Monday, April 1, 2019

The Close Connection Between Russia and Venezuela

The Administration condemns Nicolas Maduro’s continued use of foreign military personnel in his attempt to remain in power, including the introduction of Russian military personnel and equipment into Venezuela.  Maduro will only use this military support to further repress the people of Venezuela; perpetuate the economic crisis that has destroyed Venezuela’s economy; and endanger regional stability.  We call on the Venezuelan military to uphold its constitutional duty to protect the citizens of Venezuela.

We strongly caution actors external to the Western Hemisphere against deploying military assets to Venezuela, or elsewhere in the Hemisphere, with the intent of establishing or expanding military operations.  We will consider such provocative actions as a direct threat to international peace and security in the region.  We will continue to defend and protect the interests of the United States, and those of our partners in the Western Hemisphere, which are rooted in a shared respect for liberty, security, and the rule of law.

...and this discussion about the situation in Venezuela between Russian Foreign Minister Sergey Lavrov and Secretary of State Mike Pompeo which received very little coverage in the Western mainstream media:

Here is Russia's response to Washington's demands:

"As to the statements by the US President and Secretary of State, we regard them as an arrogant attempt to dictate to two sovereign states the way they should build their relations. I would like to remind you that proconsuls were appointed in Ancient Rome to govern the provinces. Neither Russia nor Venezuela is a US province.

This underlies the basic difference between nations abiding by international law – and there are too many to list them all – and the group of nations who make up pretexts for interfering in the internal affairs of other countries.

Regarding Washington’s idea of who we “must” support in Venezuela. Russia supports the legitimate authorities. This phrase contains two key words – legitimate and authorities. It is legitimate because only Venezuela’s people have the right to elect their leaders in accordance with the national Constitution. If there are other interpretations, we would like to ask the US a carefully worded question: What legal grounds does the US have to make statements like the ones made in the last 24 hours? The Venezuelan people made their choice...

The authorities – because there are no authorities in Venezuela except President Nicolas Maduro’s government. Mr Guaido can claim to be whoever he wants...

By denying Nicolas Maduro the right and obligations of authority, Washington and its proxies are denying the people of Venezuela “here and now” the right to live in a country which has authorities."

The subject of the conversation between the two gentlemen also received coverage on the Government of Venezuela's website for its Ministry of Popular Power for Foreign Affairs as shown here:

With this back and forth in mind, let's look at how the relationship between Russia and Venezuela is playing out given Washington's ongoing attempts to isolate Venezuela from its potential partner or partners.

In early December 2018, Nicolas Maduro and Vladimir Putin met Russia where deals were signed between the two leaders, securing investments from Russia in Venezuela's gold and oil sectors.  Contracts were signed for investments of more than $5 billion in Venezuela's oil industry with the goal of increasing the nation's oil production which has done this:

As well, an additional investment of $1 billion is guaranteed for Venezuela's gold sector.  Gold is an important source of hard currency for Venezuela as oil revenues dry up thanks to American-led sanctions.  

As background, it is important to keep in mind that Rosneft, Russia's national oil company owns two offshore gas fields in Venezuela as well as interests in assets that total more than 150 billion barrels of proven oil reserves.  It is the largest oil and second largest gas producer in Venezuela.  As well, Rosneft is owned more than $6 billion by Venezuela.  In addition, Venezuela's state oil company, PDVSA, owed Rosneft $2.3 billion at the end of the fourth quarter 2018, down from $3.1 billion at the end of the previous quarter.  Intergovernmental debt between Russia and Venezuela was restructured in November 2018.  Under the terms of the restructuring, Venezuela which was technically in default on its Russia debt, will be allowed to pay back the debt over a ten-year period with minimal payments over the next six years.  

According to Russian news agency Tass, Russia and Venezuela are slated to sign more than 20 cooperation agreements in April 2019 as shown here:

These agreements will cover the economy, trade, culture, energy and education.

In addition, there are close ties between the two nations when it comes to Venezuela's overall economy.  Here is a quote from a paper entitled Russian-Venezuelan Relationship at a Crossroads by Vladimir Rouvinski at the Wilson Center:
"In late October 2018, Russia sent a team of experts to Caracas from its Ministry of Finance, Ministry of Economic Development, Russian Central Bank, Federal Tax Service, and a number of other ministries and departments.41 According to official sources, the Venezuelan government requested the presence of senior officials of the Russian ministries in order “to exchange experiences in the field of economic reform.” The inter-departmental expert group public mission was to assist the government of Venezuela in the “development of measures in the field of economic management in a crisis situation.” The Russian experts were to have access to all the necessary information and to remain in Caracas for several months. The head of the mission, Sergei Storchak, is known for his role in the successful negotiations of Russia’s Soviet- era debt to the Paris Club and is considered a key Russian expert in the area of external debt.
At about the same time as the Russian experts arrived in the Venezuelan capital, reports appeared indicating that Russia’s Evrofinance Mosnarbank was helping Venezuela to work around U.S. financial sanctions.42 The bank in question is a joint venture owned by the Fondo de Desarrollo Nacional SA. of Venezuela and two other Russian banks (one of them belonging to Gazprom), and has Russian and Venezuelan nationals on its governing board. In March 2018, it became first international financial institution to back the Venezuelan cryptocurrency, the petro. The government of Nicolás Maduro soon began advising Venezuelan companies to conduct all international transactions via Moscow’s Evorfinance Mosnarbank.

Taking into account the difficulties faced by Venezuela’s chavista government and Russia’s combined investment in Venezuela of up to $20 billion.  Vladimir Putin’s government does not appear to view losing its investment as an acceptable.  The value of the Bolivarian Republic for Russia American nation for Moscow is is not measured in terms of money alone. There are other interests in play relating to two fundamental aspects of post-Cold war Russian relations with Venezuela. The first is Russia’s recognition that the primary value of the South American nation for the regime in Moscow is its geographical proximity to the United States. The second is an unusual sense of comradeship and trust developed by an important part of the Russian political elite towards Venezuela that dates back to the reign of Hugo Chávez and has continued during the rule of Nicolás Maduro." (bolds mine)

As you can see, there is a very close relationship between Russia and Venezuela, a relationship that will not disappear simply because Washington wishes it to end.  As well as a relationship with Russia, Venezuela also has another key ally as shown here:

It is quite clear that China stands on the side of the Maduro-led government and that the situation should not be resolved by any external forces, namely, Washington.

In the current global geopolitical environment where two nations are poised to impact the current unipolar reality, the situation in Venezuela will prove to be a testing ground with Washington battling for control of Venezuela with two very determined world powers that stand in their way.

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