Indonesia pledges palm oil in return for Russian fighter jets

By: Madeleine Keck - Posted on: August 7, 2017 | Business

As Moscow’s relations with US and EU worsen, Indonesia is closing in on deals that would boost economic ties with Russia

Russian President Vladimir Putin (R) and Indonesian President Joko Widodo (L) attend a signature ceremony at the Bocharov Ruchei state residence in Sochi, Russia, 18 May 2016.
Russian President Vladimir Putin (R) and Indonesian President Joko Widodo (L) attend a signature ceremony at the Bocharov Ruchei state residence in Sochi, Russia, 18 May 2016. EPA/Yuri Kochetkov

Indonesian state-owned trading company PT Perusahaan Perdagangan and Russian state-owned company Rostec have signed a preliminary deal to exchange Indonesian agricultural products for eleven Russian fighter jets.

A memorandum of understanding was signed in Moscow on Friday. Specifics about the deal will be released in the coming days by Indonesia’s trade and defense ministries, Indonesian trade ministry official Imam Pambagyo said on Sunday.

“This barter under the supervision of both governments hopefully will be realised through the exchange of eleven Sukhoi Su-35s (jet planes) and a number of Indonesian exports, starting from coffee and tea to palm oil and strategic defense products,” Trade Minister Enggartiasto Lukita said in a statement.

Enggartiasto also voiced his hope that the deal would spur similar arrangements with Russia sectors.

Indonesia is trying to expand its trade partnerships with Russia as the country faces economic sanctions imposed by the US and the EU, mainly in response to election meddling and the invasion of Ukraine. In response, Russia has limited imports from the West and is looking to other countries for commodity imports.

“It is an opportunity we have to seize. The great potential for economic cooperation during the embargo and counter embargo goes beyond trade and investment issues,” Enggartiasto explained. “We also have the opportunity to enhance cooperation in tourism, student exchange, energy, technology and aviation.”

The Sukhoi 35 planes are expected to arrive in Indonesia next year.

The Russian-made aircrafts are expected to replace F5 E/F Tiger II warplanes, which have been in use by the Indonesian Air Force since 1980s, according to Xinhua.

The Su-35 plane is a major upgrade, according to industry website Air Force Technology. The Su-35 “has high maneuverability with a high angle of attack, and is equipped with high-capability weapon systems that contribute to the new aircraft’s exceptional dogfighting capability.”

The Su-35s will join the Indonesian Air Force’s Flanker-family fleet, which now operates 11 Su-30s and five Su-27s.

This latest deal comes after months of tightening relations between the countries. According to the Russian Ministry of Industry and Trade, bilateral trade with Indonesia increased by 14 percent in the first five months of 2017.

In May, Indonesia’s and Russia’s oil and gas giants Pertamina and Rosneft signed a $13.8 billion deal to develop the Tuban refinery in East Java, which is seen as being crucial to reducing Indonesia’s reliance on oil imports.