Economists Value Jokowi's Peace Mission Can Repress Domino Effect Of Global Inflation

President Joko Widodo and Mrs. Iriana inspect the ruins of the Lipky Apartment complex in Irpin City, Ukraine on Wednesday (29/6/2022). ANTARA/HO-Laily Rachev - Press Bureau of the Presidential Secretariat/pri.

JAKARTA - Economist from the University of Jember, Adhitya Wardhono, assessed that President Joko Widodo's visit to Ukraine and Russia with a mission of peace could suppress the domino effect of global inflation due to the sharp increase in world oil and gas prices.

"The peace mission brought by President Jokowi will have an impact on the economy, both globally and domestically," said Adhitya as quoted from Antara, Wednesday, June 29.

According to him, the longstanding feud between Ukraine and Russia indirectly has an impact on the global economy, including Indonesia.

"As one of the largest emerging markets in the world that has good relations with Russia and Ukraine, Indonesia certainly becomes hope and has an important voice to be able to defuse the ongoing conflict," he said.

He said that Indonesia was not only independent, but also actively involved in upholding decolonization and economic justice which was one of the visions of the Non-Aligned Movement.

One of the steps for Indonesia's involvement in the global agenda was manifested in Jokowi's visit to Ukraine and Russia to have dialogue and open the gap for peace, so that the threat of the global food crisis that is currently hitting can be avoided.

"The threat of a global food crisis is caused by disruption of the world supply chain caused by the COVID-19 pandemic and exacerbated by tensions between Russia and Ukraine," said Adhitya.

In Indonesia, he continued, wheat is one of the commodities that is met through imports from other countries, especially Ukraine.

In addition, fertilizer is also one of the commodities imported from Russia.

If President Jokowi's visit produces good results, according to him, at least there will be an indirect impact that will be felt by the food industry, local farmers, and can increase Indonesia's export corridor.

Moreover, the credibility of the Indonesian state can also increase in the eyes of the world so that this can attract and increase the confidence of both local and foreign investors.

"The visit can also be a moment to strengthen bilateral relations between Indonesia and Russia and Ukraine, it can even improve Indonesia's position internationally and have a positive impact both globally and domestically if successful," he said.

In diplomatic matters, he continued, Indonesia's relations with Russia and Ukraine are also very good. If Indonesia is able to bring peace to Russia and Ukraine, it is hoped that Indonesia will also be able to convince Western countries to stop all sanctions against Russia and stop the game of war of attrition (limited war).

Russia's Role

The monetary economist explained that the peaceful mission brought by Jokowi also had an impact on the economy both in the global and domestic scope.

The actions taken by Jokowi can reduce the potential for high inflation to increase throughout 2022 because there is a delay in the central bank's policy to increase the benchmark interest rate.

Controlling interest rates will benefit the domestic economy in the form of ease of financing for business actors so that financing is at an accommodative level.

Adhitya said Russia plays an important role in world oil exports, which is around 10 percent, and affects gas distribution to Western countries, especially Europe through the Nox Stream 1 and 2 routes.

"With the visit of the President of Indonesia to Ukraine and Russia, it is hoped that the domino effect will be minimized and the economy will be stable," he said.

The lecturer at the Faculty of Business Economics at Unej said that Jokowi's visit was also expected to reduce trade protections or restrictions on exports from Russia and Ukraine.

Indonesia can negotiate with Russia so that the Black Sea route can still be used by Ukraine as a route for sending wheat to other countries because there is a shortage of bread and other wheat products in Africa and the Middle East.

"Jokowi's actions during his visits to Ukraine and Russia can also be used to create a good public perception for Indonesian investors or trading partners and it is hoped that the investments that will be made in Indonesia can be realized soon," said Adhitya.

In addition, he continued, the visit of the Indonesian President was able to help European countries that are currently in an energy crisis by increasing cooperation through Ukraine to supply energy needs.

Countries that are already on the verge of an energy crisis are Germany, Sweden, the Netherlands, Austria, and Denmark.

Countries that depend on Russia for gas supplies are starting to reuse coal power as an alternative form of energy that can be used in times of energy crisis.