Russia and Pakistan are bypassing international sanctions with some old fashioned bartering. Instead of using currency, the two are exchanging goods like mandarin oranges and chickpeas.
This development comes as Russia faces mounting challenges getting basic needs for its citizens and engaging in the global financial market. Sanctions on the country have forced it out of lucrative trade deals due to 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. The effects have been felt even between the “no limits partners” China and Russia, where 98% 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, Oct. 1, the two countries outlined a deal that avoids traditional financial transactions altogether.
Under the agreement, Russia will send 20,000 tons of chickpeas to Pakistan in exchange for the same quantity of rice. Additionally, Pakistan will be sending 10,000 tons of potatoes and 15,000 tons of mandarin oranges for Russian lentils and even more chickpeas.
The Pakistani Deputy Minister of Trade Nasir Hamid said that difficulties in making payments have forced the partner countries to opt for the barter mechanism.
Russia is no stranger to bartering, it even made similar deals with China during the Cold War. That practice continued far into the 1990s. As new rounds of U.S. sanctions affect Moscow’s trade relations, it seems that bartering is once again becoming a viable solution.
The total export value from the Pakistani side alone is expected to exceed half a billion dollars.
