Sukhoi deal is betrayal of 'reformasi'

Sukhoi deal is betrayal of 'reformasi'

Rizal Ramli, Former Coordinating Minister for the Economy, Jakarta

I agree wholeheartedly that the Indonesian Military (TNI) is
in great need of improvements and additions to existing military
equipment, primarily to contain social unrest and separatist
movements like those in Maluku, Ambon and Aceh. The priority must
be on acquiring military hardware needed to control local
insurgencies. Efforts to diversify sources of supply are to be
welcomed, since in the past the dependence upon one country for
military equipment has left us vulnerable to interference in our
domestic social and political affairs.

The TNI is indeed in great need of new equipment. The main
priority must be for equipment to control insurgences and not
preparations against regional threats. Additional Hercules-type
transport aircraft like the Antonov 12 or the Antonov 26 are
needed to increase troop mobility to control unrest in conflict
areas. Aside from transport aircraft, other priorities for the
TNI include transport helicopters such as the MI-8T, the MI-8
cargo helicopter, and Apache-type helicopter gunships such as the
Kamov-50, MI-24 or MI-35.

The priority on transport aircraft and helicopter gunships
reflects that fact that Indonesia is not threatened by regional
conflict in the short term.

These worthwhile objectives have been used as cover for short-
term interests, illegal activities, contravention of the division
of authority between ministries and of fiscal procedures, misuse
of food stabilization funds, waste of government money, and
potential corruption, collusion and nepotism resulting in losses
to the state.

For the worse, acquisition of Sukhoi-30MKs and Sukhoi-27SKs
are not a priority for Indonesia because the Sukhoi-30MK can
achieve the very high speeds of mach 2.6 (2.6 times the speed of
sound) and is therefore most useful against regional military
threats. Moreover, the purchase of four aircraft would not
constitute an effective fighting force and therefore would not
deter potential aggressors in the region.

Even worse, buying four units of different types (Sukhoi-30MKs
and Sukhoi-27SKs) is very inefficient because the two aircraft
require different spare parts and maintenance regimes.

We must conclude that the motive for buying the Sukhoi
aircraft is unrelated to strategic concerns and national defense
for the following reasons:
* Procurement of fighter planes must be based on standard
Ministry of Defense procedures.
* The purchase of just four Sukhoi jets has clearly been
dominated by commercial arguments rather than the needs of the
national defense system. Normally, sophisticated fighters of the
Sukhoi class would be acquired in formations of one or two
squadrons. Deployment of this equipment at squadron strength
would represent an effective deterrent against external
aggressors and an improvement to the air defense capability of
the Republic of Indonesia. Therefore four jets cannot fulfill the
minimum requirements used to justify their purchase.
* The purchase of the Sukhoi jets is inefficient because:

Sukhoi jets are deployed in battle squadrons consisting of
pilots and crew, ground crew, logistical support including spare
parts. Spare parts for the Sukhoi must be managed separately from
spares for the Air Force's existing squadrons of F16, Hawk and F5
jets because technical specifications, operations and maintenance
procedures are different in each case.

The use of Sukhoi jets in the Indonesian Air Force would also
require harmonization with existing missile and radar systems.
Careful reflection on this issue would reveal that the purchase
of the Russian aircraft would give rise to additional costs
resulting from the need to modify software as well as hardware.

The case of the purchase of the Sukhoi-30MK is similar to the
purchase of the East German warships carried out by Habibie in
1994. At that time Habibie justified the purchase of the East
German ships on the basis of their low cost. But in fact the
ships were in such poor condition that the overhaul and
maintenance costs of the equipment was extremely high. This
misjudgment drained resources from the Indonesian Navy for many
years.

The Sukhoi jets bought by Malaysia, for example, were equipped
with full weapons systems, including missiles and the high-tech
Sextan radar system built in France. At present Sukhoi jets are
identified as foe by our current radar system, which was
constructed by the French company Thomson. In order to deploy the
Sukhoi jets, this system would have to be modified at a cost of
tens of millions of US dollars. Sukhoi jets also require an
engine overhaul every 1000 flight hours and engine replacement
after 5,000 hours.

The purchase is also inefficient from the economic perspective
when the costs of radar modifications, maintenance and spare
parts are considered. All of this is a result of the fact that
these negotiations were led by Minister of Industry and Trade
Rini M. Suwandi who does not have the authority, knowledge and
understanding of aircraft and military equipment to undertake
this task.

The purchase of the Sukhoi jets was not included in the
planning documents of the minister of defense or the Ministry of
Defense. Even the allocation of import credits totaling US$
241.71 million to TNI in the 2003 budget drawn up by National
Development Planning Agency (Bappenas) did not include the
purchase of the Russian equipment. Nor did the purchase appear in
the Air Force's plans to the year 2004, which totals Rp 5
trillion.

The major responsibility of National Logistics Agency (Bulog)
is to maintain food price stability, most importantly the
stability of rice prices. In executing this function, Bulog sells
rice from its stocks to stabilize market prices and buys rice
from farmers to defend the government's floor price. To carry out
these market operations, Bulog is allocated a special budget for
food security. During the New Order, the agency was often used as
a milk cow by those in power.

Under President Megawati Soekarnuputri, the agency is again
involved in the regulated trade of the sugar industry and the
purchase of military equipment including the Sukhoi jets. It is
clear that Bulog has once again become a tool of the politically
powerful.

The need to upgrade the equipment of the TNI and in particular
the need for new aircraft is indeed important. But procurement
must be based on the planning mechanisms already in place in the
TNI and the Ministry of Defense. Once the defense authorities
have established their priorities, the plans must then meet with
the approval of Bappenas and the Ministry of Finance. Only then
are the plans ready for submission to parliament as part of the
national budget.

These standard procedures were ignored by the government. The
argument that the purchase of Russian military equipment,
including the Sukhoi jets, will be conducted by way of counter-
trade, and therefore will not impose a huge burden on the budget,
is not valid.

This patchwork counter-trade proposal could result in huge
losses to the state because all of the price risk associated with
the purchase of the commodities involved, and their valuation at
the time of sale, will be carried by the state budget.

The violation of existing laws, the misuse of ministerial
authority, the violation of budget procedures, the misuse of food
stabilization funds and the waste of government resources through
the patchwork counter-trade mechanism also suggests a disturbing
case of corruption, collusion and nepotism that represents a
betrayal of the nation's farmers and of the goals of reformasi.

The above article is testimony of Dr. Rizal Ramli, former
Coordinating Minister for the Economy at SUKHOI Working Group,
Commission I of the House of Representatives, July 7, 2003.