Hugo Chavez (left, background) is developing relations with Russia in all fields, considering the countries united by a common enemy. In the photo: Chavez visits Mamaev Kurgan in Volgograd. The inscription reads "All forces for the devastation of the enemy!"
Photo: Gennadiy Gulyaev
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Hugo Chavez Undergoes Conversion
// Russia changes its priorities in relations with Venezuela
Venezuelan President Hugo Chavez arrives in Russia today on a visit that may be the most difficult in all the years of Moscow and Caracas’ friendship. Kommersant has learned that Chavez will have a long talk with Russian President Dmitry Medvedev and Prime Minister Vladimir Putin about problems that have built up in the key area for the two countries, military-technical cooperation. The visit promises to be a success for Russian energy companies, however.
Chavez was expected in Moscow yesterday morning, but the timeline for his visit was pushed back a day at the last minute. This sixth visit by the Venezuelan president to Russia was postponed more than once, and that delay was far from the longest. Kommersant sources in Venezuelan diplomatic circles say that Col. Chavez wanted to “meet with his friend Vladimir” in February, just before the presidential elections in Russia, but that visit was cancelled. In June, the new Russian president met with Colombian Vice President Francisco Santos and discussed the possibilities of Russian arms supplies to that country, which is an adversary of Venezuela. Thus, relations between Moscow and Caracas have been soured the last few months. Kommersant has learned that military-technical cooperation has been the source of controversy.
Venezuela is the largest buyer of Russian arms in Latin America. The sum of its contracts is over $4 billion. Moscow and Caracas have discussed new contracts that could be worth $2 billion. Kommersant sources in the Russian military industrial complex say that the most active discussion concerned contracts for the delivery of Tor-M1 and Tor-M2E midrange 20 antiaircraft complexes, three or four project 636 submarines, 12 Il-76 and Il-78 heavy military transport planes and 24 Su fighter jets. Caracas has also shown interest in Russian tanks, which Chavez told ITAR-TASS about in an interview.
However, first deputy director of the Federal Service for Military-Technical Cooperation Alexander Fomin told Kommersant that there are no plans to sign new contracts this time. “We have preliminarily determined who will fulfill the contract for the submarines, but Venezuela has not yet sent an official application,” a source in the military-industrial complex. Another source said that the contract for the Il-76 planes will be signed no sooner than the end of the year. The signing of the contract for the fighter jets has been delayed until then as well.
“Venezuela has not yet finally determined what type of fighter to buy,” a source in the defense industry explained. “The deadline for delivery will depend on the type. If they take the Su-30MK2V again, delivery will be possible the next year, but if it’s the new Su-35, delivery will be after 2011.” As a result, Kommersant’s sources note, the contract for antiaircraft complexes has the best chance of being signed.
Another serious problem in the area of military-technical cooperation is Venezuela’s desire to buy sniper rifles and Igla-S portable ballistic missile complexes. Those weapons could be transferred by Chavez to Colombian FARC rebels. Colombian special services received documentary evidence that Caracas is aiding the group with arms in May, when the laptop computer of FARC leader Raul Reyes was captured. If Russian weapons make it into the conflict zone, it might significantly worsen Moscow’s relations not only with Bogota, but with Washington as well. Under those circumstances, Russia may take protective measures and demand the signing of a special protocol to the contract that would juridically prevent Caracas from secretly transferring the Russian arms to a third country. Venezuela would most likely find such conditions unacceptable.
Finally, the dialog about providing Venezuela with a credit line for its Russian arms purchases is developing with complications as well. Chavez asked Putin for it, and during his visit to Moscow in June Venezuelan Vice President Ramon Carrizales repeated the request. It seems Moscow answer is still not ready. “Moscow should be alarmed when, with the price of oil at over $130 per barrel, a member of OPEC is buying arms on credit,” Konstantin Makienko, an expert at the Center for the Analysis Strategy and Technology, told Kommersant.
It seems that Chavez will have to find a way out of these problems during his meeting with Medvedev. Putin will also hold talks with the Venezuelan president, and those talks will also touch on weapons, Dmitry Peskov, the prime minister press secretary, said.
All things considered, negotiations on other subjects promise to be more optimistic. Kommersant has learned that Chavez’ interlocutors in the Kremlin and government headquarters intend to discuss major Russian companies’ projects in his country too. Rusal has a plan to set up a bauxite-alumina complex in Venezuela, for example, and to build an aluminum plant around it. A Kommersant source at the company confirmed that negotiations are underway but “the situation should be discussed on a government level” before an agreement is reached.
Gazprom also has big plans in Venezuela. In partnership with the state company PDVSA, it intends to participate in the creation of natural gas transport systems (some regional), in a project to refine gas and to create natural gas-based chemical enterprises. “We are discussing the projects,” the monopoly’s representative Sergey Kupriyanov told Kommersant.
Russian oil companies active in Venezuela can expect the best news from Chavez’s visit. A source in LUKOIL said that an agreement may be reached on the development of a project to search for oil in the basin of the Orinoco River on the Junin-3 block. Russian companies were engaged in certifying reserves there previously. It is likely that LUKOIL may now sign an agreement with PDVSA on joint production on that block. LUKOIL head Vagit Alekperov discussed the company’s overseas plans with Putin on July 18.
Experts say Russia wants to diversify its relations with Venezuela. “Institutionally, the environment for doing business in Venezuela changes often, so the leaders of the two countries have to try to prevent that type of problem,” Vladimir Davydov, director of the Russian Academy of Sciences’ Latin American Institute, explained to Kommersant. RusEnergy expert Mikhail Krutikhin agrees. “The country is very promising. It is possible that, with the departure of major Western players from the market, such as ExxonMobil and ConocoPhillips, Russian companies can take their places,” he said. “But the political risks are high. Even an insignificant warming in Russian-American relations could lead to a worse attitude toward Russian companies. And the special relationship between Chavez and Vladimir Putin is no insurance here.”
Alexander Gabuev, Alexandra Gritskova
All the Article in Russian as of July 22, 2008
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