New Russia-Venezuela Cooperation Deal Opens Door to Putin’s Cronies.
The 16th edition of the Russia-Venezuela High Level Intergovernmental Commission (CIAN) was held in Caracas on Saturday, culminating in Russian Deputy Prime Minister Yuri Borisov pledging $4 billion in new investments.
The message was clear – Moscow will continue to offer unwavering support to the embattled South American state, come hell or high water.
In the current environment, Venezuela is desperately in need of friends.
Sanctions against the state have been relentless, from the freezing and seizing of assets to travel bans and arms embargoes. The Trump administration has increasingly tightened the screws on Venezuela’s besieged president, Nicolás Maduro.
Most recently, the US administration slapped Venezuela with a general embargo, including secondary sanctions against any US or non-US individual, firms or government entity trading with the state and associated bodies.
As the country’s economy continues its downward spiral, the Maduro regime has come under intense pressure domestically, with opposition resistance crystallizing in the form of Juan Guaidó, the young president of the National Assembly.
In early 2019, shortly after Maduro won re-election amid reports of vote-rigging and coercion, Guaidó directly challenged the leadership and declared himself the interim president.
Thousands of protesters rallied in support, and around fifty countries, including the US and much of Latin America and the EU, promptly recognized him as the legitimate head of state.
Yet, despite international support and US funding, Guaido’s push to oust Maduro has yet to bear fruit.
With the economy in freefall and a severe shortage of food, medicine, and basic goods have prompted an estimated 4 million people (up to a tenth of the population) to flee the country.
Yet Maduro continues to cling to power and throughout it all, Venezuela’s unraveling regime has been increasingly turning to Russia for the funds and credit needed to stay afloat.
Maduro’s administration needs Moscow’s money to finance everything from bond payments to imports of basic goods. And as Venezuela struggles to deal with hyperinflation and violent street protests, Russia is increasingly using its position as lender of last resort to grow its influence over the region.
Moscow’s backing fulfills several key foreign policy objectives: it challenges the US in its own sphere of influence, demonstrates Russia’s power reach, and highlights the multipolar world system that Russia is pursuing as a replacement for waning US hegemony.
And all the while, Russia is gaining ever more control over Venezuela’s prized crude oil reserves – the largest in the world – through oil giant Rosneft. The company has taken around half of Venezuela’s crude exports in recent months.
As Russia continues to provide support to an increasingly isolated Venezuela, its involvement in the country is set to increase further.
At the recent CIAN summit, it was announced that trade between the countries was set to increase by a further 10% this year up to $150 million per annum, encompassing a range of different sectors including transport, mining, petrochemicals, and national defence.
Under the new deal, Putin’s allies will be first in line to reap the benefits of preferential treatment. Chief amongst them, Oleg Deripaska – the Russian oligarch with vast interests across virtually all the industries earmarked for greater cooperation.
Deripaska remains banned from doing business with US individuals or companies under sanctions imposed on him in relations to alleged “worldwide malign activity” on behalf of the Russian government.
The US Treasury’s designation states that Deripaska has been “investigated for money laundering, and has been accused of threatening the lives of business rivals, illegally wiretapping a government official, and taking part in extortion and racketeering.” He is also accused of having “bribed a government official, ordered the murder of a businessman and had links to a Russian organized crime group.”
The sanctions have had a significant impact on Deripaska’s financial affairs, reportedly cutting his wealth to $3.6 billion from $6.7 billion.
Deripaska will therefore undoubtedly be keen on getting involved in the Venezuelan spoils, handed out by the country’s autocratic ruler in return for a financial lifeline.
That Venezuela is in the grips of a crippling humanitarian crisis will be of little concern to a self-serving Russian oligarch such as Oleg Deripaska.
But this is the direction of travel for Venezuela: their ruler at the mercy of his only true ally, their resources plundered by oligarchs intent on turning a profit on the cheap rather than turning the country’s fortunes around.