Barter trade in the region is becoming increasingly common to bypass the effects of US sanctions and to cope with shortages of foreign currency reserves.
Earlier this month, Pakistan
a barter trade agreement with Russia, Iran, and Afghanistan to ease the mounting pressure on its depleted foreign exchange reserves.
The barter mechanism allows crude oil, liquefied natural gas (LNG), liquefied petroleum gas (LPG), wheat, iron, and steel to be imported from Russia. In contrast, coal, crude oil, LNG, LPG, fruits, nuts, and vegetables will be allowed to be imported from Iran.
The barter mechanism is necessary for trade with Pakistan’s neighbors because the US government has imposed economic sanctions on all three. Any Pakistani company engaging in financial transactions with Iran, Russia, or Afghanistan would be shut out of the US-dominated global financial system.