Indonesia will pay with oil for Russian fighter jets

The contract for the supply of 11 Su-35s can be concluded before the end of the year.
State corporation Rostec and Indonesian trading state company PT.PPI concluded a memorandum on the counter trade program (Russian purchases of Indonesian goods) on Friday in Moscow within the contract for the delivery of 11 Su-35 fighters for the country's air force, Rostekh said. "The Russian side retains the right to choose the goods and trade partner producers in Indonesia. The structure of the agreement provides for the expansion of supplies of the most promising goods, "the press release says.

The Indonesian delegation also visited the Ministry of Industry and Trade. Both countries have extensive experience in the production of palm and vegetable oils, Indonesian Commerce Minister Enghargiasto Lukita said during the meeting: "Therefore, we had an idea to invite you to create a Russian-Indonesian association of vegetable oils" (quoted by the press release of the Ministry of Industry and Trade). The fact that the Indonesian government approved the purchase of 11 Su-35, on July 28, said the Minister of Defense of the country Ramizar Ryachudu.

Negotiations on the delivery of the Su-35 to Indonesia, which already has 15 Su-27/30 fighters (Su-35 - a radical modernization of this type), were conducted at least from 2013 and several times the parties were close to signing the contract, says A man close to Rosoboronexport. The discussion was delayed due to a number of problems, primarily financial ones, but now the parties have reached the home stretch, as evidenced by the memorandum signed by Rostekh, the interlocutor explains: the contract is highly likely to be signed before the end of the year and partially paid for by palm oil, rubber and Other Indonesian goods. The representative of Rosoboronexport declined to comment.

Su-35 was developed by Sukhim due to bank loans, but its first customer was the Russian Air Force, which bought 98 cars (of which more than 60 were delivered). In 2015, after a break of 10 years, during which China did not purchase Russian fighters, a contract was concluded with Beijing to supply 24 cars.

Payment by oil and other goods does not mean that they will be physically brought to Russia, explains the expert of the Center for Analysis of Strategies and Technologies Konstantin Makienko. This is, as a rule, about exchange commodities, which are easy to sell in the markets of the region. The cost of supply of 11 fighters can be up to $ 1 billion, the expert believes. In his view, the contract with Indonesia is no less significant than with China, as this country has access to Western-made aircraft and the deal encourages a number of other countries in the region, primarily Vietnam, to purchase new Russian fighters.