Ferdinando Pelazzo, the President of the Italian-Russian Chamber of Commerce has said that Russian buyers should be able to pay for Italian goods in Rubles, and the Italian business lobby in Russia is working on a mechanism to achieve this. A new payment mechanism could come into effect within months.
Pelazzo stated that trade in non-sanctioned goods such as wine and clothing has been made difficult by financial restrictions on Russia, including the disconnection of its banks from the SWIFT international financial messaging system. “We want to create a system that would allow Russian buyers to pay us in Rubles to an account in a third country, so that we could then forward the money to Italy. After all, the payments are not subject to sanctions, only certain goods,” he said.
“Since last year, a large number of exports fell under Western restrictions; however, 49% of the goods Italy trades with Russia are exempt, and if trade in these goods is compromised, Italy will lose a lot.” Pelazzo warned.
In just the wine sector, exports from Italy to Russia jumped by 16% last year compared to 2021, reaching a record €172 million, Italian association of agricultural producers Coldiretti reported in April.
Pelazzo noted Russia’s growing links with Brazil, India, China, and South Africa, fellow members of the BRICS group of countries. The BRICS nations have been working to switch to payments in their national currencies instead of the US dollar and euro. At the upcoming BRICS summit in August, the bloc will discuss a single currency, which Pelazzo described as “the most interesting financial, commercial and geopolitical change.”
In terms of Russian buyers being able to pay for Italian goods in Rubles, this would involve a third country as a currency exchange. This could include for example Turkiye, which requires Euros and can transfer these to Turkish Lira or Rubles for payment to Russia. Russia-Turkiye trade was up 198% in 2022.
Another candidate is Armenia, which is a member of the Eurasian Economic Union (EAEU) free trade bloc with Russia and is looking to boost its trade. Russia-Armenia trade is also up, with Yerevan able to process both Euros and Rubles. Both Turkiye and Armenia are easily accessible from Italy. Dubai could be another option.
With SWIFT sanctions now 18 months old, traders with historic connections with Russia are looking to find ways to continue their business. About 500 Italian companies operate in Russia, with bilateral trade worth about €30 billion in 2019. The alternative to finding solutions for many is bankruptcy.