Diary

It Figures: A Putin Connection to Venezuela's Sketchy New Currency

TIME has found that “Russian officials and businessmen” were behind the launch of the new Venezuelan cryptocurrency, the petro. The purpose is to evade US sanctions on the regime.

President Donald Trump may not have realized on Monday that his executive order would step on Russia’s toes. Its official target was Venezuela, specifically the country’s plan to create the world’s first state-backed cryptocurrency, the petro, which went on sale Tuesday.

But behind the scenes, the petro was in fact a collaboration—a half-hidden joint venture between Venezuelan and Russian officials and businessmen, whose aim was to erode the power of U.S. sanctions, sources familiar with the effort told TIME.

Trump’s executive order did not mention the petro’s Russian backers, whose role has not previously been reported. Citing economic sanctions that the U.S. imposed against Venezuela in August, the order simply made clear that anyone who buys or uses the new cryptocurrency would be in breach of those sanctions, as would anyone under U.S. jurisdiction who helps Venezuela develop the petro. “Any conspiracy formed to violate any of the prohibitions set forth in this order is prohibited,” the document states.

I’m guessing that any damage to those Putin operatives by Trump’s EO was unwitting. Last November, Putin cut Maduro some slack on an upcoming interest payment, so Maduro owed the Russian dictator. Putin partially called in that favor a month later when Maduro gave the Russian oil company Rosneft the rights to develop two offshore gas fields. With the new cryptocurrency, it appears that Putin still has his hooks into the Venezuelan wannabe socialist regime. Putin can try this currency experiment on some other country and not put the ruble at risk.

The larger problem, of course, is that Chavez and then Maduro have gutted their economy by printing money at alarming rates (the 2017 inflation rate was 2616%) and taking over most economic sectors. The one real solution to their problem, dollarizing their currency like Mugabe did in Zimbabwe, would be a direct rebuke of Maduro and his leadership, which is why he won’t do it and instead resort to this cryptocurrency scheme.