US sanctions have closed Indonesia for Russian fighters

Russian Su-35s are facing American obstacles in Indonesia.
Restrictive measures that the United States is prepared to introduce within the framework of the Law on Countering the Opponents of the United States through Sanctions (CAATSA) have affected the delivery times of Indonesia to Russian Su-35 fighters. In Jakarta, the first of 11 cars was expected to arrive in October, but the US did not give Indonesia guarantees not to apply restrictive measures. The Russian side also has difficulties: when implementing the contract, it was planned to use a credit scheme, funds for which would be allocated by one of the commercial banks. But this is fraught with grave consequences for him, since in the United States they regard this loan as cooperation with Rosoboronexport and impose sanctions against the bank.

Two top managers of defense industry enterprises told about the difficulties that arose with the implementation of the Indonesian contract, “Kommersant”, and confirmed a source close to the government staff. According to them, the contract for the supply of 11 Su-35 fighter jets has retained its legal force, but its implementation will be delayed. This is due to the CAATSA sanctions, which can be imposed for cooperation with Rosoboronexport, both on Indonesia and on counterparties of the Russian weapons special exporter. “The situation is unpleasant, but in no way critical. We are in constant contact with our Indonesian partners, looking for ways out of the situation, ”added one of the Kommersant interlocutors. In Rosoboronexport and the Federal Service for the PTS, they refrained from official comments.

Indonesia signed a contract for the Su-35 squadron in February, becoming the second foreign customer of this type of fighter (the first export agreement for 24 vehicles worth over $ 2 billion was signed in November 2015 with China). Negotiations with Jakarta with varying degrees of intensity lasted for three years: in 2015, the Indonesian military directly stated that they had direct instructions from President Joko Widodo to purchase the Su-35 to replace outdated F-5 Tiger fighter jets that had been in service for more than 40 years and had completely exhausted the actual your resource. First of all, the Ministry of Defense of Indonesia planned to replace the machines that are in service with the 14th squadron of the country's air force at the Iswahyudi air force base (Madiun, Java). Local media clarified that the purchased Su-35s will form part of the 11th squadron of the 5th aviation wing of the Indonesian Air Force (the Sultan Hasanuddin air base in Makassar and Sulawesi), and the Su-27SKM and Su-30MK2 stationed there will be reduced to 14 Squadron Yu.

However, such plans did not find understanding among a number of other countries, primarily the United States. Serious pressure was put on Jakarta: a working visit to Indonesia of a Russian delegation to discuss issues on this contract coincided with the same visit to US Secretary of Defense James Mattis. As previously reported to Kommersant, he threatened to stop supplying spare parts for American aircraft in service if he signed a contract with Rosoboronexport, but in the event of a rejection of this idea, he promised to organize deliveries of F-16 fighters. One way or another, the contract for the Su-35 was signed: it is estimated at $ 1.154 billion, of which about half (about $ 570 million) falls on counter deliveries of non-military goods (rubber, palm oil, etc.). It was planned that the delivery of Su-35 aircraft to the customer should be completed within two years from the moment of signing the contract in two stages (eight and three aircraft, respectively). At the same time, the Indonesian Ambassador to the Russian Federation Vahid Supriyadi said that they would like to receive the first aircraft of the Air Force by October.

However, this did not happen. According to a Kommersant source in the MTC field, despite the fact that the decision to purchase the Su-35 was made long before CAATSA, the US authorities have not yet formulated a clear position on Indonesia. A number of media outlets reported that Mr. Mattis is trying to convince Congress to soften sanctions against some countries “who have historically developed relations with Russia, but now they are against the United States with the prospect of buying American defense systems.” In this case, it was about Indonesia, India and Vietnam. But none of these countries received any firm guarantees from the United States, the Kommersant source is convinced in the sphere of military-technical cooperation. Earlier, we would note that the Vedomosti newspaper reported that CAATSA sanctions apply to Rosoboronexport’s counterparties, therefore, payments from India on most weapons contracts with Russia have not been received since April 2018.

According to Kommersant, restrictive measures create difficulties in issuing a loan that was planned to be used in the implementation of the Russian-Indonesian contract.

Part of the amount was supposed to be covered by a Russian commercial loan: according to Kommersant sources, a large bank could provide these funds - for example, VTB (there, however, they say that the organization does not participate in this project). But there are no commercial organizations wishing to fall under the secondary sanctions of the United States for cooperation with Rosoboronexport, this is risky for their other projects, says the Kommersant source in the industry. As confirmed on Thursday by one of the top managers of the military-industrial complex, the contract will come into force after all loans have been approved.