On September 26, Russia’s biggest state-controlled Rosneft oil company and a subsidiary of Venezuela’s PDVSA, La Corporacion Venezolana del Petroleo (CVP), signed trade agreements worth about 20 billion dollars, including a pact that allows Rosneft to tap into new Venezuelan oilfields in a region known as the Orinoco Oil Belt. Rosneft will invest 16 billion dollars in the Carabobo 2 oil project. Last week oil started coming from Venezuela’s Junin-6 deposit.
Among the documents signed in the presence of President Hugo Chavez were a memorandum of understanding and an agreement whereby Rosneft would pay a bonus worth 1.1 million dollars, and another one whereby CVP would receive a five-year loan worth 1.5 billion dollars. The documents were signed by Rosneft President Igor Sechin and his PDVSA counterpart Rafael Ramirez. Another agreement and memorandum concerned joint oil development and production ventures, including the construction, by Inter RAO, of a 300 MW power plant running on petroleum coke.
President Putin made his Venezuelan counterpart happy with a personal present, a 3-month-old Russian Black Terrier, delivered by Sechin. Chavez said his name would be El Russo – Russian. Putin’s present carried a message, considering that the Russian Black Terrier was first bred in Russia, in the second half of the 20th century, when the crossing of Giant Schnauzers, Airedales, Rottweilers and Newfoundlands resulted in this new sturdy black-coated breed, with big teeth and long strong and frost-resistant paws. The puppy will quickly grow strong enough to accompany and protect Chavez on his trips to Guiana Plateau and the spurs of the Cordillera on the Colombian border, the only places where you can find snow in a 9.3928° N, 66.3562° W country – except that Chavez isn’t likely to venture such trips, considering his current physical condition; also considering that the Russian Black Terrier needs a frisky handler; that this big doggie must have a hair cut every three months – otherwise it will turn into a shaggy, shapeless bear. Most likely, this gift symbolizes Russia’s penetration of this Latin American country.
Russia’s expansionist moods in regard to this remote continent could be regarded from three aspects: political, military-technological, and economic one; also considering that all these aspects are intertwined.
What are Putin&Co. after in Venezuela? Politically speaking, in terms of Cheka/KGB, any enemy of Washington is Russia’s friend. Hugo Chavez is this kind of friend. Putin will make every effort to win him over to his side and the process appears to be reciprocal. The president of Venezuela needs foreign support, considering the domestic situation, with Russia being among the options on his agenda, including China. All this makes Putin hurry up.
Russia’s interest in Venezuela has to do with an attempt to turn this country into a bridgehead to penetrate neighboring countries with similar leftist regimes, including the multiethnic State of Bolivia and the Republic of Ecuador, also eventually Colombia, if all goes well, as schemed by the Kremlin. If this scheme works, Moscow will succeed in seriously limiting Washington’s influence behind the rear lines. Then will come the turn of Central America, with fantastic prospects. This was the Soviet political leadership’s cherished dream. To help it come true, the Soviet Communist Party’s Politburo spared no funds supporting Fidel Castro’s regime and Nicaragua’s Sandinista movement. The whole project went down the drain. Daniel Ortega’s return to power in Nicaragua failed to provide for rapprochement with Moscow. Havana started drifting, slowly but surely, toward Beijing. President Rafael Correa of Ecuador and his Bolivian counterpart Evo Morales took a cautious stand from the very start, yet both have to do nationalizing, particularly in the energy sector, using anti-US rhetoric.
Another aspect is Russia’s military ambitions; its generals and admirals are daydreaming about a naval base in Venezuela, after losing the spy one in Lourdes, in Cuba, with Vietnam refusing to discuss the possibility of using its Cam Ranh Bay. Events in Syria may well end up in evacuation from Tartus. What are the options left for Russia’s Navy? Hugo Chavez is going through the motions of keeping their naval bases, with the stability of his regime being anyone’s guess, considering that the results of the October 7 election are still to be determined. In other words, there are options.
There are options relating to military and technological cooperation. Venezuela has been a major buyer of Russia’s weapons systems, registering between six and seven billion dollars worth of such purchases by the end of 2011, including 24 Su-30MKAV war aircraft, Tor-M1 and Pechora-2M air defense systems, 35 helicopters, 100,000 Kalashnikov assault rifles (AK-103), 9K38 Igla Soviet-developed man-portable infrared homing surface-to-air missiles, 92 T-72 tanks (talks are underway concerning the delivery of another 100 armored vehicles’ shipment). AK-103, ammunition production, and helicopter repair facilities are under construction.
Venezuela’s populist policy of sharing leftovers from lavishly laid tables with the impoverished strata, government control over retail prices call for bigger food imports to keep these prices low. Its oil and gas industry remain the main source of the central budget’s revenues, yet this source is affected by an increase in emergency situations, with breakdowns and explosions caused by mismanagement. Recently an explosion tore through Venezuela’s biggest Amuray oil refinery, in Punto Fijo in the Peninsula of Paraguana, killing at least 39 people, wounding dozens and halting operations at this world’s second oil-producing facility, considering that such accidents have become common practice there. Russia showed its understanding by giving a loan, one of many totaling several billion dollars. Moscow is still prepared to splurge, otherwise Beijing will step in.
Also, there is the aspect of the oil and gas extraction costs in Russia being on an upward curve, considering that new deposits can be developed only in the north, something easier said than done. The prospects of gas supplies to Europe remain ambiguous. Their rate is not increasing and is likely to decrease, considering the availability of liquefied and shale gas. Apparently, the only option is exporting capital to the most attractive countries. Putin wants to remain in office, but he knows he can’t stay there forever, so oil-and-gas revenues will come in handy, anyway.
Add here the demonstrative support of Hugo Chavez during the presidential campaign. One hears about the gap narrowing between him and the sole opposition candidate, Henrique Capriles, with the current margin being some five percent. The competition is severe, so much so two opposition leaders were shot dead in the western state of Barinas. Four persons were injured during a shootout when rehearsing the casting of ballots in early September. The Opposition is determined to remove Chavez from office and the man is sure to face a number of problems.
The United States is once again being regarded by Russia as an enemy, in terms of foreign and domestic policy. Not so long ago, Russia banned USAID activities on its territory, a very unfriendly act reminding one of the cold war. In this sense, Vladimir Putin’s gift of a puppy and the agreements made with Venezuela fit perfectly into the pattern. What is happening is just the beginning.
