Some countries are trying to create a national cryptocurrency kind of like bitcoin. Venezuela and Russia are exploring this as a way to get around international sanctions. Financial Times reporter Max Seddon has written about Russia's efforts to create a kind of cryptorouble, and he joins us from Moscow. Hey there.
MAX SEDDON: Hi.
SHAPIRO: Why do people in the Russian government think this is a good idea?
SEDDON: Well, the Russian government has a very specific problem, which is the Russian government is under all sorts of sanctions from the United States. And this limits the abilities of various Russian government entities — and they account for 70 percent of Russia's GDP, so that's a lot — to conduct various business around the globe, especially in dollars, which is the global reserve currency. And so the idea behind cryptocurrency is to continue conducting business around the world without worrying about the Treasury coming after you.
SHAPIRO: Give us an example of how a specific Russian company might use this.
SEDDON: Well, so the person in the kind of Russian government ecosystem who's the most enthusiastic about cryptocurrencies is Sergei Gorkov, who you may remember as the man who mysteriously met Jared Kushner at the end of 2016. And he runs something called VEB, which is called a bank, but it's more like a kind of slush fund for pet Kremlin projects than a bank.
And it is under sanctions. And this puts it in big trouble because they have nearly $20 billion of foreign debt that is now extremely difficult for them to refinance because of the sanctions. And so, you know, if they have some sort of alternative way of conducting transactions that doesn't leave them reliant on Western debt markets, then they can act like they did before the sanctions.SHAPIRO: One of the fundamental ideas underlying bitcoin is that nobody's in charge. There's no central bank. This seems to be a very different approach by Moscow.
SEDDON: It's completely the opposite approach. But this is the thing that goes through a lot of what we're seeing in the tech world. If you look at social media, a lot of the biggest social media companies were born out of these same libertarian ideals of transborder freedom and no submission to central governments. And instead, they've become tools that have been deployed very successfully by authoritarian governments like Russia and China to advance their ends.
And the idea that you can use all this stuff to basically reinforce the authoritarian government's control over its population's finances is something that I think a lot of people didn't think about. And when you see the founder of the second-biggest cryptocurrency after bitcoin, Ethereum, meeting Putin, you definitely have to wonder where this is all going.
SHAPIRO: If Russia or Venezuela does take this step to avoid sanctions, is there anything the U.S. could do in response?
SEDDON: There's a lot they can do in response. The U.S. has a tool called the Specially Designated Nationals List, which is basically a blacklist that keeps you out of the dollar. And the dollar is so pervasive that it is very difficult to create this sort of parallel financial world. This is one reason why everyone is very skeptical about this Venezuelan cryptocurrency, which is called the petro, because oil is nonetheless traded, as we know, in dollars. And how Venezuela's going to be able to get around all the restrictions on a dollar just through this bitcoin mania isn't really clear.
And the same thing goes for Russia. The problem that they have is there has to be a way both from a technical standpoint and legally to do this in a way that stops America from basically going aha, nice try, I see what you did there, and then just adding all these cryptocurrencies to the banned list.
SHAPIRO: Max Seddon of the Financial Times, speaking with us from Moscow. Thanks very much.
SEDDON: Thank you.