At the 11th Eastern Economic Forum in Vladivostok, Russia, President Prabowo Subianto announced plans by Russian aluminum producer Rusal to invest in an Indonesian processing plant, part of broader efforts to deepen bilateral economic ties. Yet the planned investment comes amid intensifying geoeconomic rivalry among major powers, raising questions over whether Indonesia can deepen ties with Russia without compromising its strategic flexibility. The test is whether Indonesia can remain both bebas (free) and aktif (active).

Rusal is the world’s largest aluminum producer outside China, selling 4.2 million metric tonnes of aluminum in 2023. It expressed interest in investing in Indonesia as far back as 2014, when the company sought to build smelters in the country to expand its production base into lower-cost regions, although nothing came of the plan at the time.

This interest has been renewed in recent years, partly because of Rusal’s need to diversify its sources of raw materials after losing 40 percent of its alumina supply from Ukraine and Australia in 2022 following Russia’s invasion of Ukraine. Indonesia, meanwhile, could benefit from broader economic cooperation with Russia as a hedge against systemic risks arising from overdependence on any single economic bloc.

Indonesia-Russia ties have a long history dating back to the Cold War. In the years after independence, Indonesia enjoyed close relations with the Soviet Union, which supported the construction of landmarks including Persahabatan Hospital and Gelora Bung Karno Stadium. Relations between Indonesia and the Soviet Union deteriorated following the political upheaval of 1965 and Soeharto’s subsequent rise to power, which brought the country closer to the United States, but began to recover after his fall in 1998.

Reform-era Indonesia revived relations with the newly established Russian Federation, notably through President Megawati Soekarnoputri’s visit in 2003, which included agreements on purchases of Russian military equipment. The reestablishment of scholarships for Indonesian students wishing to study in Russia followed soon afterward.

However, economic cooperation during the Reformasi era has not always been smooth, as various projects proposed in recent decades have stalled for different reasons. In 2015, President Joko “Jokowi” Widodo launched the Kalimantan railway project, which aimed to provide 398 kilometers of rail infrastructure for transporting coal, passengers and other goods. The project was to be funded by Russian Railways, which withdrew in 2020, citing several factors, including low coal prices and a lengthy land-acquisition process.

Sanctions imposed on Russia have exacerbated the problem, with the development of an oil refinery in Tuban facing additional uncertainty following Rosneft’s inclusion on the US’ Specially Designated Nationals (SDN) list. Indonesia is now seeking to reinvigorate its partnership with Russia, with President Prabowo having visited the country four times, primarily to discuss bilateral economic and defense cooperation.

The question, therefore, is how Indonesia can thread the needle between competing powers. After all, memories remain fresh of US sanctions imposed on an oil terminal in Karimun, Riau Islands, over its alleged involvement in Russian oil shipments.

Rusal itself was once a sanctioned entity because of its ties to Russian oligarch Oleg Deripaska, but it was removed from the SDN list in 2019 after Deripaska agreed to reduce his ownership in EN+ Group, which controls Rusal, from around 70 percent to 45 percent. Therefore, unlike the Karimun terminal and the Tuban refinery, the Rusal investment may not in itself carry direct sanctions risks.

However, the broader context surrounding the Rusal deal could ultimately derail the project. Indonesia has pitched itself to Russia as a gateway through which Russia and the Eurasian Economic Union can access the ASEAN market. This could potentially expose Indonesia to scrutiny as a third-country enabler of the Russian economy if it becomes party to transactions connecting sanctioned Russian entities with third parties, creating sanctions risks of its own.

The risks are heightened as Indonesia is also drafting regulations that would allow it to continue importing Russian oil despite Western sanctions. Indonesia currently trades far less with Russia than with its major Western partners. Care must therefore be taken to ensure that Indonesia’s pursuit of closer ties with Russia remains consistent with its bebas aktif foreign policy without unnecessarily exposing the economy to sanctions or jeopardizing relations with more important trading partners.