Jakarta and Moscow are set to sign weapons, mining and oil deals valued at billions of dollars during the first visit to the country by Vladimir Putin, Russia’s president, on Thursday. Juwono Sudarsono, Indonesia’s defence minister, said his country will sign contracts to buy $1.35bn (€990m, £670m) of Russian military equipment as part of its policy to diversify arms procurement. Jakarta will use a $1bn soft credit facility repayable over 15 years to buy 10 transport helicopters, five assault helicopters, 20 amphibious tanks and two Kilo-class submarines from Russia. A $350m commercial loan will pay for six Sukhoi fighter jets.
The trip will include the signing of preliminary agreements in the energy and mining sectors that could bring $10bn of Russian investment into Indonesia. This will include several deals between LukOil, Russia's biggest state-owned oil company, and Pertamina, IndonesiaÂ’s state-owned oil company to develop fields in Indonesia. The arms deal was brokered during a visit by Susilo Bambang Yudhoyono, the Indonesian president, to Russia last year.
Mr Juwono said the large order of Russian equipment, was “opening another [procurement] door”. “It’s a logical policy that we have adopted in light of the issues we have faced over the last seven years,” he told the Financial Times.
| The US and EU froze contacts with the Indonesian military following the 1999 East Timor crisis |
In the last two years western powers have lifted some of the embargo, such as on non-lethal equipment. Indonesia last week received the first of four navy corvettes ordered from the Netherlands. The government hopes to buy 40 from various countries by 2015.
“But there’s still difficulty in getting spares for things like fighter aircraft because they’re seen as lethal,” Mr Juwono said. “We’re adapting to the new reality.”
The Sukhois will complement the five or six functioning US-built fighters the Indonesians still have.