Trade and aid: yet another Dutch warship for Indonesia

Last week the Indonesian Ministry of Defence signed a contract with Dutch shipbuilder Damen Schelde Naval Shipbuilding (DSNS) for a so-called SIGMA 10514 Guided Missile Frigate, or Perusak Kawal Rudal (PKR). The frigate is to be delivered in 2016 and is part of a major expansion of the Indonesian Navy, TNI-AL. The contract comes nearly two years after it was announced and includes a transfer of technology, enabling Indonesia to expand its shipbuilding capabilities, something Jakarta had long been looking for. The deal is being financed through a multi-year export credit arrangement, according to the Indonesian government.

In 2011 Indonesia was the largest beneficiary of Dutch bilateral aid, totaling over 71 million euro. Even as the aid relation is currently being built-down, it is cynical to see that at the same time Indonesia is the largest non-NATO recipient of Dutch arms.

Over the past decade Dutch arms sales to Indonesia skyrocketed, largely due to the sale of the four SIGMA corvettes commissioned between 2007 and 2009, worth 595 million euro - out of a total of 619 million from 2001-2010.

Moreover, in 2011 Thales Nederland announced an 18 million euro deal to supply spare parts for Indonesia’s SIGMA’s.

Back in 2010, Damen director Van Ameijden mentioned that the current frigate deal would be worth 171 million euro. Damen beated Russian and Italian shipbuilders when competing for the deal. Van Ameijden also predicted that the ship would be “the first of a series”. The frigate is built upon the same SIGMA concept used for the four Indonesian corvettes.

The 105 meter long warship that is now under contract is bigger and more heavily armed, with guided missiles and guns for Anti-Air Warfare and Anti-Surface Warfare, as well as torpedo systems for Anti-Submarine Warfare.

Thales Nederland will supply its Tacticos Combat Management System. The ship will be able to carry a helicopter. Modules of the frigate will be built in Europe as well as at PT PAL in Surabaya, Indonesia, where assembly and trials will take place as well.

Contrary to most European countries, Indonesia and most of its neighbors are heavily investing in new military equipment. Indonesia has announced that its military expenditure will rise from the then level of 0.8 per cent of GDP to 1.2 per cent of GDP in 2011 and 1.5 per cent by 2014. Indonesia’s defence procurement funding is scheduled to rise 71 per cent between 2011 and 2015, from 1.25 to 2.14 billion US dollar annually.

It has since ordered amphibious vehicles from Russia, combat search and rescue helicopters from Eurocopter, as well as the modernisation of its fighter aircraft force.

Also, it has plans to buy eight Apache attack helicopters from Boeing and Korean [or German?] submarines worth over a billion US dollar.

 

Between 2003 and 2005 the sale of the Dutch corvettes was subject of fierce public debate. With a potentially much bigger deal now, it would seem logical that parliament will  raise the interdependent issues of major Dutch arms sales to Indonesia (as well as Malaysia and Thailand), spiraling military spending in South East Asia and the likely threat of increasing regional tensions.

 

Certainly arms sales to Indonesia are subject of a crucial debate on 21 June, when Dutch parliament will discuss the proposed sale of some 100 Leopard tanks with the current caretaker government. Last December – quite uniquely in terms of Dutch arms export control - a parliamentary majority voted against such a sale because of human rights concerns.

There is little reason to see why that situation would have changed in between, and thus why the government is still pushing the highly controversial tank sale for which it needs parliamentary approval.

 

[FS, 13 June 2012]