- Central African Republic new trade partner of Russia
- In 2013, the United Security Council has placed an arms embargo on the Central African Republic (CAR).
- Russia was given an “exemption” in Dec 2017 and security personnel have been in the country ever since.
- Russia is interested in natural resources in CAR.
CAR adopts bitcoin as legal tender. According to a press release, bitcoin adoption is an effort to offer prosperity to CAR’s citizens.
This is an ironic statement given the geopolitical turmoil that has ranged in the region for decades. Taking a step back, how does Bitcoin help CAR? It is one of the poorest countries in the world based on GDP.
Telecommunication penitration is estimated at less that 5% in the Central African Republic
Internet and telecommunications are very nascent given the country’s high rate of displaced citizens due to numerous gorilla-type warfare regimes. With less than 10% have access to the internet, it is hard to see how the adoption of the alpha cryptocurrency will function at scale with such poor infrastructure.
With the exception of the country’s capital, Bangui, it is hard to envision how bitcoin adoption serves the highly dispersed population throughout the country.
Russia extends its influence in Africa
“Russia is exploring the possibilities of the mutually beneficial development of Central African natural resources,” …..”The prospecting-mining exploration concessions began in 2018. We believe these projects will help stabilize the economic situation in CAR, promote the construction of the infrastructure, and serve as a basis for drawing additional investment to the country’s economy.”https://www.rferl.org/a/explainer-what-russian-military-contractors-are-doing-in-central-african-republic/29405290.html
Sanctions force Russia to seek trade with those outside the traditional SWIFT system
The currency of CAR, the CFA franc, is a remmnant of its former occupier France and pegged to the EURO. Inflation is moderately low, compared to its counterpart countries and CAR has a vast supply of natural resources that make up a large majority of its exports and GDP. These include gold, diamonds, and timber but most of this leaves the country by illegal means and never benefits the population that is laboring for its production.
Why the Russian-CAR relationship matters
With sanctions against Russian having ripple effects across the world, this has pushed fuel cost ever higher for those who can least afford it. CAR is a landlocked country without a port and the only way to it is through Cameroon transportation lines. With sanctions preventing transportation to CAR, does bitcoin pose an alternative system to sell natural resources to Russia or its aliy CHina?
“CAR is also a close ally to Russia and some worry that it is part of a bigger scheme to undermine the CFA“
Does weakening the CFA franc, backed via France, and strengthen the EUROdollar alliance that was recently formed when Russia and China signed a 30-year agreement to settle oil trade in Euros?
This is yet to be seen but Russia has been laying the groundwork for a future less reliant on the United States and the countries of Western Europe. With the freezing of sovereign assets, US treasuries do not look very appealing to central banks around the globe as they were once protected from these very sanctions. A very reasonable scenario exists where CAR sells its natural resources to Russia for EUROs at a deep discount given that Russia has the monopoly on arms trade within the Central African Republic until at least July of this year, according to the UN Security council.