Venezuela to Use Ruble and Petro to Avoid Sanctions

Venezuela and Russia are now holding discussions on how to use the Russian Ruble as well as the Venezuelan national cryptocurrency El Petro for trade settlements. This would allow the two countries to avoid the more common US dollar for international trades.

Jorge Valero, the Venezuelan UN Representative make the announcement to the media about the two countries’ trade plans.

Avoiding US Sanctions

The US controls the international financial markets since most countries use a US Dollar based system for international trade. Due to this, the US can impose sanctions on any country using its currency.

With the US having placed economic sanctions against Venezuela and Russia, the two countries are looking for ways to do away with having to trade using the US dollar, and use the Russian Ruble and the El Petro in its place.

Valero told the media that the penalties imposed by the United States against his country’s oil sector, as well as freezing Venezuela’s US Dollar accounts had had a huge negative impact on their economy. These sanctions deprived the country of being able to get international investments as well as support for its oil sector.

Sanctions on Venezuela and Russia

The US Treasury had imposed sanctions against the government of Venezuela as well as the state-run crypto exchange Evrofinance post the launch of the Petro. All American citizens were forbidden from using the Petro, because of which the crypto failed to achieve the international traction it needed.

The Treasury justified its stance by saying that the crypto exchange’s involvement in the Petro pointed to President Maduro’s hopes that the national cryptocurrency would allow Venezuela to bypass the financial sanctions imposed by the US.

Considering that there are no properly functioning cryptocurrency exchanges and no real way in which people can pay for goods and services using cryptocurrencies in the country, this effort to circumvent US sanctions seems to be aimed at saving Venezuela’s severely broken government, rather than actually improving economic conditions.

While Russia may not be as badly off as Venezuela, but many financial institutions in the country are facing sanctions by the US for having financed the Petro.

Other Countries Looking at Cryptos

Venezuela and Russia are not the only two countries looking for ways to circumvent the sanctions placed on them by the US. Iran is also using cryptocurrencies for the same reasons.

The Russian President’s advisor also proposed introducing a new cryptocurrency in Crimea, which is the country’s federal subject, in an effort to avoid US sanctions.