Putin Inks $1Bln Jakarta Arms Deal

APPutin talking with Indonesian President Susilo Bambang Yudhoyono at a signing ceremony in Jakarta on Thursday.
JAKARTA, Indonesia -- President Vladimir Putin sealed a $1 billion deal to sell tanks, helicopters and submarines to Indonesia during a visit to Jakarta on Thursday, marking a further sign of Moscow's growing re-engagement in the region.

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

Russia, which has annual arms 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 Indonesian President Susilo Bambang Yudhoyono at the presidential palace. "There's good perspective to work together in the military and technical fields."

Indonesia plans to purchase 10 transport helicopters, five assault helicopters, 20 amphibious tanks and two submarines from Russia, which will provide state credit facilities, Indonesian Defense Ministry spokesman Edy Butar Butar said 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 have agreed to finance the deal, Butar Butar said. Weapons for the Sukhoi fighter jets were part of the $1 billion deal, he 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 Defense Minister Juwono Sudarsono said there were fewer strings attached to arms deals with Russia.

"Requirements for purchasing arms from Western countries are complicated, with preconditions 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 since the United States lifted military restrictions in 2005, it had sold $46 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.

Putin, who was due to fly to Sydney on Thursday for the Asian Pacific Economic Cooperation forum, said in an editorial in Indonesian newspapers that he would like to see joint trade grow to $1 billion per year from $600 million now.

On energy, LUKoil and Indonesia's state-owned firm Pertamina signed an exploration agreement in East Kalimantan, on Borneo, and in Papua.

Indonesia's state-owned miner, Aneka Tambang, also signed a $1.5 billion deal for an aluminum project in Kalimantan with United Company RusAl.