Russia will swap chickpeas for Pakistani mandarin oranges under a new barter system launched in response to payment woes caused by international sanctions in place over Moscow’s invasion of Ukraine.
The Biden administration’s secondary sanctions targeting finance and trade flows that could aid Russia’s war efforts have spooked foreign lenders. The threat of sanctions has been notably effective in China, with Russian media reporting that by August, up to 98 percent of the country’s banks were rejecting Russian cross-border settlements in yuan.
One potential workaround emerged in the form of a Memorandum of Understanding from the inaugural Pakistan-Russia Trade and Investment Forum, held Tuesday in Moscow, Russian state media outlet TASS reported.
Through the framework, which aims to strengthen commercial ties between the countries, participating companies can trade commodities while avoiding monetary transactions bedeviled by U.S. scrutiny and anxieties over sanctions.
As a result, mandarins and rice from Pakistan’s Meskay & Femtee Trading Company will be exchanged for chickpeas and lentils from the Russian company Astarta-Agrotrading, The Moscow Times reported.
“Russia and Pakistan have some difficulties in making mutual payments. Therefore, the two companies decided to launch a barter trade mechanism,” Ukrainska Pravda quoted Pakistani Deputy Minister of Trade Nasir Hamid as saying.
According to the agreement, Russia will provide 20,000 tons of chickpeas in exchange for the same amount of Pakistani rice. Separately, Pakistan will trade 10,000 tons of potatoes and 15,000 tons of mandarin oranges for 10,000 tons of Russian lentils and 15,000 tons of chickpeas.
The Russian foreign ministry did not immediately respond to a written request for comment.
The agreement is not the first time Russia has looked at a bartering scheme.
While trade turnover with China soared by 26 percent to a record $240 billion last year, fresh rounds of U.S. sanctions have caused significant hiccups, prompting the neighbors to explore such an option, Reuters reported in August citing payment and trade sources familiar with the matter.
Moscow favored such barter agreements with China during the Cold War, with the practice lasting well into the 1990s even after the dissolution of the Soviet Union.
Russian traders’ payment issues were reportedly a topic of concern during Russian President Vladimir Putin‘s talks with his Chinese counterpart Xi Jinping in Beijing in May.
Tuesday’s forum, aimed at strengthening trade ties between Moscow and Islamabad, was attended by more than 60 Pakistani businesses with a total export value of over half a billion dollars. Representatives from Russian banks and over 60 officials from the country’s Agriculture, Industry and Trade, and Economic Development ministries also attended.