Mark Forbes – Indonesia will finalise a $1.2 billion defence deal with Russian President Vladimir Putin in Jakarta tomorrow, to fund the purchase of Russian submarines, tanks and helicopters.
The acquisition of two high-performance Kilo-class submarines has significant strategic implications for Australia and could erode its naval dominance in the region, military experts believe.
Indonesian navy spokesman Sugeng Darmawan told The Age that long-term plans to buy another eight of the new submarines were being discussed.
Tomorrow's agreement will deepen military links between Russia and Indonesia as well as upgrade Indonesia's army, navy and air force. It will reduce Indonesia's dependence on US military supplies.
Under the deal, Russia will provide a $1.2 billion line of credit to finance the military purchases. Indonesia will buy two of the most advanced conventional submarines built by Russia, 22 helicopters and 20 tanks.
The move will fuel rising concerns about an accelerating regional arms race, with China, Japan and Australia – among others – involved in major military acquisitions. Leaders at APEC this weekend will discuss concerns about the regional build-up.
The head of the Australian National University's Strategic and Defence Studies Centre, Hugh White, said the submarine purchase would "significantly complicate" Australia's naval planning as they would represent a real threat to surface warships.
"These are Russia's highest-quality conventional boats. They would significantly increase Indonesia's capability," Professor White said. "It is most strategically significant for Australia. If there was any conflict with Indonesia, these submarines would massively complicate the use of Australian surface ships."
The ongoing pattern of major arms purchases in the region was eroding Australia's air and naval advantage, despite the $A10 billion acquisition of air warfare destroyers, he said. Under Australia's defence planning, the destroyers will be essential to protecting military forces deployed offshore.
First Admiral Darmawan said the Indonesian navy was proposing to acquire a fleet of 10 submarines and 260 surface ships in the longer term.
Mr Putin and Indonesian President Susilo Bambang Yudhoyono will witness the signing of the defence deal tomorrow, Indonesian Defence Ministry spokesman Edy Butar Butar confirmed.
It is the first visit of a Russian leader to Indonesia and the pair will hold wide-ranging talks before travelling to APEC in Sydney. Stronger trade, as well as military ties, will be endorsed.
Brigadier General Butar said the military deal would reduce Indonesia's military dependence on the US. "We hope with other sources we will be strong enough to do our job to protect the unitary state of Indonesia.
"The air force will also receive weapons and equipment for its Sukhoi squadron, because on top of the $US1 billion purchase we will also buy six Sukhoi jet fighters worth $US335 million," he said. Under the deal, Indonesia will not pay interest on the loan for 15 years.
Military links with Russia, including exchange of personnel and training, would also be boosted, General Butar said. He raised Indonesia's concern over arms embargoes instituted by the US after human rights abuses in Timor.
Earlier this week, one of Mr Putin's aides confirmed the credit deal would be discussed in Jakarta, but denied any plans finalising specific military purchases.
"Indonesia is a creditworthy, oil-producing country. Russia gives loans to such countries when it can," the aide, Sergey Prikhodko, said. "I think that this is a very right thing to do."
Australia's most potent defence against any hostile regional submarine forces is an effective submarine force of its own and the Royal Australian Navy and defence analysts are already planning for replacements for Australia's six Collins Class boats.
The Australian Strategic Policy Institute said in March that China, India, Bangladesh, Indonesia, Malaysia, Pakistan, Singapore and South Korea were buying or planning to buy modern conventional submarines from Russia or Western Europe. China and India were developing their own nuclear submarines.
ASPI said regional submarine fleets could threaten Australia's maritime movements and the safety of Australia itself. "Submarines will be able to seriously threaten the operation of surface fleets and commercial trade," a defence analyst at ASPI, Andrew Davies, said.
"Australia simply cannot expect to be able to conduct major naval operations in waters patrolled by submarines without a major upgrade to its anti-submarine warfare capabilities."
After initial problems with noise and their combat systems, the Collins are widely considered the best conventional submarines in the world and they are valued by Australia's US ally because they can operate in shallow regional waters where the much bigger US nuclear boats cannot go.
[With Brendan Nicholson and Karuni Rompies.]