Mega hopes palm oil eases arms buying trip

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?