Russia Extends Credit to Indonesia

I for one would be a tad suss about Russian involvement and especially where money and arms are concerned. But it seems the Russian government has agreed to provide Indonesia a US$1 billion export credit to procure several Sukhoi fighter jets, warships and other military equipment from the country.

A memorandum of understanding on the deal was signed in Jakarta. It follows an agreement in April 2003 to enhance technical military cooperation between the two countries. Under this latest deal the export credit also will be used to buy spare parts from Russia for troop training programs and to develop Indonesia's defence industry. The agreement is effective for five years according to a Business New report.

According to the secretary-general the government agreed to accept the export credit because of the beneficial terms offered. The interest rate is only for five years and there is no insurance fee. The credit can save us up to 12.25 percent if compared to a commercial credit.

There is the possibility that the value of the credit will be expanded. Russian banks are still studying this cooperation. President Susilo Bambang Yudhoyono plans to visit Russia to discuss defence cooperation with his counterpart Vladimir Putin.

Russia had also agreed to find other sources of funds to provide Indonesia more credits for its defence needs. Oh yeah, what kind of needs?.