Russia and Pakistan forced into barter system due to sanctions

Karah Rucker

RUSSIA AND PAKISTAN ARE TURNING TO A BARTER SYSTEM TO BYPASS INTERNATIONAL SANCTIONS, EXCHANGING GOODS LIKE MANDARIN ORANGES AND CHICKPEAS INSTEAD OF CASH.

THIS LATEST DEVELOPMENT COMES AS RUSSIA FACES MOUNTING CHALLENGES MAKING GLOBAL FINANCIAL TRANSACTIONS DUE TO SANCTIONS OVER ITS INVASION OF UKRAINE. 

IN PARTICULAR, U.S. SECONDARY SANCTIONS,  HAVE MADE FOREIGN LENDERS WARY OF FACILITATING ANY TRADE THAT MIGHT BOLSTER RUSSIA’S WAR EFFORTS.

AND THE EFFECTS HAVE BEEN FELT EVEN IN CHINA, WITH REPORTS SUGGESTING THAT UP TO 98-PERCENT OF CHINESE BANKS WERE DECLINING RUSSIAN PAYMENTS BY AUGUST. 

IN RESPONSE, RUSSIA AND PAKISTAN HAVE FOUND A POTENTIAL WORKAROUND–A BARTER TRADE MECHANISM.

AT THE FIRST-EVER PAKISTAN-RUSSIA TRADE AND INVESTMENT FORUM, HELD IN MOSCOW ON TUESDAY, THE TWO COUNTRIES OUTLINED A DEAL THAT AVOIDS TRADITIONAL FINANCIAL TRANSACTIONS ALTOGETHER.

UNDER THE AGREEMENT, RUSSIA WILL SEND 20-THOUSAND TONS OF CHICKPEAS TO PAKISTAN IN EXCHANGE FOR THE SAME QUANTITY OF RICE.

ADDITIONALLY, PAKISTAN WILL TRADE TEN-THOUSAND TONS OF POTATOES AND 15-THOUSAND TONS OF MANDARIN ORANGES FOR RUSSIAN LENTILS AND CHICKPEAS.

THE PAKISTANI DEPUTY MINISTER OF TRADE EXPLAINED THE DUE TO DIFFICULTIES IN MAKING PAYMENTS, THE TWO NATIONS OPTED FOR THIS BARTER MECHANISM TO FACILITATE TRADE.

RUSSIA IS NO STRANGER TO BARTERING, HAVING RELIED ON SUCH SYSTEMS WITH CHINA DURING THE COLD WAR -CONTINUING THE PRACTICE INTO THE 1990S.

AND AS NEW ROUNDS OF U.S. SANCTIONS AFFECT THEIR CURRENT TRADE RELATIONS, IT SEEMS BARTER IS ONCE AGAIN BECOMING A VIABLE SOLUTION.

THE TOTAL EXPORT VALUE FROM THE PAKISTANI SIDE ALONE IS EXPECTED TO EXCEED HALF A BILLION DOLLARS.

I’M KARAH RUCKER AND WE’LL KEEP YOU UPDATED- DON’T FORGET TO DOWNLOAD THE STRAIGHT ARROW NEWS APP