On Monday Russia warned that it would begin aggressively reducing its dependence on the US Dollar and US-based payment systems, and shortly after it confirmed just that when Indonesia announced that it will barter coffee, palm oil, tea and various other commodities in exchange for 11 Russian-made Su-35 fighter jets, calling U.S. and European sanctions against Russia "an opportunity to boost the Southeast Asian nation's trade."
The Indonesian Ministry of Trade said that a memorandum of understanding for the barter was signed Aug. 4 in Moscow between Russia's Rostec and PT. Perusahaan Perdagangan Indonesia, both state-owned companies. “This barter under the supervision of both governments hopefully will soon be realized through the exchange of 11 Sukhoi Su-35s and a number of Indonesian exports, starting from coffee and tea to palm oil and strategic defense products,” Indonesian Trade Minister Enggartiasto Lukita said on Monday, as quoted by Reuters.
The trade minister also said that in exchange for the Su-35 jets, Indonesia would provide coffee, tea, palm oil and defense equipment. No value for the barter was announced according to Bloomberg, which added that Indonesia already operates 16 Sukhoi jets, making its first purchase in 2003 while the country was subject to a U.S. embargo on arms sales due to the military's human rights abuses.
In what may be the first of many such barter deals, the Russian state-run corporation Rostec said it is committed to implement the terms of a counter trade program. At the same time, the Russian corporation reserves the option to choose which goods it receives in trade from Indonesia as well as the right to pick trade partners and producers for cooperation under the agreement.
“The deal allows expanding supplies of Indonesian goods that are the most easily-suited for the Russian market. The range of products will be discussed by members of a specially created advisory group,” the company’s press release reads.
Jakarta is trying to promote its palm oil products amid decreasing demand in Europe. Indonesia is the world’s number one producer of the commodity, which is widely used in cooking, cosmetics and biofuel.
As Bloomberg adds, trade between Russia and Indonesia, the largest economy in Southeast Asia, has tumbled since 2012, but Lukita said the wide-ranging European Union and U.S. financial and trade sanctions against Russia are an opportunity for Indonesia to revive trade through barter deals in other industries.
"This is an opportunity that should not be lost from our grasp," he said.