When Venezuela's President Hugo Chávez touches down in
Moscow on July 22 to meet with the duumvirate of Prime Minister
Vladimir Putin and President Dmitry Medvedev, he will be ready for
more than the usual diplomatic photo-op. This odd trio will be
well-positioned to plan substantial international mischief.
A Russian-Venezuelan axis is a 21st-century throwback to the
Cold War Soviet-Cuban alliance. Such a partnership bodes ill for
energy security, for freedom in both nations, and for the Western
Despite differences in culture, language, and geography, the
rulers of Russia and Venezuela are increasingly rejecting civil
society and narrowing political space in their respective
countries. They drive out foreign investors and erode market
mechanisms. Both governments have mounted sustained attacks on the
rule of law in an effort to exert control over energy resources,
excessively strengthen the state, and expand geopolitical clout.
Putin and Chávez are promoting an alternative vision to that
of the U.S. and the West and are comfortable with the progress they
are making toward this end.
Redistribution of Global Power
The Russia-Venezuela condominium is emblematic of geopolitical
forces rising to challenge U.S. leadership and influence.
Chávez and the Russian duo want to redistribute global power
as expediently as possible. In pursuit of this "world without the
West," the two governments are dumping the dollar in favor of the
Euro during energy transactions, using energy as a geopolitical
weapon, and calling for the creation of "new economic and financial
institutions" to supplant the post-Bretton Woods order. They also
are cooperating in launching a natural gas OPEC-style cartel, led
For Russia, this new relationship is part of a larger effort to
recover its great power status lost as the result of the Soviet
Union's precipitous collapse. Chávez, on the other hand,
seeks to realize Simón Bolivar's dream of a united Latin
America capable of challenging the "Colossus to the North." Such
geopolitical ambitions reflect the buoyancy found in oil- and
gas-rich nations riding the crest of $135 per barrel oil.
Russia and Venezuela, together with Iran, are among the
trend-setters in the democracy roll-back taking place since the
late 1990s, especially in petro-states. The rise of oil prices has
accelerated this process and helped precipitate the rise of statism
and the decline in democratic governance, while energy revenues
provide the means to buy off political opponents and the media,
build up internal security forces, and insulate regimes from any
domestic and international criticism.
While Russia is supporting Iran-both diplomatically and
militarily-and buying European politicians with Gazprom jobs,
Chávez is working to undermine stability in the Western
Hemisphere. For instance, Chávez provides covert support for
the narco-terrorism of the FARC, suitcases of clandestine cash for
political candidates, friendship with Hezbollah, and a
permissiveness or inattention that has allowed Venezuela to become
a major transit point for cocaine.
Sprawling and Increasingly Statist
Chávez and the Putin-Medvedev duumvirate both preside
over sprawling and increasingly statist economies, gorged upon
freshly nationalized industries and deeply dependent on resource
nationalism. Russia has forced Western energy companies out of
massive development projects in Siberia and the Far East, pressured
British Petroleum to sell a major stake in a large Siberian gas
field to Gazprom, and squeezed Royal Dutch Shell in the giant
Sakhalin Island project. The current dispute between BP and Russian
TNK-the only remaining major oil venture in Russia with 50 percent
foreign ownership-is also consistent with Russia's continuing
commitment to de-privatization.
Yet Russian state control is not limited to natural resources.
State control has also been mounting over metals, the arms sector,
and the automotive industry. Moreover, despite resistance within
the Kremlin, President Medvedev has just approved the transfer of
the state's assets in 426 companies to a single "national
champion"-state-owned Rostekhnologii or Russian Technologies. As it
so happens, Rostekhnologii is run by Sergey Chemezov, Putin's
intelligence community comrade. This transfer of assets and the
ongoing dispute between British Petroleum and Russian TNK directly
contradict Medvedev's rhetoric of liberal economics and legal
In the last 18 months, Chávez has also increased the
tempo of nationalizations with several "my way or the highway"
deals. By allowing for increased importation, skyrocketing oil
prices mask-temporarily-economic mismanagement and the deeper
shortcomings of anti-market economic policies. In modern-day
Venezuela, crime, corruption, and inflation rise and while the
quality of life of the average citizen declines or stagnates.
Crony capitalism, coupled with lack of transparency and
accountability, makes life difficult for the ordinary Russian or
Venezuelan. Scarce wonder that, according to The Heritage
Foundation's 2008 Index of Economic Freedom, Russia stands
134th out of 157 ranked nations, while Venezuela has descended to
the bottom 10 at 148th out of 157.
Energy as a Geopolitical Weapon
The Kremlin is skilled at using energy as a foreign policy tool.
It has cut off supplies to six countries over the last seven years
and uses energy dependence as leverage to divide Europe on key
issues. Most recently, after the signing of an agreement between
Prague and Washington for an anti-missile defense radar station, a
Russian company sharply reduced the flow of oil to the Czech
Mimicking the Russians, Caracas relishes using oil for
geopolitical leverage and influence. In recent months,
Chávez has bolstered oil subsidies and a financing facility
known as Petrocaribe. Using the oil bonanza, Chávez has
pledged assistance that eclipses U.S. aid in the Western
Hemisphere. Even democratic Costa Rica cannot resist the seduction
of relief at the pump.
At the working level, Russia's energy giant Gazprom and
Venezuela' national petroleum company, PDVSA, are cementing an
energy partnership in South America. As the chief of PDVSA recently
reported, "We want to make [PDVSA] like Gazprom, but with a social
role." Chávez seeks to deepen cooperation with the Kremlin
and its state-run enterprises. He has invited Russian firms to
exploit the Orinoco River basin-potentially the world's largest oil
deposit, holding 1.2 trillion barrels of extra-heavy crude. Gazprom
is also involved in a proposed Venezuelan initiative to construct
an 8,000-kilometer trans-South American gas pipeline that will link
Venezuela's oil and gas fields to Argentina via Brazil, with
potential spurs going to Bolivia, Paraguay, Uruguay and Argentina.
According to Chávez, these Russian state-run firms are part
of the vanguard of the Bolivarian revolution.
Arms sales-which Russia uses to gain friends and influence
governments-are key components of the Kremlin's relationship with
Venezuela. Flush with cash, Chávez is buying as much
military hardware as possible. For instance, in 2006, Chávez
sealed a $3 billion arms package with Russian state-owned arms
trader Rosoboronexport that included 100,000 Kalashnikov AK-103
series automatic rifles, 24 advanced Sukhoi (SU-30) fighter jets,
and 53 military helicopters. A Russian Kalashnikov rifle plant and
munitions factory should be operational in Venezuela by 2010.
Caracas is also interested in Russian air defense systems and
Chávez increasingly relies on Russia to provide the
weaponry he insists is needed to defend Venezuela against the bogey
of a U.S. invasion. The July 22 visit will yield more arms,
including a possible submarine deal. While Washington tends to
focus on Chavez's ties to the FARC or Iran and Hezbollah,
Venezuela's rapidly solidifying relationship with Russia opens up
previously unexplored avenues for diplomatic, military, and perhaps
nuclear cooperation between the two. Whether in Eurasia or the
Western Hemisphere, these actors are playing a broad geopolitical
game into which they hope to lure China, India, Brazil, and other
A Multi-Pronged Strategy
The next administration will have to devote more attention to
the Western Hemisphere, as well as to the increasing threat of
resource nationalism from Russia, Venezuela, Iran, and other
energy-rich countries. Specifically, the next administration must
develop a multi-pronged strategy committed to:
- Promoting market access and the rule of law among energy
- Promoting greater cooperation between energy consumers;
- Developing alternative sources of energy consumers want.
These are trying days for the globe's democracies, yet greater
threats were defeated in the past.
Ph.D., is Senior Research Fellow in Russian and Eurasian
Studies and International Energy Security and Ray Walser, Ph.D., is Senior
Policy Analyst for Latin America in the Douglas and Sarah
Allison Center for Foreign Policy Studies, a division of the
Kathryn and Shelby Cullom Davis Institute for International
Studies, at The Heritage Foundation.