Mega hopes palm oil eases arms buying trip

Kornelius Purba, Staff Writer, The Jakarta Post, Jakarta, korpur@yahoo.com

This Easter, President Megawati Soekarnoputri is scheduled to meet Russian President Vladimir Putin. Hopefully, there will not be any misunderstanding should either wear surgical masks, given the fear of Severe Acute Respiratory Syndrome (SARS), the effect of which is also felt in Indonesia.

The problem of SARS, however, does not mean Megawati's presence is unwelcome in Russia.

Megawati may raise the question of purchasing Russian weapons, including the Sukhoi Su-30 KI, given that Indonesia reportedly is interested in procuring at least one squadron of jet fighters.

With the buying power of natural rubber and palm oil in her hands, the President will leave Jakarta on Thursday for an arms shopping mission to cash-starved countries in eastern Europe.

"This is serious business, not a picnic or a waste of money," she said, most likely in anticipation of the recurring criticism about her overseas trips.

The visit to Russia is a part of the President's 12-day tour to Poland, Rumania, Russia and Thailand. Arms shopping will ostensibly be a major item on the President's agenda during her four-day stay in the former Eastern European nations.

This will be the second window-shopping trip for the President to the region following her visit to Hungary, Croatia and Bosnia Herzegovina last September.

Indonesian ministers and military top brass have often conveyed their enthusiasm for buying jet fighters and weapons from the former members of the Warsaw Pact, because of the prolonged U.S. arms embargo on Indonesia.

The military has suffered severely from the embargo, especially the Air Force. In an apparent attempt to upset the U.S., they have desperately pointed out the benefits of purchasing jet fighters from countries other than the U.S.

The government wants to send Washington the message that Indonesia can easily procure its military equipment elsewhere.

This an old tactic that former president Soeharto often used. In retaliation against the U.S.' decision to link their sales of nine F-16 fighters with human rights abuses in Indonesia, Soeharto canceled the planned deal at the onset of the economic crisis in 1997, and disclosed his plan to buy Russian jets and French Mirage 2000 fighters.

Soeharto then announced that he would instead buy 12 SU-30K fighters and eight MI-17-IV helicopters from Russia, although the U.S. offered cheaper prices and better after-sales services. The aircraft and choppers were scheduled to be delivered in 2000.

Russia agreed to a countertrade deal because it could not offer export credit facilities or off-set deals like the U.S. Indonesia would purchase the sophisticated aircraft with 40 products, including palm oil, toys, rattan and stationery. The solution was typical of Soeharto -- his youngest daughter Siti Hutami Endang Adiningsih would profit from the sales.

Engaging in countertrade deals in the aviation industry is not new to Indonesia. Thailand once paid for aircraft it bought from Indonesia -- produced by the now nearly bankrupt PT IPTN -- with sticky rice.

As the economic crisis worsened, Indonesia had to cancel the business deal with Russia, just a few months after Soeharto confidently announced his plan and while his daughter was busy calculating her would-be profit from the business deal.

Now, Megawati is following the same strategy. Last year, for example, Megawati offered palm oil and natural rubber to Croatian President Stjepan Mesic to buy Croatian arms during her visit to the country.

Indonesian Military (TNI) top brass are very keen on the plan to purchase arms from the eastern European countries, and have praised the quality of their military equipment. Unlike the U.S., arms transactions are pure business for countries like Russia. They are not interested in linking business deals with human rights issues.

But will the U.S. react as Megawati may expect? Washington has continued the arms embargo, including the supply of spare parts -- especially after Indonesia "lost" East Timor in 1999 -- despite U.S. officials' promises to lift the blockade. Indonesia's domestic condition, especially its economy, and the global situation is not conducive to Megawati's arms buying strategy.

Indonesia does not have fresh money, and the letters of credit issued by Indonesian banks are often rejected by foreign companies. Indonesia can buy weapons from any country in the world if she has cash, or if foreign arms producers regard Indonesia as too lucrative to be ignored -- even if they have to accept palm oil as payment.

So when Megawati and Putin witness the signing of the Memorandum of Understanding on the arms and aircraft purchases made by their respective ministers on Sunday, the signing ceremony will likely produce a virtually blank document, because Russia and other countries in the region need U.S. greenbacks more than palm oil or rubber. The negotiations will be very tiring, if not fruitless.

U.S. officials would smirk jeeringly at the Megawati administration when she fails to persuade Putin to accept her palm oil products.

Indonesia's palm oil plantations are often exploited by local people. How could Russia -- or any other country, for that matter -- be convinced that they would benefit from a countertrade transaction?

If Thailand only needs sticky rice to pay for Indonesia's jet- propelled planes, the President may be thinking, there's no reason why Indonesia can't apply the same standard to other countries.

Traveling to Russia with palm oil in hand, will she return with jet fighters in her shopping bag?