INDONESIA'S PLANNED purchase of nine embargoed Pakistani Lockheed Martin F-16A/Bs from the USA has stalled over Jakarta's demand for export credit.

According to defence sources, the issue of financing is the only remaining hurdle still to be cleared for the deal to go ahead. Agreement has already been reached on the number of aircraft, support equipment and spares.

Under a new policy introduced by Indonesia's Minister of Finance, foreign countries are required to provide export credits for all weapon sales to the Indonesian military.

Indonesia is understood to be asking for up to 100% financing in the form of soft loans for the $161 million deal to proceed. The US Government, however, no longer provides export credit for foreign weapons-sales.

The issue of funding is further complicated by the fact that any money received for the nine F-16s will go to the Pakistan Government, which originally ordered and paid for the aircraft

Delivery of the fighters has been embargoed, by the US Congress in response to Pakistan's nuclear-weapons programme. The US Government has agreed to try and refund Pakistan's $658 investment by selling the 28 F-16s already completed and in storage.

Local defence officials are confident that a way around the funding problem can be found in the near term for the Indonesian deal to proceed. The Philippines, in the meantime, is continuing to express interest in the remaining Pakistan F-16s, but like Indonesia, faces funding difficulties.

Source: Flight International