Indonesian Air Force (IDAF) has resumed paying South Korea for its portion of the costs associated with the joint project to develop the KF-21 stealth jet. However, budgetary concerns appear to hamper Jakarta’s ambitions to acquire another fighter aircraft.
According to a Bloomberg report, the proposed sale of 36 F-15 fighter jets and accompanying equipment to Indonesia by the US defense giant Boeing has been hampered due to funding concerns.
In February, the state department approved the potential sale of the jets, which have an estimated market worth of $9.5 billion. The deal also includes associated equipment worth about $4.4 billion.
The latest report stated that Boeing executives traveled to Jakarta this week to talk with Indonesian officials about the deal on the sidelines of an annual defense exhibition. The US aircraft manufacturer is particularly concerned about Jakarta’s ability to pay for the warplanes.
On the other hand, Jakarta insists on making payments in installments. The meetings concluded without a solution, the company’s officials told Bloomberg on condition of anonymity.
In light of this, the date for signing the contract, which was set for the end of this year, will probably be pushed further. A Boeing representative said that the company is still having meaningful and fruitful meetings with top members of the Indonesian Air Force and the Ministry of Defense.
Late last month, Prabowo Subianto, Indonesia’s defense minister, addressed the budgetary difficulties and stated that negotiations with Boeing are still ongoing.
At the time, Subianto stated that they explicitly requested to purchase the warplanes by making payments in installments as they could not do it all at once. “The government always prioritizes economic development and so on,” he added.
Nevertheless, a pandemic-induced budgetary pressure paired with skyrocketing inflation is still a significant barrier to acquiring new weaponry. The country’s role in developing a stealth aircraft with South Korea had also been previously called into question due to late payments.
The country has finally resumed paying South Korea for developing the KF-21 Boramae multirole fighter aircraft. Jakarta has paid W9.4 billion ($6.6 million) for the development of KF-21.
The Southeast Asian nation must contribute 20% of the W8.8 trillion (USD6.2 billion) price tag for the fighter under the deal’s provisions. The country was supposed to make payments until 2028 but stopped in 2019.
The KF-21 repayment, which marks the first payment from Indonesia to South Korea in three years, comes after multiple rounds of negotiations that came to an end in November 2021.
Why Is The Deal Vital For The US?
Indonesia’s intention to acquire US jets is consistent with Jakarta’s ambitions to replace an aging fighter fleet consisting of American F-16s and Russian Sukhois.
Regarding geopolitics, the F-15 sale is crucial for US national interests because it would strengthen one of its major regional allies. The deal is also critical for the US to prevent Asian countries from acquiring Russian weapons.
In 2018, Indonesia inked a deal worth $1.4 billion with Moscow to acquire 11 Russian Su-35 fighter jets. The transaction was, however, effectively halted and ultimately scrapped due to the Countering America’s Adversaries Through Sanctions Act (CAATSA).
CAATSA was passed into law in August 2017, leveraging the United States’ position at the heart of the global banking system to prevent military agreements involving Moscow. Therefore, countries interested in a sizable arms deal with Russia could be subject to severe US sanctions.
In February 2022, the Pentagon announced that the US State Department had approved the potential sale of up to 36 F-15ID fighter planes and associated equipment in a deal worth up to $13.9 billion to Indonesia.
The state department decided a day after Subianto revealed that agreements had been reached with France to buy 42 Dassault Rafale fighter planes and two Scorpene-class submarines during their meeting in Jakarta.
Even the sales by France are a significant advantage for the United States since they enhance the French defense industry while simultaneously hurting Russia.