Venezuela is negotiating with Russia about abandoning the USD in their bilateral trade settlements. They are planning to use the Russian ruble or petro according to the information given by Jorge Valero, Venezuela’s representative in UN’s Geneva offices.
RT News further reported on May 17 that the two countries are also discussing the possibility of using Venezuela’s state-backed cryptocurrency known as the Petro. Petro was announced by President Nicolas Maduro on Dec. 3, 2017, in a speech. He said the state cryptocurrency is backed by oil and mineral resources like gold and diamonds. The country planned to issue 100 million tokens. The cryptocurrency was released in February 2018.
The currency was basically launched so that it could serve as a substitute to the failing bolivar currency which was eroded in hyperinflation. This would also help the country to dodge U.S. sanctions and give the South American country access to international finance.
“In 2019, we have a schedule for [oil] to be sold in Petros and in this way continue to free us from a currency that the elite of Washington uses,” Maduro said in December 2018.
Petro met a lot of criticism from both within and outside. Venezuela’s opposition party claimed that the Petro is illegal and so they would not recognize it because it was issued by a government in desperate need for cash. In addition to this U.S. president, Donald Trump prohibited American citizens from investing in the Petro.
A few countries that have been sanctioned by the U.S. are looking at cryptocurrencies as a way to circumventing sanctions. Iran is another country that is using crypto for this purpose. U.S. Congressman Brad Sherman has proposed the banning of cryptocurrencies in the country because they threaten America’s global power base. Sherman perceives that America’s global dominance lies in many countries relying on its fiat currency for international trade.
International sanctions imposed on Venezuela by the U.S. have forced the country to halt using the USD for international trade. The country is currently using the Euro and is paying for imported products with crude oil.
Ambassador Valero said his country is counting on Russia to restructure its foreign debt estimated to be in the region of $140 billion.
Russia’s situation is no different. Some financial institutions in the Eastern European country have been sanctioned for their willingness to finance the Petro. Russia’s advisor to the president proposed the introduction of digital currency in Crimea (Russia’ federal subject) in an attempt to avoid sanctions.