DEFENSE COOPERATION -- INDONESIA INCREASINGLY

C O N F I D E N T I A L SECTION 01 OF 03 JAKARTA 003155

SIPDIS

SIPDIS

DEPT FOR EAP, EAP/MTS, EAP/MLS, PM, PM/RSAT, PM/DDTC, DRL
SECDEF FOR USDP/ISA/AP P.IPSEN
JOINT STAFF FOR P.CLEMMONS
NSC FOR E.PHU

E.O. 12958: DECL: 11/13/2017
TAGS: PREL MARR MASS PGOV ID
SUBJECT: DEFENSE COOPERATION -- INDONESIA INCREASINGLY
LOOKING AT U.S. AS ARMS SUPPLIER

REF: A. JAKARTA 2990

B. JAKARTA 2893

Classified By: Ambassador Cameron R. Hume, reasons 1.4(b,d).


1. (C) SUMMARY: There are signs that the GOI is increasingly
interested in purchasing U.S. military equipment as it begins
to rebuild its defense capabilities. Two prospective F-16
deals continue to move forward (ref a) and the Indonesian
military is considering possible deals for other items. We
now understand the Indonesian Army is interested in two major
U.S. systems. This growing interest by the Indonesian
military (TNI) as a whole in U.S. equipment reflects, we
believe, a strong preference for U.S. quality and
reliability. Mission supports this process and urges
Washington to take this opportunity to further cement defense
ties with Indonesia. END SUMMARY.

F-16 DEALS A STEP CLOSER TO TAKEOFF


2. (C) The two previously reported prospective F-16 deals,
one for new planes and the other involving mid-life upgrades
(ref a),are moving forward. Regarding the first, a U.S.
team--including representatives of Lockheed-Martin and
officials from the Air Force--will visit Indonesia during the
week of November 26 to make an offer of price and
availability. Lockheed representative James Gribbon
confirmed this information to Defense Minister Sudarsono in
Sudarsono's meeting with a delegation from the US-ASEAN
Business Council on October 30 in Jakarta.


3. (C) Gribbon later told Mission that, in his view, it is
critical that Washington put together an attractive financing
package in order to secure the deal, given the substantial
cost of the purchase and the Russian government's competing
offer of Russian military equipment valued at $1 billion on
the basis of soft credits.


4. (C) The second deal reportedly was circulated for GOI
interagency review near the beginning of November. The
Department of Defense is heading that process.

ARMY NOW OPEN TO U.S. SYSTEMS


5. (C) According to both commercial vendors and TNI
officials, the Indonesian Army is considering new U.S.-origin
equipment to replace obsolescent systems. One ageing system
consists of British-origin Rapier air-defense missiles, which
could be replaced by a U.S.-origin multi-point fixed system
of missiles and guns with a range of five kilometers or less.
The Army Headquarters, which has budgeted the project at
$100 million, appears to be drawing upon multiple sources,
including Polish missiles. On the basis of indications that
U.S. systems would be seriously considered, Mission has
encouraged Raytheon to seek approval to provide a price and
availability quotation.


6. (C) Also up for replacement are the British-origin
Scorpion light-track reconnaissance vehicles. According to
sources in Indonesia, the TNI reportedly is looking to spend
$46 million for wheeled (6x6) armored personnel carriers
(APC),which could double as infantry fighting vehicles, and
is considering a U.S. model among the options.


7. (C) A turning point in the Army's thinking may have
occurred at a meeting of Army Chief Djoko Santoso with
Embassy defense officials on September 3. The meeting,
Mission's first substantive meeting on assistance with
Santoso since the lifting of U.S. sanctions two years
earlier, involved an extensive briefing of U.S. programs,
including IMET, FMF, FMS, Section 1206 and others, and was
attended by Santoso's senior staff. The atmosphere was very
positive, as though a new leaf had turned over. We note that
shortly before these meetings, Washington had issued an
export license for competition pistols. Santoso was aware of
this development, and seems to have taken the issuance as

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proof that sanctions had indeed been lifted and the United
States was newly interested in Indonesia as a partner.

NAVY: AN ISSUE OF REPLACEMENT PARTS


8. (C) Mission has sought to clarify and resolve several
complaints by Navy staff, including outgoing Navy Chief
Slamet Soebijanto, alleging difficulty in obtaining U.S.
parts for TNI Navy equipment. These complaints were raised
at the 2007 Strategic Dialogue in Jakarta in April and by
Soebijanto during a meeting with Mission's Naval Attache in
October (ref b). Mission has been investigating these cases
to determine whether they have any basis in fact.


9. (C) In the case involving a U.S. inertial navigation
system manufactured by Honeywell for Corvette frigates
constructed in Holland, a check of the license application
record indicates that Department returned the application
because Honeywell's electronic signature on the form had
expired earlier. This information was communicated to the
Indonesian Navy. In the case of a magnetic detection system
of U.S. origin, electronics- systems specialists at Navy
Headquarters told Mission's Office of Defense Cooperation on
November 13 that there was no need for U.S. parts because
those systems had been functioning normally. These are the
only two identifiable cases that the Navy has mentioned to
us. To the extent that Navy officials are willing to provide
details, Mission is endeavoring to determine whether any
problems exist and, if so, to resolve them.

DESPITE RHETORIC, U.S. IS TOP CHOICE


10. (C) These reports must be taken in the context of
statements by senior Indonesian military and civilian
officials alleging that the United States is an "unreliable
partner" for arms supplies due to prior sanctions, etc.
Defense Minister Sudarsono and TNI Commander (Panglima) Djoko
Suyanto have made such statements publicly, and
recently-dismissed Navy Chief Soebijanto had alleged the same
to Mission officials directly (ref b). Working-level TNI
officials and commercial defense-industry sources here have
made clear U.S. equipment remains attractive because of its
quality and sophistication and because of the reliability of
the equipment and its servicing.


11. (C) In contrast, we are told, the TNI disdains Russian
and Chinese equipment because of the degraded nature of the
export version of the technology compared with domestic
versions, inferior performance and unreliable servicing.
Little, if any, of the much-hyped $1 billion in Russian arms
credits agreed during recent reciprocal state visits by
President Yudhoyono and President Putin has materialized into
actual arms purchases. Military sources tell us the Russian
deal was put together by the Indonesian Defense Department
for political purposes and that the TNI was not really
interested in it.

NEED TO FURTHER CEMENT TIES


12. (C) Defense cooperation with Indonesia is picking up
steam. Mission firmly supports this process and urges
Washington to take this opportunity to further cement defense
ties with this important partner. In particular, the
potential F-16 deals represent a real opportunity which, if
properly used, could come to symbolize a new era in
U.S.-Indonesia relations. These potential sales, and the
cooperation they represent, would help to provide a strategic
center to the U.S.-Indonesian Strategic Partnership agreed to
by Presidents Bush and Yudhoyono. In making this
recommendation, we note that Indonesia is often not easy to
deal with: its procurement process is complex and not
readily transparent, and nothing is certain yet on any of
these deals. That said, we think that Indonesia is looking
at the U.S. in a new, positive light. Given the
psychological and material legacy of U.S. sanctions on the
TNI, this is an enormous step forward. We should move

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forward quickly to act on this interest and to test their
readiness to further improve ties.

HUME