Financing and Offsets: Who will pick up the tab?
Indonesia received its last major installment of military aid from the United States in 1991, when the U.S. supplied the Suharto regime with $25 million under the Pentagon's Foreign Military Financing (FMF) program. Since that time, however, Indonesia has become eligible for several new channels of arms export subsidies, one of which it has taken advantage of already and the other of which coule come into play as part of the pending F-16 sale. The first channel involves guaranteed loans offered by the U.S. government's Export-Import Bank which are granted for so-called "dual use" items: equipment with both military and civilian applications. Indonesia was one of the first countries to benefit from this new program, which was implemented after intensive lobbying by the Aerospace Industries Association. In late 1995 Indonesia received a $22 million loan guarantee from ExIm Bank to refurbish seven of that nation's U.S.-origin C-130 and L-100 transport aircraft. The second channel of assistance is the Pentagon's newly created $15 billion arms export loan guarantee fund: [13] Indonesia is one of 37 nations in Europe and Asia that is currently eligible to receive support from the fund. Indonesian officials have indicated an interest in receiving some kind of credit or subsidized financing for the F-16 sale. If so, Indonesia would receive very cushy financing: any missed payments on the roughly $200 million involved in the F-16 sale and the shortfall would be fully covered by U.S. taxpayers. [14]
Related under articles: U.S Arms transfers to Indonesia 1975-1997
Table of Contents
Introduction
Soeharto and U.S Arms
F-16 Pending Project
Who will pick up the tab?
Friday, March 13, 2009
