Russian officials who met last week with Argentine economy authorities have reportedly conveyed a proposal from President Vladimir Putin's Government to drop the US dollar and hold bilateral trade operations through a conversion scheme between rubles and pesos.
The Buenos Aires daily El Cronista reported Tuesday that such an unusual proposal had been on the table during last week's talks. The issue was discussed over lunch between President Alberto Fernández and a group of his aides with a delegation of businessmen from the Russian Direct Investment Fund (RDIF) and Sovcombank executives.
If the initiative moves forward, Argentina and Russia would drop the US dollar as an exchange currency and redefine their trade balance as per the exchange between rubles and Argentine pesos.
El Cronista also said Argentina's ambassador to Moscow Eduardo Zuain has been discussing the issue with Kremlin authorities, businessmen and Russian diplomats. However, the outlet also mentioned the idea was a highly technical issue that requires financial engineering, which was up to Argentine Central Bank (BCRA) CEO Miguel Pesce to gauge.
Argentine government sources admitted Moscow's idea was being entertained. If approved, it would also be a very strong geopolitical challenge. With an impending devaluation of the Argentine peso against the US dollar in the radar, it is only natural the Argentine Government would consider all options.
For Russia it would mean putting aside a dependence on the US dollar at a time when the inflationary spiral is wreaking havoc in the United States. The Kremlin would also circumvene potential sanctions in the future, El Cronista explained.
Since 2014 the European Union and the United States imposed economic sanctions on Russia targeting its energy, banking and defense sectors. Tougher sanctions are now being considered if Moscow tries to invade Ukraine after increasing its troops at the border.
President Fernández and Ambassador Zuain met for 38 minutes Monday at Casa Rosada to discuss the visit of the Russian businessmen and Fernández's possible trip to Moscow in April 2022 to promote bilateral trade.
Developing foreign trade in rubles with his allied countries would be a significant achievement for Putin, who sees his own currency also losing ground to that of the US.
For the time being, bilateral trade with Argentina is relatively low (US $ 900 million a year), but the idea is to increase this flow and strengthen the strategic alliance which dates back to 2010 when then President Cristina Kirchner and Putin met.
Russian companies are interested in areas such as mining, railroads, solar energy, chemicals and oil.
The possibility that Sovcombank could open up an office in Buenos Aires in addition to the potential sale of Russian military equipment to the Ministry of Defense was also discussed, as was the Sputnik V COVID-19 vaccine.