Paul Lewis/Singapore
Indonesian contractual negotiations with Russia to purchase 12 Sukhoi Su-30MK fighters have run into difficulty because of the country's rapidly deteriorating economic situation.
Russian efforts to seal a deal to sell $500 million-worth of fighters and helicopters to the Indonesian military are being undermined by the slump in the rupiah's value. The Indonesian currency has lost more than 70% value against the US dollar since the weapons purchase was announced in August 1997.
"The Russian deal is coming apart, and the only way it can be salvaged is for the amount of barter content to be increased, " says a local defence source.
Indonesia had originally been proposing to finance up to 70% of the deal, with counter trade arranged through local agent PT Dwipangga Sakti Prima. Jakarta is now understood to want to reduce further the proportion of hard-cash payments, from 30% to 15%, in favour of a larger barter content. The move would also help allay pressure from the International Monetary Fund for spending cuts.
Russia in turn has indicated that it is interested only in taking marketable commodities and, in particular, crude palm oil. Indonesia announced plans to order Su-30s after abandoning plans to buy nine embargoed Pakistan Lockheed Martin F-16A/Bs in the face of US congressional opposition.
It also said that it would be acquiring eight Mil Mi-17s after earlier failing to get US approval to acquire surplus Bell UH-1Hs.
The army, in the meantime, is trying to get around the ban with secondhand commercial Bell 212s. It is looking for up to 28 helicopters and is understood already to have secured three from South America and another seven from Europe.
Source: Flight International
