Exploring Russia, Forgetting Indonesia

Exploring Russia, Forgetting Indonesia

Tempo Magazine, Thursday, October 13, 2005

The Indonesian Navy is exploring the purchase of Russian corvettes. The DPR has questioned Nur Budiharto's appointment as liaison officer.

PT Pal Shipwharf, Surabaya

AFTER experiencing a Western military equipment embargo, Admiral Slamet Soebijanto turned to the East for possibilities. Early in September, the Navy Chief of Staff and his team visited Russia to explore the purchase of warships from Rosoboronexport, Russia's armament industry.

For Admiral Soebijanto, this trip was not out of the ordinary. It was aimed at determining the best options for purchasing military equipment to suit the needs of the navy. "It can come from any country, as long as it's not expensive and no embargo is imposed," Slamet told Tempo on Wednesday.

Despite these assurances, the navy's Russian tour caused anxiety in the House of Representatives (DPR). House Commission I member Djoko Susilo is concerned that the navy's Strategic Plan for 2003-2013, created by Soebijanto's predecessor Bernard Kent Sondakh, would be changed. The Strategic Plan included the purchase of four Sigma Class corvettes from Holland. "And the plan was already approved by the DPR," Djoko said.

The four ships were to be purchased in two stages-the first in 2003. This was conducted by Minister of Defense, Matori Abdul Djalil, representing the Indonesian Navy. The Dutch government provided export credit facilities. The first two ships are currently being constructed. "They are expected to be ready in 2007," said Department of Defense Director-General of Defense Facilities, Vice Marshal Pieter L.D. Wattimena.

The beginning of the second phase, the purchase of the remaining two corvettes, should occur this year, with the ships to be completed in 2009. The problem is that, according to Djoko, the navy intends to change the second-phase purchase from Holland. As Djoko disclosed, in a hearing with Commission I in September, Slamet stated that the navy would consider buying corvettes from Russia.

Slamet's statement was also supported by a letter of the Navy Chief's Logistics Assistant, Rear Admiral Yudoko, on August 18 to Rosoboronexport. In the correspondence, Yudoko noted that the navy would visit Rosoboronexport to obtain information on Project 20382 corvettes, Uran-E missiles and BMP-3F amphibian tanks. For this purpose, the navy appointed Nur Budiharto as liaison officer.

Djoko described Budiharto's appointment as peculiar. "In what capacity was he named liaison officer?" asked the DPR National Mandate Party (PAN) faction member. Djoko was afraid that the involvement of Budiharto would lead to an arms purchase via a third party alias agent instead of a government-to-government (G-to-G) deal. Pieter Wattimena expressed the same fear. "The gathering of information should have been done by the defense attaché," he said.

But Slamet maintained his argument for choosing Budiharto. He said Budiharto was selected by the navy because he is a member of the Russian Committee of the Indonesian Chamber of Commerce & Industry well versed in the arms purchase procedure in Russia. "The purchase will later remain on a G-to-G basis," assured Slamet. Budiharto was selected to ensure that the navy was given the best deal financially, Slamet added.

Happy Bone Zulkarnaen, Djoko's colleague in Commission I, did not question the appointment of Budiharto as liaison officer and the visit of Slamet to Rosoboronexport. Zulkarnaen argued that as a would-be arms user, it was legitimate for Slamet Soebijanto to inspect Rosoboron. "He's only a user. But the decision to buy is in the hands of the Defense Minister," Happy told Mawar Kusuma from Tempo. Furthermore, the Sigma Class corvettes have triggered political protests in Holland and are likely to end in an embargo.

Nevertheless, Djoko continues to be concerned about the possibility of realizing the corvette purchase from Russia as a follow-up to Slamet's Rosoboronexport visit. In Djoko's view, if this happens, the chance of technology transfer as declared by former Navy chief Admiral Bernard Kent Sondakh will be thwarted. "We approved the corvette purchase from Holland because of the terms on technology transfer," noted Djoko.

Technology transfer has indeed become a requirement in armament procurement, as regulated in the Decree of the Minister of Defense of 2005 on the procurement of major armament systems. Indonesian Military (TNI) Commander in Chief, General Edriartono Sutarto, emphasized this when visiting shipyard company PT PAL Indonesia in Surabaya two years ago.

At that time Endriartono said that the TNI Headquarters would buy corvettes from PAL. "It's meant to reduce dependence on other countries," he explained. According to Endriartono, PAL will build the ships and their armament will be equipped by PT Pindad. Endriartono anticipated that the national corvettes could be manufactured this year.
But the national corvette building plan seemed to be limited to a verbal statement. In another Commission I hearing in June, Slamet Soebijanto mentioned the navy's budget proposal for arms purchase through export credits for the 2005-2009 period worth US$1.9 billion. But Slamet made no reference to technology transfer for national corvettes.

In the written reply, Slamet specified that the US$1.9 billion was, among others, for the phase-I purchase of two Sigma Class corvettes at US$212 million and the phase-II procurement of two Sigma Class corvettes at US$339 million. Slamet confirmed that the two units for the first stage were to be built in Holland. "But the navy has not reached any accord on corvette construction with PAL," added Slamet.

According to Pieter, the process of technology transfer has already been included in the phase-II corvette purchase scheme. One of the terms of the export credit agreement for the phase-II Sigma Class corvettes is the sending of PAL technicians to Holland to join the manufacture of Sigma Class corvettes. "And Holland has indeed approved it," Pieter confirmed.

According to Pieter, last year Slamet Soebijanto submitted a request that the export credit loan agreement for the phase-II Sigma Class corvettes be carried on. This request was also approved by the National Planning Board and the Coordinating Minister for the Economy. The problem, however, arose as Slamet wished to shift the phase-II Sigma Class corvette purchase from Dutch-made ships to Russia's Project 20382 corvettes. Yet the plan change allegation was denied by Slamet. In his response, his visit to Russia was only exploratory in nature. "Nothing was positive yet," he affirmed.

In the meantime, the national shipyard is expecting the navy to procure its own products instead of buying corvettes from foreign countries. PT PAL Indonesia has long awaited orders from the navy for corvette construction. Sadly, as PAL Technical Director M. Moenir put it, the orders for PAL's ships were just officials' discourse. "The navy, the Defense Department and the president have agreed, but no orders have yet been placed," said Moenir.

He made it clear that PAL was capable of building corvettes without having to send its technicians to Holland, because the company had experience in constructing 12 Fast Patrol Boats (FPB) for the navy. Moenir said PAL had once also built a Fatron vessel measuring 30,000 DWT in weight, 190 meters in length and 3.5 meters in width. The ship, ordered by state oil company Pertamina, cost just US$30 million.

Moenir assured that corvettes were not considerably different from other types of ships. Around 60 meters long, a corvette has a larger engine and is equipped with weapons. "So, we have no problem with technology," added Moenir. If this shipyard received orders for corvettes, PAL will cooperate with 10 national companies including PT Dirgantara and PT Pindad.

Indonesia, advised Moenir, should copy Malaysia with most of its warships being domestically constructed. "Indonesia is strange, its own [shipyard] industry is not utilized," added Moenir. Therefore, in Moenir's opinion, Admiral Slamet should not have sought embargo-free corvettes eastward and westward-it would have been enough to merely look at the industry at home. [Zed Abidien, Fanni Febiana (Jakarta), Adi Mawardi (Surabaya)] -- (No. 06/VI Oct 11-17, 2005)

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