In a Volatile World, Barter Trade Finds New Relevance

Geoeconomics strikes again

At the beginning of 2022, just before the Ukraine war broke out, India was put in an awkward situation. For several years, India had been ramping up tea exports to Iran. But, after the pandemic, which had changed trade flows, tea exports to Iran dropped almost 50%. This in itself was a challenge, a decline that New Delhi likely wanted to reverse.

But then, Sri Lanka entered the picture.

The government in Colombo had racked up huge oil debt with Iran (over $250 million). Because of political and economic crises, Sri Lanka was having trouble paying it down. So, both countries came up with a novel idea: Sri Lanka would pay for its oil debt to Iran with tea exports.