I’m always surprised when I hear comments from businessmen who exclaim, “Barter’s for the little guy, no one of any size fools around with this old-fashion way-of-doing business.” Really? History proves otherwise.

When Armand Hammer died in 1990 he was 92 years old, and the head of Occidental Petroleum. His genius included that of a barterer, playing on the world stage and putting together a multi-billion barter deal, it was one of his crowning achievements and most successful trades, which occurred in 1973.

He started bartering while a medical student visiting the Soviet Union with his Russian-born dad. He was a need and filled it—setting up a deal to ship U.S. grain to the Soviets in exchange for Russian furs.

Later he would take payments in Russian artworks from the Czar’s Hermitage Palace in Saint Petersburg, Russia. (I had the pleasure of visiting the Hermitage in the July of 2001 and it was one of the most memorable experiences of my life.)

Hammer’s gigantic, complex, multi-billion barter deal saw Hammer’s company building the world’s largest fertilizer plant on the Black Sea. He took back as payment urea, a chemical used in fertilizers and plastics manufacturing. A stunning example of countertrade, and yet, Hammer’s efforts pale in comparison to the astounding $50 billion dollar deal we covered in
the Tuesday Report of 01-02-07, which I’ve copied below for you.

A series of massive arms sales by the United Kingdom to Saudi Arabia has been paid for by the delivery of up to 600,000 barrels of oil per day to the UK government.

Al Yamamah (The Dove) is the name given to the huge deal, which has never been fully clarified, but has been described as “the biggest United Kingdom sale of anything to anyone.”

Al Yamamah prime contractor BAE systems revealed in 2005 that they, along with predecessor British Aerospace, had earned £43 billion in twenty years from the contracts.


The biggest barter deals in the world are known as offsets and countertrade, see: COUNTERTRADE

This entry was posted on Friday, January 11th, 2008 at 8:39 pm and is filed under From the Desk of Bob Meyer. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.