Hugo Chávez deepens petroleum and military ties with Russia

Eight visits in eight years. Venezuelan leader Hugo Chávez has been here so often that the Moscow media calls him "Russia's comrade-in-arms-and-oil," a phrase that neatly summarizes the growing politicization of a relationship whose profitable core is trade in weapons and energy.

On this occasion, Mr. Chávez presented a special gift to his Russian hosts, by declaring at a meeting with President Dmitry Medvedev that Venezuela will extend official recognition to the breakaway statelets of South Ossetia and Abkhazia, over whose survival Russia fought a brief but bloody war with Georgia last year. Until now, only the tiny Central American state of Nicaragua has joined Moscow in recognizing the independence of the two republics, a fact that appears to underscore Russia's deep diplomatic isolation on the world stage.

"Venezuela from today is joining in the recognition of the independence of South Ossetia and Abkhazia," Chávez said. "We soon will begin actions to establish diplomatic relations with these countries." Both of the tiny, mountainous statelets remain virtual Russian dependencies with little trade or access to the outside world.

"Thank you, Hugo," responded Mr. Medvedev. "Russia has always supported a country's sovereign right to recognize or not recognize a state's independence. But of course we are not indifferent to the fate of these two states. We are very grateful," he added.

Russian experts say Chávez gesture may have cost him little, but it was just what the Kremlin wanted to hear.

"Venezuela is an important South American state, and for it to take this step matters a lot to us, because it shows that we are not alone," says Andrei Klimov, deputy chair of the Russian State Duma's foreign affairs committee. "It's yet another signal that our strategic partnership with Venezuela is growing. For us, this is a new part of the world where we can do business and find cooperative relationships. It's not directed against the US or anyone else."

As he usually does on these visits, Chávez gave a speech filled with inflammatory political rhetoric, this time to students at Patrice Lumumba, a Moscow university attended largely by students from Third World countries.

Amid cheers and applause, he told the students that the days of a "unipolar world" dominated by Washington are numbered. "The US wants to own the entire world, but the Yankee empire is falling," he said. And he praised his Russian hosts, Medvedev and Prime Minister Vladimir Putin, saying "I believe Putin and Medvedev will leave behind a great legacy not only for Russia but for the entire world."

Shopping for tanks and subs

Chávez has spent over $4-billion on Russian arms since 2005, including jet fighters, helicopters, and 100,000 Kalashnikov rifles. The official RIA-Novosti said he would likely sign deals for up to $1-billion more, including 100 main battle tanks, three diesel-powered Kilo-class submarines, 10 Mi-28 helicopters, and several land-based anti-ship missiles.

Experts say Chávez's search for more sophisticated weaponry may be due to growing tensions with his neighbor, Colombia. But it also reflects a deeper strategic affinity with Russia, which last year held its first naval war games in the Western Hemisphere – together with the Venezuelan navy – since the cold war ended.

Last year, there was talk about Russian bombers using bases in Venezuela and Cuba.

"Russian cooperation with Venezuela is growing, and it's part of a larger Russian opening to Latin America," says Vladimir Davydov, director of the official Institute of Latin America in Moscow. "We are expecting a number of visits by Latin American leaders in the near future, including Ecuador, Uruguay, and Brazil. The centers of world economic activity are changing, and they want to reach dynamic markets," in Russia and the former Soviet Union, he says.

Russia-Venezuela oil deal soon

A consortium of Russian oil companies is expected to soon finalize a deal with Venezuelan national oil company Petroleos to develop part of a huge oil field in the Orinoco River Basin, which is thought to be the world's single largest oil deposit with as much as 1.2 trillion barrels of extra-heavy crude.

Experts say that politics plays a role here too, because Chávez finds it easier to do business with Russian state-dominated companies, which provides them a boost into a new and potentially lucrative market.

But political payoffs, such as Chávez' surprise recognition of the breakaway statelets, may be the only profit Russia sees, says Mikhail Krutikhin, an analyst with RusEnergy, an independent Moscow-based consultancy.

"Russian companies that do business abroad do not typically repatriate their profits to Russia, so the nation isn't going to benefit from this," he says. "But it's good publicity for Russia, and for Putin and Medvedev, it may be good news for domestic consumption."

Chávez isn't relying on Russia alone for investment. Click here to read about how China is investing heavily in Venezuela's petroleum industry, too