Procurement: Indonesia Settles For What Works


September 2, 2013: The U.S. is selling Indonesia eight AH-64 helicopter gunships. With all the accessories (training, spares, and maintenance equipment) the total cost is $500 million. This is the largest ever American arms sale to Indonesia. For decades, until quite recently, the U.S. refused to sell Indonesia weapons because of accusations that the Indonesian government terrorized its own people. There are still some problems with that (especially in Papua), but not enough to stop this sale or others that began after decades of dictatorship ended in 1998, and was followed by elections. With the new government came more Russian arms salesmen, eager to make sales before the Americans returned. Russian arms salesmen had a hard time in the 1990s, because after the Cold War ended in 1991, there were many potential buyers who backed away from Russia because throughout the Cold War Russian gear had performed poorly. Now, with the Soviet Union gone there, were no more incentives (free weapons, very cheap weapons, and great credit terms).

The Russians did the best they could and an improving economy back home enabled better sales terms to be offered. Thus, in 2006, Russia offered a billion dollars in loans so Indonesia could purchase eight Su-30 fighters, two submarines, and four Mi-26 assault helicopters over the next five years. The Russians were now back with their famous low prices, immediate delivery, and, now, credit terms.

The Americans eventually returned and it has been hard times for Russian arms sales ever since. Last year Indonesia signed a contract to buy six more Su-30 jet fighters from Russia for $78 million each. This was less than the Russians expected. Indonesia already had ten Su-27s and Su-30s but wanted at least 16 of these modern aircraft so they would have a full squadron. Although expensive, the Russian fighters are modern, and look great. They are also relatively cheap to maintain. This was all part of a plan to switch from American fighters (ten F-16s and 16 F-5s) to Russian Su-27s and 30s. But used F-16s are so much cheaper than Su-27s, and the public pressure forced the Indonesian politicians to hang on to the F-16s and upgrade it's existing F-16s. Buying from the U.S. was not popular with corrupt Indonesian officials looking for a cut of each arms purchase. That’s easy to arrange with the Russians but very difficult with the Americans.

Although Indonesian air force leaders wanted to buy 180 Su-27 and Su-30 fighters from Russia they are now also rebuilding their older force of early model F-16s. In addition, Indonesia has ordered 24 used, but modernized, F-16Cs for $31 million each. The ten older F-16s will also be modernized to the same standard. Purchases of more Russian aircraft are on hold.

Indonesian Air force generals opposed the acquisition of the F-16s because they feared this will lead to a reduction in the procurement of new Russian fighters. The generals believe the Russian fighters are a better match for the F-18Es and MiG-29s that neighboring Malaysia is acquiring and the F-35s that Australia is buying. But the F-16s have a proven combat record that the Su-27s and Su-30s lack, and this is something the Russian salesmen cannot change.

Indonesia was attracted by the equally excellent combat record of the AH-64s. These will be used to help deal with Islamic terrorism and pirates off shore, two problems that many other nations, including the United States, are concerned about.





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