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Countertrade in Modern Geoeconomics: A Study of Indonesia and the Eurasian Economic Union

WORKING PAPER 21: This working paper examines the resurgence of countertrade—an exchange of goods and services without immediate monetary payment—as a strategic economic mechanism within modern geoeconomic contexts, specifically focusing on Indonesia and the Eurasian Economic Union (EAEU). Historically prominent during periods of economic isolation or liquidity constraints, countertrade is now re-emerging amid rising geopolitical tensions and financial uncertainties, serving as a tool for economic resilience and strategic autonomy. The paper investigates Indonesia’s past experiences with countertrade, primarily in defense procurement, and evaluates scenarios for potential future engagement under a proposed Indonesia-EAEU Free Trade Agreement. Using theoretical firm-level analysis, it distinguishes how different Indonesian firm categories—super-large conglomerates, large enterprises, and small and medium-sized enterprises (SMEs)—could benefit from or face challenges in adopting countertrade. Findings suggest that, despite theoretical benefits like reduced currency risk and strategic resource access, practical implementation is complex and cost-intensive, making it most suitable for larger, resource-rich firms capable of navigating these complexities.

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