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After a long and restless day recently, I enjoyed a cup of coffee on the campus of Paramadina University near the Senayan sports complex. From the window of a high-rise building, Jakarta looked picturesque, with a view of the Gelora Bung Karno main stadium, one of the largest football stadiums in the world.

Constructed in the early 1960s by a Russian contractor and financed by the Soviet government, the stadium has been the venue for various important events in Indonesia’s history. It has been a silent witness to the political and economic transformations that have shaped the face of the country. It has also been witness to the ups and downs of the 60-year relationship between Indonesia and Russia.

In the past, the two nations were close allies. Indonesia was among the Soviet Union’s most important partners in Asia. But the warm relationship, more ideologically than economically motivated, evaporated when President Sukarno fell from power in 1966.

The old generation of Indonesians suspected that the Soviet Union played a role in the Communist Party’s failed coup in 1965. The younger generation, knowing Russia mostly from James Bond, Rambo or other Hollywood movies, saw Russians as cold-faced soldiers or deceptive KGB agents.

This perception, combined with President Suharto’s more open and pro-Western economic policy, distanced the two nations. Things remained that way until the early 1990s, when the collapse of the Soviet Union ended the cold war.

Economics follows politics, and the Russian economy quickly shrank by 50 percent. Unemployment was everywhere, but the bitter pill that Russia was forced to swallow eventually paid off. After years of economic upheaval, Russia’s economy is stronger today.

As the world economy grows, demand for fossil fuels and metals will increase. This means that commodities will serve as a reliable pillar for Russia’s economy in the foreseeable future. British Petroleum data show that based on proven reserves of oil, coal and natural gas, Russia’s natural endowment value reaches $18.5 trillion, the largest in the world and much higher than Indonesia’s $825 billion.

Still, Russia faces serious problems that may distort its long-term economic performance. Political instability and the prevalence of corruption remain threats and could create resource misallocation and dampen foreign direct investment, much needed by Russia to improve its infrastructure and manufacturing facilities to expand beyond a commodity-based economy.

Trade between Indonesia and Russia has grown significantly, reaching a record high of $1.7 billion in 2008. Considering the countries’ combined gross domestic product of $2.2 trillion, however, the level of trade is relatively meager, indicating the huge potential for expansion in the future.

With its robust economic performance, Russia is a potential market for Indonesia, one in which we can expand our exports beyond crude palm oil, coffee, tea and wood products. Russia’s growing middle class is also resulting in an increasing number of tourists heading to our shores.

On the import side, Russia is a technologically advanced country and we need to think beyond steel and fertilizer, the two main commodities we import from the country. For example, Russia could become an alternative supplier of electric power generating and transmitting equipment. It could be a cost-effective solution for Indonesia, which faces uncertainty over its electricity supply in the future.

Last but not least, to ensure long-term economic growth Russia needs to address the reality that its population is shrinking by 0.49 percent per year, creating problems in the supply of a labor force. Migrant labor could be a viable answer for Russia, and Indonesia could be a solution.

Indonesia and Russia have many things in common. Both have large populations, and both are diverse nations with hundreds of ethnic groups and various religious traditions. The two are also key producers of commodities. Despite these similarities, we have different strengths and weaknesses that make us natural partners.

We need to recreate our past warm relations, since in this globalized world, fortune favors those who have many friends.

Let’s use this, the 60th year of relations between Indonesia and Russia, to rebuild the bridge connecting our two nations.

 

Wijayanto is a deputy rector at Paramadina University and is the co-founder and managing director of the Paramadina Public Policy Institute. This article appears in the March issue of Globe Asia.