28 Nov 2005
US arms purchases underline reduced reputational risks
Defence Minister Juwono Sudarsono on 25 November said that the government plans to purchase military equipment from the US as early as January. Sudarsono was speaking three days after the US government announced that it was lifting a six-year embargo on arms sales to Indonesia.
The resumption of military relations with the US is a sign of Indonesia’s improved international standing. The country has come a long way since the US government announced in 1999 that it was severing military ties following the East Timor independence referendum, when pro-Jakarta militias are estimated to killed about 1,000 people. While foreign companies operating in Indonesia still face reputational risks, mainly as a result of the poor human-rights record of the Indonesian armed forces (TNI), those risks have diminished as the process of democratic reform progresses. Government has become more accountable; in 2004 the country held its first direct presidential election, completing the transition to democracy that began with the ousting of former president Suharto in 1998.
Sudarsono, speaking at a news conference, said that the government would seek to acquire US-made C-130 Hercules aircraft to boost its capabilities of providing military transport and disaster relief. The country presently has just six operational Hercules aircraft, compared with 24 before the embargo.
However, despite the lifting of the arms embargo, limited reputational risks to foreign investors persist. Critics say that the US decision to lift the arms embargo is a reflection of Indonesia’s strategic importance in the war on terrorism, and not an improvement in its record on human rights. The US Congress has consistently pursued a tougher line against Indonesia than the White House and the decision to resume military relations has been criticised by some in Congress. US lawmakers recently passed an appropriations bill giving Secretary of State Condoleezza Rice authority to keep the restrictions in place and had expected further concessions from the Jakarta government in exchange for the lifting of the embargo.
President Susilo Bambang Yudhoyono, a former general, has worked hard to restore military relations with the US since he took office in October 2004. In February, Washington agreed to resume the high-profile International Military Education and Training (IMET) programme and in May it lifted a ban on the sale of non-lethal military equipment.
