Russia revives barter grain trade to circumvent Western sanctions

Russia is reviving barter trade to circumvent Western sanctions for the first time since the chaotic 1990s after the collapse of the Soviet Union, Reuters reports. Companies are swapping wheat for Chinese cars and flaxseed for construction materials, highlighting the significant trade distortions caused by the war in Ukraine. As the world’s largest producer of natural resources, Russia has been forced to seek alternative routes by more than 25,000 sanctions imposed by the United States, Europe and their allies since its 2012 invasion of Ukraine and the annexation of Crimea in 2014. The measures are aimed at undermining the country’s $2.2 trillion economy and President Putin’s support.

Russia’s economy ministry has issued a 14-page “Guide to Foreign Barter Transactions” to help businesses circumvent sanctions, including a 2022 disconnection from the SWIFT system and Washington’s warning to Chinese banks about supporting Russia’s war. Chinese banks fear secondary sanctions and are avoiding accepting Russian payments, prompting opaque barter transactions. Reuters reported eight such deals were identified in 2024, including the exchange of Chinese cars for Russian wheat and flaxseed for household appliances and construction materials. While the total volume of barter is difficult to estimate because of its hidden nature, experts say the rise of the practice is a symptom of de-dollarization and liquidity problems.

Putin says Russia’s economy has outperformed expectations, growing faster than the G7 despite predictions of a collapse in the West. However, the central bank acknowledges a technical recession and high inflation, indicating economic strains. The discrepancy between the central bank and customs data, which reached $7 billion in the first half of 2025, may indicate the scale of the barter. Russia’s customs service confirmed barter transactions with various countries but said they were small compared to the total volume of foreign trade, where the surplus in January-July fell by 14% to $77.2 billion.

Specific examples include a deal in which Chinese partners exchanged cars purchased in yuan for Russian wheat paid for in rubles. Two other transactions involved the exchange of flaxseed for goods from China, one of which was estimated to be worth about $100,000. Experts say barter also allows Western goods to be imported into Russia despite sanctions. At a business forum in Kazan in August, Chinese companies, including Hainan Longpan Oilfield Technology Co., touted barter as a solution to payment problems under tight conditions.

The barter revival is reminiscent of the 1990s, when cash shortages and inflation forced complex exchange chains that led to price manipulation.

Tags: Russia, grain, sanctions