut off by Washington as punishment for alleged human rights abuses. And Russian weapons are cheaper: Indonesia will get at least $1 billion worth of weapons without paying interest on a 15-year loan from the Russian government.

"Indonesia is one of the most dynamic and most influential countries in the Asia-Pacific region," Putin said during a news conference with President Susilo Bambang Yudhoyono. "And Russia is very interested in working together with this country."

In an opinion piece published Thursday in the English-language Jakarta Post, Putin said Russia "is ready to start a new page in our relations with Indonesia" as "the future world order is being decided."

With a population of nearly 240 million, on an archipelago spanning three time zones, Indonesia is the largest country in Southeast Asia and the most populous Muslim nation. The government is a frontline ally of the United States in the fight against terrorism and a force for moderation and democracy in the Muslim world.

The U.S. provided about $84 million in military sales and assistance to Jakarta this year, with a focus on counter-terrorism programs and reform, according to the Center for Defense Information, a Washington think tank. The amount of U.S. military aid is expected to remain steady next year.

In early 2006, President Bush lifted a ban on arms sales first imposed against Indonesia in 1991 after its troops fired on pro-democracy demonstrators in East Timor, killing at least 270 people.

The territory, which Indonesia invaded in 1975 and annexed the following year, became independent in 2002.

Congress said last year that the U.S. shouldn't restore full military links to Indonesia until members of the military are prosecuted for atrocities. U.S. lawmakers also called for reform of Indonesia's armed forces, which are a powerful political and commercial force in the emerging democracy.

But the Bush administration said in 2006 that the government in Jakarta had made significant progress since the overthrow of dictator Suharto in 1998, and resumed supplies of arms under a national security waiver.

Human rights groups criticized the decision, saying it rewards a culture of impunity in the Indonesian military, which continues to face allegations of killings, illegal detentions, corruption and other abuses.

Putin's visit also focused on increasing trade between Russia and Indonesia, which totaled less than $700 million this year. That figure should soon reach $1 billion, Yudhoyono said.

Russia will invest more than $4 billion in mining and energy projects here, mainly in aluminum and oil and gas, Yudhoyono said.

The Indonesian leader also asked Putin to send coaches for chess and judo, which drew a smile from the Russian president, a former KGB agent with a black belt in judo.


The Straits Times (Singapore) Friday September 7, 2007

Jakarta, Moscow Rekindle Ties with a Bang

They sign weapons and trade deals worth billions during Putin's visit to Indonesia

by Azhar Ghani, Indonesia Bureau Chief

IN JAKARTA - INDONESIA and Russia rekindled long-neglected ties in a big way yesterday, signing a billion-dollar arms deal and sealing business tie-ups worth several billion dollars more.

The agreements were signed during Russian President Vladimir Putin's 10-hour trip to Jakarta - the first visit by a Russian or Soviet leader to Indonesia in almost 50 years.

The last Soviet leader to visit Indonesia was the late Nikita Khrushchev, whose 1960 trip kicked off a military aid programme that made Indonesia, then under first president Sukarno, the most well-armed country in the region.

But bilateral ties cooled after anti-communist former president Suharto came into power in 1965.

At a press conference after holding talks with Mr Putin, Indonesian President Susilo Bambang Yudhoyono indicated that the Russian leader's visit would signal a freshening of relations.

He said: 'We hope, and believe, that this visit will mark an increase in the future cooperation and partnership between Indonesia and Russia.'

Russia's growing interest in the region followed that of the continuing interest shown by the United States and China.

Under the new arms pact, Russia will provide US$1 billion (S$1.5 billion) in credit for Jakarta to buy Russian helicopters, tanks and submarines over the next 15 years.

The deal will also bring in weapons required by six Russian Sukhoi-30 fighter planes, worth a total of US$335 million, that Indonesia had signed for during a Moscow airshow last month.

The arms deal is seen as a move to help Jakarta reduce its dependence on American weapons. This overreliance on the United States affected Indonesia when Washington froze military ties with Jakarta between 1999 and 2005 over the Indonesian military's poor human rights record.

Also signed yesterday were business deals worth at least US$5 billion.

These included a tie-up between Indonesian state energy firm Pertamina and Russia's Lukoil for a US$1.5 billion investment in deep sea oil-and-gas exploration projects.

Indonesian state nickel miner PT Aneka Tambang and Russia's Rusal, the world's biggest producer of aluminium and alumina, signed a memorandum of understanding (MOU) to set up a US$3 billion joint venture to manage a bauxite mining project in West Kalimantan.

Other undisclosed deals, including a tie-up between Indonesian state-owned Bank Mandiri and Russia's Alfa Bank, could push the total value of the business deals signed to US$8 billion, said the chairman of Indonesia's Chamber of Commerce and Industry, Mr M.S. Hidayat.

Jakarta also gave Russian visitors visa-on-arrival status in a move that could boost the number of Russian tourists. More than 20,000 Russians visited Indonesia last year.

Both countries said they hoped the improved ties would increase annual bilateral trade to US$1 billion. Last year, it reached only US$689 million, or less than half a per cent of Indonesia's US$162 billion total trade for 2006.

During their meeting, Dr Yudhoyono and Mr Putin also discussed global concerns such as the situation in the Palestinian territories and Iraq, and the nuclear issues in Iran and North Korea.

Both countries are members of the United Nations Security Council - Russia has a permanent seat, while Indonesia was voted in as a non-permanent member last year.

Said Dr Yudhoyono, who visited Russia in December last year: 'Our positions on these issues are similar.'

Mr Putin's next stop is the Asia-Pacific Economic Cooperation (Apec) summit in Sydney.

sidebar: The major contracts

* Defence equipment deal for Indonesia to buy US$1 billion worth of Russian weapons in the next 15 years. Indonesia also plans to buy 10 transport helicopters, five assault helicopters, 20 amphibious tanks and two submarines.

* Russian and Indonesian firms signed mineral resources and oil-and-gas contracts worth US$5.5 billion. These were between Indonesian mining company PT Aneka Tambang and Russian aluminium giant Rusal, and between state-owned oil firm Pertamina and one of Russia's biggest oil companies, Lukoil, to explore for oil and gas off Papua in eastern Indonesia. 


BBC Monitoring Asia Pacific - September 7, 2007

Indonesian commander sees Russian arms deal thwarting embargoes

Source: Tempo website, Jakarta, in English 7 Sep 07 Text of report in English by Raden Rachmadi, Sutarto and Fanny Febiana carried by Indonesian newspaper Tempo website on 7 September

Indonesian military (TNI) commander Marshal Djoko Suyanto acknowledged that the purchase of defence system primary equipment from Russia was a part of efforts to avoid the domination of weapon procurement from certain countries. Thus, Indonesia need not worry about embargo, as has been carried out by the United States and the United Kingdom within the last few years.

"We have been evaluating that thought regarding the purchase of Sukhoi in 1996," said the TNI commander after the ceremony of post transfer of the National Air Defence Command at Halim Perdana Kusuma Airport, Jakarta, yesterday (6/9).

However, the TNI commander said that the efforts to avoid the monopoly were not only by purchasing weapons from Russia. "But also from Brazil, Italy, German and China."

Defence cooperation with Russia was emphasized again during the meeting between Russian Federation President Vladimir Putin and President Yudhoyono at the State Palace, Jakarta, yesterday. One of the points in the cooperation treaty is Russia's commitment to give export credit assistance amounting to 1bn US dollars for the defence equipment purchase.

The weapons that were to be bought through the scheme include two units of Kilo-class submarines, 20 BMF-3F amphibian tanks, two packages of anti-ship missiles, 10 Mi-17 U-5 carrier helicopters and an Mi-35P combat helicopter. Besides this package, Indonesia has also agreed to add the combat plane fleet with six units of Sukhoi, three Su-27 type and three Su-30 that are worth 335m dollars.

Defence Minister Juwono Sudarsono said the two countries agreed that the process of Russian-origin weapon procurement will be simplified, quickened and made cheaper. "Not depending on brokers any more," he said.

It is estimated that the process of this direct purchase can save the budget up to 40 per cent.


Indonesia to Buy $1B in Arms From Russia

By Peter Finn, Washington Post Foreign Service

Moscow, Sept. 6 - On a one-day visit to Indonesia on Thursday, President Vladimir Putin witnessed the signing of a $1 billion arms deal that many analysts here see as part of a broader Russian effort to restore diplomatic and military clout in the Asia-Pacific region and make some money as well.

Indonesia, which until 2005 was under a U.S. arms embargo because of human rights abuses, will purchase Russian tanks, military helicopters and submarines. Last week, Russia said it would sell six fighter jets to Indonesia, the world's most populous Muslim nation, as part of the deal.

"The deals signed in Indonesia are part of a Kremlin strategy to expand its influence in Asia and the Middle East," said Alexey Makarkin, an analyst at the Center for Political Technologies in Moscow. "Russia is trying to pursue a multi-polar policy in the world and considers itself to be one of its poles."

But unlike the former Soviet Union, he added, today's Kremlin is willing to ship arms only "to those countries who can pay."

Russia is helping Indonesia do that by providing a $1 billion line of credit, repayable over 15 years. Weighed down with foreign debt in the 1990s, Russia now has the world's second-largest foreign currency reserves, after China, because of soaring prices for its vast stores of oil and natural gas.

"We agreed to develop our cooperation in energy, mining, aviation and the telecommunication sector," said Putin, who stopped in the Indonesian capital, Jakarta, on his way to the Asia Pacific Economic Cooperation summit in Australia. "There's also a good perspective in defense and military."

For Indonesia, the country's defense minister said, the deal comes with none of the strings that encumber similar purchases from the United States and Western Europe.

"Requirements for purchasing arms from Western countries are complicated, with preconditions attached such as human rights, accountability, not to mention licensing," Juwono Sudarsono told reporters in Jakarta. "In our past experience with Britain, we were not allowed to use Scorpion tanks in Aceh, even though we were facing armed separatists."

In 2005, a peace agreement between rebels and the government ended three decades of conflict in the province of Aceh. Since the U.S. embargo was lifted that year, Indonesia has mostly bought spare parts and technical support from the United States, once the country's primary arms supplier.

Sudarsono said Thursday he was glad to be able to "reduce dependence on the United States."

Under Putin, Russia is determined to project its military, diplomatic and now energy power into the Pacific, an area that it neglected after the fall of the Soviet Union. Besides the arms deal, Russian companies have signed billions of dollars' worth of deals in the mining and energy sectors with Indonesian companies, Russian officials said.

This year, Putin signed a $200 billion, seven-year rearmament plan for Russia's military. The package includes money for the Pacific Fleet, a major Pacific submarine base and new land- and sea-based intercontinental missiles. Last month, Russia resumed global patrols by its long-range strategic bombers, sending two of them far across Pacific Ocean waters to the vicinity of Guam, site of a major U.S. base.

On Thursday, Britain and Norway scrambled jets to trail Russian bombers conducting the new patrols. The Russian Ministry of Defense described the flights by eight strategic bombers as a "routine exercise" and said that although planes from NATO countries were encountered there were "no incidents." Last month, Russia had a military exercise with China, one of its major arms customers. And it is has made or is negotiating other arms deals across Asia, including with India, Malaysia, Burma and Vietnam.

Some observers remain skeptical that Russia will become a major competitor of the United States and, increasingly, China for influence in the region.

"In my view, what is happening is that when certain rough edges appear in relations between the U.S.A. and such countries as Malaysia or Indonesia, Russia immediately makes an attempt to squeeze in and fill this gap," said Alexander Golts, a defense analyst and journalist in Moscow. "Its policy is developing these kind of niches. But we can hardly talk about any serious influence."

After a meeting, Putin and Indonesian President Susilo Bambang Yudhoyono said they discussed Iraq, North Korea and Iran, among other subjects, and they voiced indirect criticism of the Bush administration's approach to global issues.

"The two presidents strongly believe that international and regional conflicts ... should be settled by peaceful means," they wrote in a joint statement. "The use of force is admissible as the last resort and only in accordance with the United Nations charter."


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