Is Russia Horning in on Latin America’s Oil Patch?
WHY YOU SHOULD CARE
Because Russia is moving into the hemisphere (again).
By Julia Chapman
This past week the red carpet was rolled out in Russia for a slew of current and former Latin American leaders.
In Moscow, President Vladimir Putin met Venezuelan President Nicolás Maduro last Wednesday. Maduro was in town for Russian Energy Week, during which international government and industry representatives discussed the future of energy — and Russia’s role in it.
In St. Petersburg, former Brazilian President Dilma Rousseff, who was ousted by the legislature last year after corruption allegations, addressed a forum on cooperation between Russia and Latin America. Former Colombian President Ernesto Samper used his time at the event to stress Russia’s strategic value to the region.
Russia thinks these [Latin American] governments can support its position and help its geopolitical struggle with the U.S. and other Western countries.
Dmitry Rozental, Institute of Latin America, Russian Academy of Sciences
“Russia is talking about the necessity to construct a multipolar world,” said Victor Kheyfets, a professor of international relations at St. Petersburg State University, referring to the country’s efforts to decentralize global power. “Latin American countries are doing the same. But I’m not sure if their visions of a multipolar world are the same.”
Venezuela has been increasingly dependent on Russia since its economic woes escalated with the fall of oil prices in 2014.
“Right now, Venezuela needs all the help it can get — Russian help, Chinese help, help from any other country,” said Dmitry Rozental, the academic secretary at the Institute of Latin America at the Russian Academy of Sciences. “But now China is trying to be more moderate toward Venezuela. Other countries are not able to help Caracas solve its internal problems.”
Volatile Venezuela is also increasingly being viewed as too much of a financial risk for nations to invest in. “That leaves Russia as the only country which can provide financial support to the regime of Nicolás Maduro,” Rozental said.
That help has largely come from the Russian state oil company Rosneft. It emerged this summer that Rosneft has paid a total of $6 billion (€5.1 billion) to the state-owned Petróleos de Venezuela. In exchange, a repayment schedule was established for a mix of cash and oil assets from Venezuela, which has the largest proven reserves in the world.
Russia is not only throwing its weight around in Caracas. Earlier this year, Rosneft began oil exploration in Brazil’s Amazon region after buying a controlling stake in drilling wells in the Solimões Basin. And state-owned Gazprom has been cozying up to Argentina’s government, exploring the possibility of joint ventures in natural gas production.
Rosneft has also stepped in to provide Cuba with oil, picking up a key customer of Venezuela’s and triggering accusations from Venezuelan opposition lawmakers that Russia is profiting from the suffering of their country.
Kheyfets is not altogether optimistic for that arrangement. “I’m not sure it will be very fruitful,” he said. “The Soviet Union had a great relationship with Cuba for decades. But Russia abandoned Cuba, and Cubans remember very well when they had to survive without any assistance from Moscow,” he added, alluding to a period of Cuban economic turmoil in the 1990s triggered by the collapse of the Soviet Union.
Venezuela’s dependency on Russia is unlikely to decrease anytime soon. Speaking in Moscow last Wednesday, President Maduro raised the possibility of restructuring debts owed to Russia as his country struggles to pay them back. “We see that Venezuela is going through difficult times,” Putin told his Venezuelan counterpart during their meeting. Maduro duly thanked the Russian leader “for all the support, political and diplomatic.”
That support is even more vital in the wake of sanctions imposed on Venezuela by U.S. President Donald Trump. The measures are aimed at preventing the country from obtaining any further loans from American financial institutions. The sanctions were a response to Maduro’s setting up a body to redraft the constitution, a move that critics describe as an effort to consolidate his power.
Russia, itself under international sanctions, is less critical of such actions.
The Institute of Latin America’s Rozental said Russia was “without a doubt” interested in Latin America for political as well as economic reasons. “Russia thinks these governments can support its position and help its geopolitical struggle with the U.S. and other Western countries,” Rozental said.
And, after a week of high-profile visitors from the region, Putin’s intentions in Latin America have been brought into even sharper relief.
- Julia Chapman, OZY Author Contact Julia Chapman