Venezuela and Russia are in talks to use the ruble in mutual trade settlements, thereby abandoning the commonly-used US dollar in country-to-country transactions. Further, the two countries are considering using El Petro, Venezuela’s oil-pegged cryptocurrency, as another medium of exchange.
The Petro is pegged to the value of a barrel Venezuelan oil and the national currency, the bolivar, is pegged to the Petro. Venezuela hopes to avoid sanctions by disconnecting from USD and the Petro is an integral part of this process. It is also “swapping crude oil for imported products” according to RT.
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.
The US Treasury imposed sanctions against the Venezuelan government and its crypto exchange Evrofinance after Petro’s launch. The treasury wrote that “Evrofinance’s involvement in the Petro demonstrated Maduro’s hope that the Petro would allow Venezuela to circumvent U.S. financial sanctions.”
Given there are no open crypto exchanges and no real way to pay with crypto in Venezuela, even after months of effort, this effort to route around sanctions appears aimed directly at getting Venezuela’s catastrophically broken government back on track but may or may not have much effect on the local economy.