In order to avoid using the commonly-used US dollar in country-to-country transactions, Venezuela and Russia are in talks to use the ruble in mutual trade settlements. However, the two countries are also considering using El Petro, Venezuela’s oil-pegged cryptocurrency, as another medium of exchange. Venezuela and Russia to Trade Rubles and Crypto.
The upcoming trade plans were shared by Venezuela‘s UN representative, Jorge Valero, with Russian house organ Russia Today.
How the Petro works are that it is pegged to the value of a barrel Venezuelan oil. Then the national currency, the bolivar, is pegged to the Petro. It is Venezuela’s goal to evade sanctions by utilizing the Petro to disconnect from the USD. According to the news source RT, it is also “swapping crude oil for imported products”:
The diplomat stressed that the US penalties against the Venezuelan oil sector, along with freezing its dollar accounts, has had an enormous negative impact on the country’s economy. The measures deprived the Latin American nation of free access to international financial support and investments in its oil sector.
Venezuela and Russia to Trade Rubles and Crypto. Sanctions were imposed against the Venezuelan government, and it’s crypto exchange Evrofinance, by The US Treasury, after Petro’s launch. The Treasury wrote:
“Evrofinance’s involvement in the Petro demonstrated Maduro’s hope that the Petro would allow Venezuela to circumvent U.S. financial sanctions.”
Even though the efforts being made by the Venezuela government may not have much effect on the local economy, because there are no open crypto exchanges and no real way to pay with crypto in Venezuela. This strategic affiliation with Russia to route around sanctions seems to be directly aimed to get the country’s catastrophically broken government back on track.