Coffee for jets: Indonesia, Russia strike barter deal

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Europe

- Indonesia strikes deal for 11 Russian-made jets

- Russia to receive coffee, tea, palm oil in exchange

- Russia looks to new markets as sanctions bite

Indonesia has struck a deal with Russia to exchange coffee, palm oil and tea for 11 Sukhoi SU-35 fighter jets, as the Southeast Asian country looks to fill a trading void created by US and EU sanctions.

"The idea was proposed last year and some people suggested Indonesia should trade the jets with our main commodities," trade ministry spokesman Marolop Nainggolan told AFP.

Indonesia is the fourth largest producer of coffee in the world. /AFP Photo

The deal will be implemented under the framework of a memorandum of understanding signed by Russian state-run corporation Rostec and Indonesian state trading company PT Perusahaan Perdagangan Indonesia on August 4.

Neither a timeframe nor value for the exchange has been disclosed, and the volume of commodities is yet unknown.

Indonesia made its first purchase of Sukhoi jets in 2003 when the country was subject to a US embargo on arms sales.

Sanctions open new doors

Sanctions imposed on Russia over alleged meddling in the US election and actions in Ukraine and Crimea have forced the country to look to fresh markets.

Indonesia had a 411-million-US-dollar trade surplus with Russia in 2016, and Trade Minister Enggartiasto Lukita said the deal could open the door to further bilateral trade.

"This is an opportunity that should not be lost from our grasp," he said.

Russia's Foreign Minister Sergei Lavrov speaks at the ASEAN-Russia Ministerial meeting during the 50th ASEAN regional security forum in suburban Manila on August 6, 2017. /AFP Photo

Indonesia aims to expand its partnership in tourism, education, energy, technology and aviation among others.

The barter arrangement emerged as Russian Foreign Minister Sergei Lavrov arrived in Jakarta for a two-day visit as part of the tour of Southeast Asia.

Lavrov is expected to discuss the prospects of a trade deal between Indonesia and the Eurasian Economic Union as Russia looks to extend its influence in the country.

Payments change

In other sanctions-related news, the RIA news agency reported this week that Russia plans action to reduce dependency on US payment systems and the dollar as a settling currency.

Russia has already introduced a new national payment system to cut reliance on Western systems, such as Visa and MasterCard.

Source(s): AFP ,Reuters