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Yudhoyono, Putin seal $3bn arms pact
by Dario Thuburn in Moscow
December 02, 2006
INDONESIAN President Susilo Bambang Yudhoyono and Russian counterpart Vladimir Putin agreed to expand energy ties and arms trade during talks in Moscow overnight.

"We have a real potential for advancing our bilateral cooperation in political, economic, military and other areas," Mr Putin said after the Kremlin meeting.

"We would like to strengthen cooperation between Russia and Indonesia. Russia is a very important country for Indonesia," said Mr Yudhoyono, who was on his first visit to Russia.

A number of agreements were signed during Mr Yudhoyono's visit, including on cooperation in space technology, nuclear energy, military purchases and tourism.

Indonesian officials said purchases of Russian arms were key to the visit.

"We had mostly Soviet weapons in the 1960s. Now we want to have more Russian weapons again," a top Indonesian defence ministry official, Shafri Shamsudin, told the Nezavisimaya Gazeta daily in an interview published overnight.

Indonesia is planning to buy Sukhoi fighter jets, submarines, armoured personnel carriers and military helicopters, Mr Shamsudin said, adding that "new formulas" for financing the deal will be discussed.

The Kommersant daily cited officials as saying that Indonesia will be offered $US1 billion ($1.26 billion) in credit to buy Russian arms but wants to make purchases of $US3 billion ($3.8 billion).

"The most important document is set to be an agreement on the development of military technical cooperation for 2007-2010," Kommersant said, adding that Indonesia was particularly interested in buying submarines.

Mr Yudhoyono was impressed by the Russian military technology he saw on display at the Indo Defence 2006 arms fair that took place in Jakarta last week, Kommersant said.

"We have agreed that the main weaponry system from Russia is needed, especially strike force" equipment for Indonesia's army, navy and air force, Indonesian Defence Minister Juwono Sudarsono told reporters last month.

Indonesia, once a major purchaser of Soviet weaponry, bought fighter jets, military helicopters, armoured personnel carriers and Kalashnikov assault rifles from Russia in 2003, Kommersant added.

Indonesia was forced to look for new arms suppliers after Washington imposed restrictions on military sales over concerns about rights abuses committed by Indonesian forces in East Timor in 1991.

Nuclear energy was also on the agenda and Russian nuclear energy agency Rosatom announced overnight that it will be taking part in a tender to build Indonesia's first nuclear power plant.

Indonesia is suffering from growing power shortages and has revived plans for nuclear energy that were shelved in 1997 because of mounting public opposition.

Indonesia and Russia were also set sign an agreement for Russian energy firms Gazprom and Lukoil to take part in oil and gas projects on the island of Borneo, Kommersant said.

"Indonesia is the biggest supplier of energy to Asia. We believe it is extremely important to coordinate our actions on world energy markets so that there is no damage but instead to boost cooperation," Putin said.

Russia has announced ambitious plans to steer a great amount of oil and gas exports towards energy-hungry Asian markets, particularly China, Japan and South Korea.

Trade turnover between Russia and Indonesia rose from 366.3 million dollars (276 million euros) in 2004 to 551.2 million dollars in 2005 and amounted to 300.9 million dollars in the first half of 2006, a Kremlin official said.