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Indonesia, Russia Sign Trade and Defense Deals

06 September 2007

Russian President Vladimir Putin stopped in Indonesia to finalize a $1 billion defense agreement and to strengthen economic ties. Chad Bouchard reports from Jakarta.

The defense package opens a line of credit that will allow Indonesia to buy Russian military equipment, including helicopters, tanks and submarines during the next 15 years.

Indonesian President Susilo Bambang Yudhoyono's meeting with President Putin signals Indonesia's desire for military independence and its increasing role in the global economy.

The United States was once Indonesia's largest arms supplier, but cooperation was suspended in 1999 due to concern over human-rights abuses in East Timor.

That arms ban has since been lifted, but presidential spokesman Dino Pati Djalal says Indonesia wants to reduce its dependence on the United States.

"We want to diversify the sources of our equipment. Russia is offering us a generous package, and Russia also does not attach any conditions whatsoever. Russia is all business and does not attach any political conditions and that is the way we like it, and that is why we took up the offer," he said.

The Russian leader was accompanied by a delegation of oil, energy, and banking officials.

The president is overseeing the signing of two contracts for Russian companies to upgrade mining and oil facilities in Indonesia.

Djalal says the leaders' talks also include ways to boost trade between the two nations.

"The trade relations are still very low at $680 million and that is minimal compared to the size of our economy. Russia is a $780-billion economy. Indonesia is about half of that. And there is much more we can do in terms of trade relations," added Djalal.

Mr. Putin's one-day visit is the first time a Russian or Soviet head of state has walked on Indonesian soil in nearly 50 years.

President Yudhoyono last met with Mr. Putin in Moscow in December 2006.

The Russian president made his visit to Jakarta while on the way to Sydney to attend the Asia Pacific Economic Cooperation summit this week.

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