2008-10-02 | Andrzej Wilk

Since the war with Georgia, Russia has significantly changed its policy towards certain Latin American states. So far, Moscow had been mainly interested in gaining economic benefits from those countries, while its political presence had remained limited. In recent weeks, however, Russia has decided to step up its political and military co-operation with the countries of the region, and to give that co-operation a wider propaganda dimension. This tendency is particularly apparent in the case of Venezuela (which has been offered a loan for the purchase of arms, and will hold a joint maritime exercise with Russia), as well as Nicaragua and Cuba.

Russia's activity in Latin America is primarily a bargaining chip in its relations with the United States, designed to persuade Washington to limit its activities in the CIS area and to stand as a symbol of Russia's growing global potential. As the USA's position in Latin America is eroding, and as the number of governments antagonistically disposed towards Washington increases, Russia sees better opportunities for political involvement in a region which has traditionally been dominated by the USA.

Intensification of Russia's policy

Russian has taken a number of measures in the course of the last month, which are indicative of a change in its policy towards Latin America. On 10 September, Russian strategic bombers performing patrol sorties landed in Venezuela, and on 16-18 September, a Russian delegation including deputy PM Igor Sechin and representatives of Russian armaments and energy companies visited Cuba, Venezuela and Nicaragua. On 24 September, the Russian ambassador to Nicaragua announced that Russia would assist that country in replacing its military arsenal. In addition, during President Hugo Chavez's visit to Moscow on 25-26 September, Russia pledged to grant Venezuela a loan of US$1 billion for the purchase of military equipment. In November this year, the two countries will hold a joint maritime exercise in the Caribbean Sea, a move which was also backed on 30 September by the president of Ecuador. Also, Russian prime minister Vladimir Putin has mentioned possible assistance to Venezuela in that country's development of a nuclear energy programme. Finally, a memorandum has been signed on the creation of an oil consortium including Venezuela's PdVSA and Russia's Rosneft, LUKoil, Gazpromneft, Surgutneftegaz and TNK-BP to explore and produce oil in Latin America, although this undertaking is still in a very early phase.

Russia's presence in Latin America to date

So far, Russia's policy has been focused on economic benefits, especially in the field of the sale of arms (the development of new markets) and energy co-operation (see the Appendix for more information).
During the months preceding the war with Georgia, Moscow was seen to be sending signals to the US indicating that the Russian presence in the region is non-confrontational: President Chavez's visit was postponed, negotiations concerning a new agreement on the sale of arms to Venezuela were prolonged, and Francisco Santos, the vice-president of Columbia (a country hostile to Venezuela) was welcomed in Moscow.

Moscow's global objectives

The recently observed changes in Kremlin policy are directly related to the rise of Russian-American rivalry in the aftermath of Russia's conflict with Georgia. Russia is seeking to achieve two fundamental objectives: to demonstrate the global character of its foreign policy, and to gain a new bargaining chip in its relations with the United States.
Russia's increasingly active political and military co-operation with selected Latin American countries is intended to make the US aware that Moscow is able to undermine US interests, and to persuade Washington to limit its activities in the CIS area; Moscow is representing its joint exercise with Venezuela as a reaction to the temporary presence of US warships in the Black Sea. Moscow's activity is also a response to the USA's plans to deploy elements of its missile shield in Central Europe.

Prospects

Russia is using Latin America instrumentally, and its further course of action will depend primarily on the dynamics of relations between Moscow and Washington. However, due to the permanent nature of the controversies between Russia and America, it should be expected that Russia will continue intensifying its policy towards Latin American countries. Most probably, however, Russia will end up having to pay the economic costs of this growing activity.
Although the effects of Russia's actions will probably remain limited (its military presence is not permanent), the anti-American attitudes of many Latin American leaders, who treat Russia as a potential ally in their relations with the USA, create favourable conditions for Russia's increasing activity in the region. Consequently, while the Kremlin's measures cannot counterbalance US influence in the region, they are capable of seriously complicating the United States' situation in its immediate neighbourhood.

Appendix 1: Russian armaments sales to Latin America

Venezuela is the main purchaser of Russian arms in Latin America. Since 2005, it has purchased US$4 billion worth of armaments from Russia. The contracts in place provide for the supplies of helicopters (Mi-24, Mi-26 and Mi-17), transport aircraft (An-74), multi-role fighter aircrafts (Su-30MK) and air-to-air missiles (R-73, R-77). In addition, an agreement has been concluded for the purchase of 100,000 AK-103 rifles as well as the construction of a factory to manufacture this type of weapon.

Appendix 2: The activities of Russian energy companies in Latin America

The activities of Russian energy companies in Latin America are currently limited to exploratory works, and are focused in Venezuela, the country which holds the region's largest hydrocarbons reserves (6.6% of the global oil reserves and 2.4% of gas reserves), as well as Bolivia.
Gazprom may potentially build a strong position in the region; however, most of the memorandums the Russian monopoly has concluded so far are vague and unspecific. In 2005 Gazprom was awarded a licence to explore gas reserves in Venezuela (Urumako-1 and Urumako-2 blocs); in July 2008, it signed an agreement with PdVSA, the Venezuelan state-owned concern, to assess the reserves of the Ayacucho-3 bloc. In September this year, the two companies also signed a memorandum defining the possible directions of co-operation. Back in 2007, Gazprom signed a co-operation memorandum with Bolivia's YPFB, and in September 2008 it signed another memorandum concerning a minority stake in one of Bolivia's projects. The Russian monopoly has also repeatedly expressed interest in the construction of transmission infrastructure in the region, including the design work on the pan-American gas pipeline (from Venezuela to Brazil and Argentina).
Among oil companies, LUKoil has been the most active in Latin America; it has been searching for oil in Columbia since 2002 (the Condor bloc), and has been involved in the assessment of oil reserves in Venezuela since 2005 (the Chunin-3 bloc). TNK-BP has been assessing the oil reserves in Venezuela's Ayacucho-2 bloc since 2007. In 2008, state-owned Zarubezhneft signed an agreement for the exploration of oil deposits in Argentina's shelf. The weakness of the Russian companies is that they are not technologically prepared to extract heavy oil and gas in Venezuela, and are not willing to spend billions of dollars on investments.

Wojciech Konończuk, Ewa Paszyc

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