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According to this video on Soviet Russia, the Russians traded submarines and warships to the Pepsico company for three million dollars worth of Pepsi. Is that factually accurate? The video does not cite sources.

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The Soviet government really did trade 17 submarines and three warships for a supply of Pepsi. However, I can't find a source regarding how much Pepsi they received in exchange.

The reason for this unusual trade was that Soviet roubles were worthless outside of the USSR, so PepsiCo couldn't receive any money in exchange for their product, and instead settled on a barter system. Initially they traded Pepsi for Stolichnaya vodka, which they then sold in the US, but the Soviet-Afghan war led to a boycott of Soviet products that meant this was no longer a profitable trade.

In 1989, PepsiCo negotiated a new deal in which they received 17 submarines and three warships. The oft-repeated claim that this briefly gave PepsiCo the world's sixth-largest navy is false; PepsiCo sold the vessels for scrap, and there's no evidence that they were armed or even operable during the short time they were under PepsiCo's control.

An even more lucrative deal was signed in 1990, that was expected to generate $3 billion in revenue for PepsiCo (this may be where the $3 million quoted in the video came from). That deal would have seen them receive (among other things) at least ten oil tankers, which they would have then sold or leased to other companies. However, the collapse of the Soviet Union in 1991 meant that the deal fell through, and PepsiCo were forced to renegotiate with the USSR's various successor states.

Sources: [1] [2] [3]

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  • "sixth-largest navy is likely false": depends on your definitions. As a practical matter you are of course correct, but navies are generally measured in terms of numbers of ships. So its not "likely false", its either complete and definitely false, or quite possibly true, depending on exactly how you define the size of a navy. Of course if you applied the same metric to the Russian navy of the time it would probably have shrunk quite a lot too. – Paul Johnson Feb 5 at 12:14
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    @PaulJohnson It's false. Navies are more usefully measured by tonnage. They're not the 6th by number either. I have no idea what measure gets you 6th. – Schwern Feb 7 at 21:34
  • @Schwern They would have been the 6th largest submarine operator (by number of subs). This is most likely where the claim comes from. – radioflash Feb 11 at 12:36
  • @radioflash More plausible, still false. In 1990 I can see. 1. US (a lot more than 17), 2, Soviet Union (same), 3, China (63), 4. West Germany (24), 5. Japan (22), 6. UK (20), 7. India (18). That isn't an exhaustive search, just noodling on GlobalSecurity.org. – Schwern Feb 11 at 20:43
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Probably Not.

(This is a snippet from my longer answer to Was the Pepsico company command the 6th biggest military in the world for a brief time? which was closed. It wasn't.)

What's clear is the Soviets offered to sell old navy ships to Pepsi. But there's little evidence that the deal went through before the Soviet Union collapsed.

Searching for the source of this proved circular, most articles reference each other, but I found a contemporary source in a NY Times opinion piece FOREIGN AFFAIRS; Soviets Buy American.

Pepsico recently bought from the Soviets 17 submarines (for a measly $150,000 each), a cruiser, a frigate and a destroyer. They are being resold for scrap.

While this opinion piece says they were bought, it's unclear if this deal went through. Nobody mentions which submarines? Which cruiser? Which frigate? History Matters claims it did not, it was just an offer, and all Soviet ships scrapped in that era are accounted for. Unfortunately they give no sources.

Details about a major surface combatant like a cruiser being sold to Pepsi and scrapped should be easy to find in the ship's histories. There's a limited number of possibilities. I can't find mention of any Sverdlov, Kresta, or Kynda being sold to Pepsi.

Instead, the Soviets built civilian ships and traded them for Pepsi. This whole wacky state of affairs was because the Soviets lacked hard currency to pay Pepsi and instead bartered goods which Pepsi could then sell outside of the Soviet Union for hard currency.

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