Bartering for food ‘security’

Counter-trade, or 'bartering', is not a sustainable way to finance commodity supply. It attracts attention from time-to-time; such as when the former Soviet states were split from the mother-ship in 1990 and found themselves short of cash. Experience shows, every time, that it means trading one form of illiquidity (lack of credit) for another even less tractable (too many Soviet trucks, or thousands of tonnes of low-grade manganese, or a dam-full of cloudy vegetable oil).

"In a striking example of how the global financial crisis and high food prices have strained the finances of poor and middle-income nations, countries including Russia, Malaysia, Vietnam and Morocco say they have signed or are discussing inter-government and barter deals to import commodities from rice to vegetable oil." extract from Financial times

The use of non-transparent denominators in place of transparent ones (like cash) is too attractive to fraudsters—often in the shape of a 'state-owned' enterprise—that want to launder their excesses and disguise their failures.

Tags for this entry: trade food countertrade barter