Indonesia is in talks to buy six Lockheed Martin F-16C/Ds, and is asking for US help to upgrade its older F-16s and Lockheed Martin C-130A/B transports.
"There is a positive response from the Pentagon," said defence minister Juwono Sudarsono after meeting US defence secretary Robert Gates in Jakarta last week.
The deal must be approved by US Congress and Indonesia's cabinet, and would be financed through a deferred instalment payment scheme. The six Block 50/52 F-16s would be delivered from 2010, and the six airworthy F-16A/Bs out of the 10 in its fleet would be upgraded to C/D standard. This would enable it to build an F-16 squadron to replace its Northrop F-5Es by 2014.
Indonesia's F-16s, F-5s and McDonnell Douglas A-4 Skyhawks are testimony to Jakarta's historically close relations with Washington.
That changed when a US arms embargo was imposed in 1992 after Indonesian soldiers killed East Timorese pro-independence demonstrators. It was tightened in 1999 after a brutal crackdown in an unsuccessful attempt to prevent East Timor's independence.
Relations have warmed recently as Washington sees Indonesia as a model of a majority-Muslim country that is also a secular democracy.
But Jakarta established close military ties with other countries during the embargo. In 2003 it ordered two Sukhoi Su-27s and two Su-30s from Russia and in 2007 confirmed plans for six more.
Sudarsono says the US deal will not affect ties with Russia. "Each country has its own advantages and disadvantages. Our difficulty to buy US-made armaments lies with the bureaucracy, while our difficulty to buy Russian-made rests with the payments."
But some Indonesian officials are still wary of the USA. "How can we be sure they won't impose another embargo?" asks one defence ministry official. "The Russians seem to be more reliable, especially during difficult times for our country."