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$1Bln Indonesia Arms Deal in Cards

President Vladimir Putin and his Indonesian counterpart, Susilo Bambang Yudhoyono, agreed on Friday to boost military and energy cooperation in deals worth more than $1 billion.

Under a series of accords, Moscow plans to sell Jakarta at least $1 billion in arms and help the country develop its space program, and will offer to build Indonesia a floating nuclear power station.

"The talks strengthened my conviction that Russia is our reliable ally and partner," Yudhoyono said during a joint news briefing with Putin in the Kremlin at the end of a three-day visit to Russia. "First and foremost, I'd like to highlight that we are counting on long-term cooperation with Russia in the military sector."

The visit was Yudhoyono's first to Russia since his election as president in 2004. Putin and Yudhoyono met in 2004 and 2005 on the sidelines of the Asia-Pacific Economic Cooperation Forum in Santiago, Chile, and Pusan, South Korea, respectively.

The two leaders emerged after two hours of talks Friday and signed cooperation accords on military, space, nuclear power, tourism and other sectors.

Sitting in the front rows of the audience were a group of senior Russian officials, including Rosoboronexport chief Sergei Chemezov, Federal Atomic Energy Agency chief Sergei Kiriyenko, Prosecutor General Yury Chaika and Justice Minister Vladimir Ustinov.

During the ceremony at the Grand Kremlin Palace's ornate Malachite Foyer, Putin and Yudhoyono watched as officials from both countries took turns to sign the respective deals.

Yudhoyono, a retired general, appeared composed throughout the briefing. Putin broke into a smile just once -- when he exchanged comments with Ustinov, who took his turn to sign a deal on the protection of intellectual property rights in the defense industry.

Chemezov said on the sidelines of the briefing that a $1 billion arms deal would be made possible by a loan to Indonesia. The size of the deal might grow, he said.

On Friday, Kommersant cited a source in the Federal Service for Military and Technical Cooperation as saying Indonesia had originally sought $3 billion worth of arms, including 20 fighter jets and six submarines.

For now, Moscow will supply $500 million installments of arms, the newspaper said.

Chemezov said the arms deal would be finalized within the next six months, before Putin visited Indonesia next year.

A Rosoboronexport spokesman said that Moscow, a leading arms supplier to Indonesia in the 1960s, was looking to help modernize the country's military hardware, much of which dates to that time.

Putin said the two countries had "considerable opportunities" to work together on nuclear power.

Kiriyenko said Indonesia might be interested in a floating nuclear power station that Russia was now building.

"It's a very interesting project which so far has no analogies in the world," Kiriyenko said on the sidelines of the briefing. Kiriyenko said his agency was eager to bid for the contract to build a nuclear power station for Indonesia in late 2007 or early 2008, Itar-Tass reported.

Russia this summer began construction of the world's first floating nuclear power station in the Arctic port of Severodvinsk.

Russia will also help Indonesia to develop its space rockets program, due to start in 2009, Itar-Tass reported.

(The Moscow Times 04.xii.06)

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