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Chavez Exit No Major Threat to Russia’s Lucrative Deals Experts

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Venezuelan leader Hugo Chavez’s failing health and possible departure from power are unlikely to pose an immediate threat to Russia’s multi-billion-dollar arms and energy contracts with his country, despite his direct personal support for the deals, Russian analysts told RIA Novosti on Wednesday.

MOSCOW, January 9 (RIA Novosti) – Venezuelan leader Hugo Chavez’s failing health and possible departure from power are unlikely to pose an immediate threat to Russia’s multi-billion-dollar arms and energy contracts with his country, despite his direct personal support for the deals, Russian analysts told RIA Novosti on Wednesday.

Chavez, who is continuing his fight against cancer and hasn’t appeared in public in about a month, asked parliament yesterday to postpone his January 10 inauguration, citing doctors’ recommendations.

Russia has intensified cooperation with Venezuela since Chavez came to power in 1999, signing multi-billion-dollar contracts with the Latin American country in the arms, oil and gas spheres.

The military-technology contracts, often short on publicly available details, have been piling up in recent years. Between 2005 and 2007, Caracas signed $4 billion worth of deals with Russia to buy Sukhoi fighter jets, combat helicopters and small arms. Chavez’s government also secured a $2.2-billion loan in 2010 to purchase Russian T-72 tanks and S-300 air defense systems.

Energy deals have also enhanced bilateral ties. Major joint ventures involve development of the Junin 6 and Junin 3 oilfields on the Orinoco River. Junin 6 is being developed by Russia's National Oil Consortium, which includes GazpromNeft, Lukoil, Rosneft, Surgutneftegaz and TNK-BP, together with Venezuela's state oil and gas company, PDVSA. Junin 3 is being developed by Lukoil.

Prior to his illness, Chavez personally endorsed the deals. But even for places as dependent on personalities as these two countries, his departure would not automatically mean the emergence of problems for Russian companies operating in Venezuela, said Igor Yushkov, a senior analyst for the National Energy Security Fund, a commercial research organization.

“Chavez is a charismatic leader who plays a big role in the development of modern Venezuela and many things may be centered around him,” but whoever his successor will be, the deals currently in place with Russia are likely to be respected since Chavez’s allies will stick to his policies, while his opponents will want to burnish their liberal, rule-of-law credentials.

If “Chavez’s supporters […] unite around a single leader and do not engage in rivalry among themselves, if they emerge as a single front and nominate a single successor candidate, then they have all the chances to retain power,” Yushkov said.

It is possible, however, that Chavez’s opponents could come to power. After the postponed inauguration, they accused the government of violating the Constitution, which stipulates that new presidential elections must be held within 30 days if Chavez is not fit enough to be sworn in on the scheduled date.

But even if the opposition were to take over government, Yushkov argues, it is unlikely they will renege on legally binding agreements.

“This is because they position themselves as liberal forces, as a counterbalance to ‘Dictator Chavez,’” he added.

Dmitry Abzalov, a leading analyst at the Center for Current Politics, also a private research firm, agreed, saying that although Russia’s contracts with Venezuela were largely centered on Chavez, it is highly probable they would be fulfilled.

According to Abzalov, Rosneft head Igor Sechin, who was deputy prime minister in Vladimir Putin’s cabinet (before Putin’s return to the Kremlin as president in 2012), visited Chavez shortly before his surgery, and “managed to reach an agreement” with the Venezuelan leadership about major energy deals. Sechin also had positive meetings with military top brass aligned with Chavez and his heir-apparent, Vice President Nicolas Maduro.

“That is why, it is highly probable that the accords signed between Russia and Venezuela will be honored,” Abzalov said.

The only question that remains open is the two countries’ long-term cooperation, Abzalov said.

“Apart from the existing contracts, there were also discussions on the prospects of delivering armaments for the Venezuelan Air Force and Navy,” he said. “This cooperation will largely depend on who Chavez’s successor is.”

“But in the medium term, the contracts will be executed in full. This refers both to military-technical deals and also to energy cooperation – first and foremost, the development of the Orinoco oil belt,” he said.

 

Tags:
S-300, Hugo Chavez, Venezuela