Venezuelan Minister Remarks 25% of Trade Can Be Conducted Away From the US Dollar

Venezuelan Foreign Minister Yvan Gil has made waves with a bold statement: at least 25% of global trade can now be conducted without relying on the US dollar. This assertion, tied to Russia’s influence and the growing momentum of the BRICS bloc (Brazil, Russia, India, China, and South Africa), reflects a seismic shift in the world’s economic landscape. As nations increasingly seek alternatives to the dollar-dominated financial system, Gil’s remarks underscore Venezuela’s strategic pivot amid sanctions and economic challenges. In this extensive article, we’ll dissect the minister’s claim, explore the forces driving de-dollarization, analyze its implications for Venezuela and the global economy, and assess the feasibility of this ambitious vision.

The Context of Gil’s Statement

Yvan Gil’s comments emerged during a period of heightened geopolitical tension and economic realignment. Speaking in an article commemorating 80 years of diplomatic relations with Russia, Gil credited Moscow and the BRICS coalition for pushing mechanisms that reduce dependence on Western financial systems. “According to experts, at least 25% of global trade operations can be conducted without being tied to the dollar,” he stated, framing this as a step toward greater financial independence for sanctioned nations like Venezuela.

This isn’t a standalone claim—it builds on years of rhetoric and policy shifts from Venezuela and its allies. Since the imposition of crippling US sanctions starting in 2017, Venezuela has been forced to rethink its economic strategies. The dollar, once a cornerstone of international trade, has become a liability for countries under Western financial pressure. Gil’s remarks signal Venezuela’s alignment with a broader movement to diversify trade currencies, a trend gaining traction as BRICS nations challenge the dollar’s hegemony.

The timing of Gil’s statement is notable. With Russia deepening ties with the global South and BRICS expanding its influence—adding members like Iran and the UAE—Venezuela sees an opportunity to leverage these partnerships. Posts on X echo this sentiment, with users noting a “shift from dollar dominance” driven by BRICS initiatives. But how realistic is this 25% figure, and what does it mean for Venezuela and the world?

Understanding De-Dollarization

De-dollarization refers to the process of reducing reliance on the US dollar in international trade, reserves, and financial transactions. For decades, the dollar has reigned supreme, accounting for roughly 60% of global foreign exchange reserves and facilitating over 80% of international trade payments, according to the International Monetary Fund (IMF). Its dominance stems from the US’s economic power, the stability of its financial system, and the Bretton Woods agreement of 1944, which pegged global currencies to the dollar and, by extension, gold.

Yet, cracks in this system have emerged. The weaponization of the dollar through sanctions—targeting nations like Venezuela, Russia, and Iran—has pushed affected countries to seek alternatives. The rise of China’s yuan, Russia’s rubles, and even cryptocurrencies like Bitcoin reflects a growing appetite for diversification. Gil’s 25% claim suggests that a significant chunk of global trade is already poised to bypass the dollar, a notion that demands scrutiny.

Historical Precedents

De-dollarization isn’t entirely new. In the 1970s, the collapse of Bretton Woods led to floating exchange rates, weakening the dollar’s absolute grip. More recently, Russia’s pivot to the yuan after 2014 Crimea sanctions and Iran’s shift to barter trade under US pressure show viable, if limited, alternatives. Venezuela itself began dollarizing informally in 2019, with nearly 70% of domestic transactions now in USD, per local polls—ironically highlighting the dollar’s resilience even as Gil pushes for its decline globally.

The BRICS Factor

BRICS plays a pivotal role in Gil’s vision. Collectively, these nations represent over 40% of the world’s population and 25% of global GDP, per World Bank data. Russia and China, in particular, have spearheaded efforts to trade in local currencies. For instance, Russia’s trade with China saw yuan transactions rise to 34% by 2023, up from negligible levels a decade ago. The BRICS New Development Bank, established in 2014, further supports this shift by funding projects in non-dollar currencies.

Gil’s reference to “experts” likely draws from such trends, though specifics remain vague. The 25% figure could reflect trade among BRICS and aligned nations, where dollar use is declining. Yet, scaling this to “global trade” requires broader adoption—a challenge we’ll explore later.

Venezuela’s Economic Backdrop

To understand Gil’s remarks, we must examine Venezuela’s economic context. Once a regional powerhouse thanks to its vast oil reserves—the world’s largest—the country has faced a catastrophic decline since 2013. Hyperinflation, peaking at over 1 million percent in 2018, decimated the bolívar, while US sanctions from 2017 onward crippled oil exports, slashing revenues by 93% between 2012 and 2020, per economic studies.

Sanctions and Survival

Sanctions, targeting state oil firm PDVSA and key officials, severed Venezuela from SWIFT and global banking networks. This forced a reliance on alternative payment systems—like Russia’s SPFS or China’s CIPS—and barter deals with allies. By 2024, Venezuela legalized cryptocurrency for cross-border trade, with Bitcoin and Petro (its state-backed crypto) facilitating payments to Russia and Turkey. Gil’s 25% claim aligns with this survival strategy, emphasizing trade outside the dollar’s reach.

Dollarization at Home

Paradoxically, Venezuela’s domestic economy has dollarized informally. With the bolívar rendered near-worthless, businesses and citizens turned to USD cash, euros, and Colombian pesos. By mid-2024, over 60% of transactions were in dollars, per Ecoanalítica estimates, a lifeline that eased shortages but priced out many locals earning in bolivars. Gil’s push to de-dollarize globally contrasts with this domestic reality, highlighting a dual-track approach: embracing dollars internally while seeking alternatives externally.

The 25% Claim: Feasibility and Evidence

Gil’s assertion that 25% of trade can bypass the dollar is ambitious but not baseless. Let’s break it down:

Current Trade Patterns

Global trade totals roughly $32 trillion annually, per World Trade Organization (WTO) data. The dollar dominates, but non-dollar trade is growing:

• BRICS Trade: Intra-BRICS trade, valued at $6 trillion in 2023, increasingly uses local currencies. Russia-China trade alone hit $240 billion, with over 50% in yuan or rubles.
• Sanctioned Economies: Russia, Iran, and Venezuela conduct $300-$400 billion in trade annually, often via barter or non-dollar currencies.
• Regional Blocs: The EU’s euro facilitates $5 trillion in trade, while ASEAN and African blocs explore local currency swaps.

Adding these, non-dollar trade could approach $8 trillion—roughly 25% of the global total. Gil’s “experts” might extrapolate from such figures, though public data lacks precision on exact shares.

Practical Mechanisms

Achieving this requires infrastructure:

• Payment Systems: Alternatives like SPFS or CIPS lag behind SWIFT’s efficiency but are expanding. Russia’s system now handles 20% of its domestic payments.
• Currency Swaps: Bilateral agreements—e.g., China’s $500 billion in swap lines with 40+ countries—enable dollar-free trade.
• Digital Currencies: Central bank digital currencies (CBDCs), like China’s digital yuan, could streamline non-dollar transactions.

Venezuela’s experience with crypto for trade payments supports this, though scalability remains a hurdle.

Challenges to 25%

Despite the potential, obstacles abound:

• Dollar Inertia: The dollar’s liquidity and trust make it hard to displace. Even BRICS nations hold 60% of reserves in USD.
• Global Reach: Non-dollar trade is concentrated among specific blocs; extending it to 25% globally requires wider adoption.
• Volatility: Alternative currencies like the ruble or yuan lack the dollar’s stability, deterring risk-averse traders.

Gil’s 25% may thus be aspirational—a target rather than a current reality—but it’s grounded in observable shifts.

Russia’s Role in De-Dollarization

Gil credits Russia as a driving force, a nod to Moscow’s leadership in challenging dollar dominance. Post-2014 sanctions, Russia reduced its USD reserves from 40% to 16% by 2023, per its central bank, while boosting gold and yuan holdings. Trade with BRICS partners now leans heavily on local currencies, a model Venezuela aims to emulate.

Strategic Alignment

Russia and Venezuela share a sanctions-driven bond. Russia’s $17 billion in loans to Venezuela since 2006, alongside military and oil partnerships, cement this alliance. The 2024 cross-border crypto pilot, allowing Venezuelan firms to pay Russian suppliers in Bitcoin, exemplifies their joint push to bypass dollar systems.

BRICS Leadership

Russia’s BRICS presidency in 2024 amplified its de-dollarization agenda. Proposals for a BRICS payment platform and reserve currency gained traction, with Venezuela as an eager participant. Gil’s remarks reflect this synergy, positioning Venezuela as a beneficiary of Russia’s efforts.

Implications for Venezuela

Gil’s vision carries profound implications for Venezuela’s economy and geopolitics.

Economic Resilience

Reducing dollar reliance could:

• Ease Sanctions Pressure: Non-dollar trade with Russia, China, and Iran—worth $10-$15 billion annually—helps offset lost oil revenue.
• Boost Trade: Access to BRICS markets could revive exports like oil and minerals, currently stifled by SWIFT exclusion.
• Stabilize Currency: A shift away from dollar dependence might bolster confidence in alternative payment systems, though the bolívar’s fate remains bleak.

Geopolitical Leverage

Aligning with BRICS enhances Venezuela’s bargaining power. As the US doubles down on sanctions—raising the bounty on Nicolás Maduro to $25 million in 2025—ties with Russia and China offer a counterweight, strengthening Maduro’s grip on power.

Domestic Challenges

Yet, domestic dollarization complicates this shift. With most Venezuelans reliant on USD cash, a global de-dollarization push might not resonate locally unless paired with economic recovery—a tall order given PDVSA’s decline and ongoing crises.

Global Economic Impact

If Gil’s 25% vision materializes, the global economy could face seismic changes.

Dollar Dominance at Risk

A quarter of trade shifting away from the dollar wouldn’t dethrone it overnight—60% of reserves and 40% of debt remain USD-denominated—but it could erode its primacy. The IMF warns that fragmented currency blocs might raise transaction costs and destabilize markets.

Rise of Alternatives

The yuan, euro, and digital currencies could gain ground. China’s 15% share of global trade already challenges the dollar, while Russia’s gold-backed trade proposals hint at new standards. Bitcoin and CBDCs, though nascent, add further diversity.

Trade Blocs and Tensions

De-dollarization might deepen economic blocs—BRICS vs. G7—fueling geopolitical rivalry. Sanctions-hit nations could form a parallel financial system, but exclusion from dollar markets risks isolation.

Feasibility: Can 25% Happen?

Gil’s claim is plausible but ambitious. Current non-dollar trade hovers below 20%, per WTO estimates, with BRICS and sanctioned states leading the charge. Reaching 25% requires:

• Wider Adoption: Neutral countries like India or Brazil must fully commit, a tough ask given their dollar reserves.
• Infrastructure: Payment systems and swaps need global scale, a decade-long project at best.
• Stability: Alternative currencies must inspire confidence, a challenge for volatile economies like Venezuela’s.

Short-term, 25% is a stretch; long-term, it’s within reach if BRICS momentum holds.

Conclusion

Yvan Gil’s remark that 25% of trade can bypass the US dollar is more than rhetoric—it’s a window into Venezuela’s survival strategy and a global shift toward de-dollarization. Backed by Russia and BRICS, this vision reflects a world rethinking financial power. For Venezuela, it’s a lifeline amid sanctions; for the globe, it’s a challenge to the dollar’s reign. Whether this 25% becomes reality depends on execution, adoption, and time—but the seeds are sown.

Stay tuned to blogfinance.online for updates on de-dollarization, Venezuela’s economy, and global trade trends!