Arms embargoes and business as usual - Libya and Indonesia

Now that NATO finished its air campaign in Libya, it will be a matter of weeks, maybe a few months, before we will hear the first calls for an end to the Libya arms embargo.
With many military installations bombed to pieces and arsenals looted, the Libyans have many armament gaps to fill. There is a lucrative market waiting out there.

Back in 2004, just after Kadhafi had declared to give up Libya's programmes for weapons of mass destruction, the European Union decided to reward his regime and allow arms sales to resume. Especially Italy, France and the UK were quick to try and get orders from the new oil-wealthy costumer.

When in early 2011 Kadhafi was suddenly no longer 'our man' again, contacts as well as contracts had to be put on hold.
However, in April the interim government was quick to reassure their NATO helpers that previous deals could resume once Libya had returned to normality. The war has only been a temporary interruption of the profitable trade.

Generally, arms embargoes which directly respond to the acute eruption of violence, often have little or no effect as stocks of arms are mostly sufficient to fight for some time. And as soon as the smoke has cleared the business continues again.

A similar situation arose some ten years ago, with the EU embargo against Indonesia, and two Dutch companies waiting for it to expire:
In 1999 Indonesian armed forces brutally tried to break the East Timorese quest for independence, after a referendum which showed overwhelming popular support to break away.
The military intervention caused more then 1,500 of deaths and put the island into chaos, razing some 70 percent of its infrastructure.
The international community, which had long taken an ambiguous, or even favourable attitude towards the then ruling dictator Suharto, now could no longer ignore the brutal nature of his leadership. Both the European Union and the United States imposed an arms embargo in September 1999.
In 2000 violence also flared up in the Maluku Islands and in September of that year three UN workers and 20 refugees were murdered by militiamen in West Timor while Indonesian soldiers watched. The late Richard Holbrooke, then American ambassador to the UN, said the military was responsible for the outrage.

Although the EU lifted military sanctions in January 2000, the United States maintained its ban until November 2005.
 
During those years of the American embargo Indonesia was looking to both upgrade its F-16 fighter arsenal and to procure new aircraft. With Washington unwilling to supply F-16s it turned to Russia for Sukhoi fighter bombers.

Meanwhile however, and despite the US sanctions, Indonesia secured a deal with two Dutch companies to upgrade its F-16s, a previously unknown document reveals.
Between October 2000 and March 2002 Daedalus and Koolhaas Alphen executed the "Falcon Up" structural modification program on the Indonesian F-16 fleet. The Indonesian "certificate of final acceptance" refers to an initial contract dated 6 August 1999, just weeks before Indonesian armed forces started their murder campaign in East Timor.
From the document it appears that the two Dutch companies waited for embargo to expire, to resume their business in October 2000.

Of course this raises the question if Washington knew about this circumvention of its own embargo and if so, whether or not they discussed the issue with the Dutch government, which must have granted an export licence for the deal.

[FS, 3 Nov 2011]

PS 13 Feb 2012: Answering parliamentary questions, the Dutch government writes that Daedalus nor Koolhaas Alphen did anything wrong. However, it does not answer whether there was US permission for the F-16 upgrade at a time when there was an ongoing US arms embargo.