France-Indonesia pact could lead to new Rafale jet orders, says Macron

JAKARTA (Reuters) -France and Indonesia on Wednesday signed a preliminary defence pact that could lead to new orders of military equipment from Paris, including Rafale fighter jets and Scorpene submarines, French President Emmanuel Macron said.

In 2022, the two countries signed an $8.1 billion defence deal that included an order for 42 Rafale fighter aircraft made by France's Dassault Aviation, as well as a series of agreements including submarine development and ammunition.

"I am delighted that the letter of intent signed today could open up a new perspective with new orders for Rafales, Scorpenes, light frigates," Macron said at a joint press conference alongside Indonesian President Prabowo Subianto.

Prabowo did not mention the new pact, but said France was one of Indonesia's main partners in upgrading military hardware, including the development of the defence industry through joint production and technology transfers.

Macron arrived in Jakarta from Vietnam on Tuesday night on the second leg of his Southeast Asia tour. Indonesia is the region's largest economy and Paris' biggest arms client in Southeast Asia. The French president is scheduled to fly to Singapore on Thursday.

Dassault Aviation shares were up 3.4 percent in the morning session in Paris.

Indonesia has yet to receive any of the Rafale jets from the 2022 deal. The chief of the Indonesian Air Force Mohamad Tonny Harjono said in February that six jets would arrive in Indonesia in early 2026, state news agency Antara reported.

Aside from the Rafale deal, Indonesia in 2024 struck an agreement with French state-owned shipyard Naval Group to buy two "Scorpene" submarines, and in 2023 announced the purchase of 13 long-range air surveillance radars from France's Thales.

Prabowo, who became president last year, was the defence minister when the deals were signed.

ISRAEL-PALESTINE

The two leaders also discussed the deepening crisis in the Middle East with Israel's military action in Gaza.

Prabowo said Indonesia, the world's largest Muslim-majority country, was willing to recognise and open diplomatic relations with Israel if an independent Palestinian state was recognised by Tel Aviv.

"When Palestine is recognised by Israel, Indonesia is ready to recognise Israel and we are ready to open diplomatic relations with Israel," Prabowo said.

Indonesia currently does not recognise or share any diplomatic relations with Israel.

Macron reaffirmed his wish to see a two-state solution to the Israel-Palestinian conflict and said there were no double standards in French policy towards the Middle East.

Macron is leaning towards recognising a Palestinian state, diplomats and experts say, a move that could infuriate Israel and deepen Western splits.

"Only a political solution will make it possible to restore peace and build for the long term," Macron said.

"Together with Saudi Arabia, we will soon be organising a conference on Gaza in New York to give fresh impetus to the recognition of a Palestinian state and the recognition of the State of Israel and its right to live in peace and security in this region," he said.

MOUs SIGNED

Indonesia and France signed a host of other Memorandums of Understanding, including one on cooperation between French mining company Eramet and newly-established Indonesian sovereign wealth fund Danantara.

Macron's delegation to mineral-rich Indonesia included Eramet's new CEO Paulo Castellari. There were no immediate details on the MOU, but Eramet chairwoman Christel Bories had said they would look to discuss mining permits in relation to the Weda Bay nickel mine in eastern Indonesia.

Indonesia is the world's largest producer of nickel, and also holds the biggest known reserves of the metal. Eramet and other companies have complained about reduced export volume allowances.

The group has been in talks with Danantara about battery supply-chain investments, with Eramet still wanting to get into nickel processing after dropping a plan to build a plant with BASF last year.

French food company Danone, and TotalEnergies also signed deals, according to images of a signing ceremony broadcast by Reuters TV.

(Reporting by Ananda Teresia and Stanley Widanto in Jakarta, and Gus Trompiz and Sudip Kar-Gupta in Paris; Writing by Gibran Peshimam; Editing by John Mair and Kate Mayberry)