Saturday, July 29, 2006


There Goes Hugo


Putin and Chavez Seal Weapons Deal
By Anna Smolchenko and Nabi Abdullaev
Staff Writers

Photobucket - Video and Image HostingPresident Vladimir Putin welcoming Venezuelan President Hugo Chavez in the Kremlin on Thursday. They praised burgeoning energy and military ties.

President Vladimir Putin courted Venezuelan leader Hugo Chavez in the Kremlin on Thursday, offering the strongly anti-American leader broad political support and giving his blessing to hefty arms orders and budding oil and gas projects.

Under the arms deals, which Washington has sought to block, Russia will sell 24 fighter jets and 53 helicopters to the Venezuelan military.

In contrast to Chavez's harsh anti-U.S. rhetoric during the rest of his three-day visit to Russia, however, his tone was far more restrained during the Kremlin meeting.

After more than three hours of talks with Chavez, part of which included delegations of business and political leaders from both countries, Putin told reporters that Russia was ready to pump investment into Venezuela, primarily in the energy sector.

Then, in comments that appeared to refer directly to the United States, Putin said, "The cooperation between Venezuela and Russia is not aimed against any third parties."

Putin and Chavez were standing at lecterns in the Grand Kremlin Palace's Malachite Foyer, a hall adorned with malachite columns and portraits of princes and military commanders. Both leaders appeared solemn and barely broke into a smile during the half-hour briefing.

Sitting in the front rows of the audience were a gaggle of business leaders and state officials from both countries, including Sukhoi CEO Mikhail Pogosyan, Rosoboronexport chief Sergei Chemezov and Interros chief Vladimir Potanin.

Chavez, wearing a sober black suit and a scarlet tie, praised Russia's Sukhoi jets and Kalashnikov rifles, yet took pains during a restrained speech to tone down his anti-American rhetoric.

"For us, it's very important that Russia participates in the construction of a large gas pipeline that will run from Venezuela to the south and will span 8,000 kilometers," Chavez said, adding that the pipeline would take $20 billion to build.

He repeatedly thanked Putin for his support, saying, "In the face of the pressure and even an embargo that they wanted to impose on us, Russia has extended its hand to us."

Only at the end of an otherwise unremarkable speech did he revert to vintage Chavez, noting that he had unveiled a statue earlier in the day to Latin American revolutionary hero Simon Bolivar.

He concluded: "We are dreaming of a world in which equilibrium reigns. We are dreaming of peace in the world. Muchas gracias."

In his remarks, Putin appeared even more cautious, staying focused on the countries' fledgling cooperation in energy and other sectors.

"Possible investments by private businesses may reach hundreds of millions and billions of dollars," he said, adding that the Russian government would lend those companies its support.

Putin praised Chavez, saying that under his leadership the Venezuelan economy was growing at 8 percent annually. "This is a pace that any country could be envious of," he said.

Putin welcomed a bid by Venezuela to win one of the seats for non-permanent member on the United Nations Security Council, and wished Chavez success in his re-election bid in January 2007.

Chavez responded by praising Putin for "consistent and firm support" of Venezuela in the international arena and pledged to confirm "our sympathy and our friendship."

Chavez's visit comes toward the end of a two-week world tour aimed at striking arms and energy deals with countries that are open critics of the United States, including Cuba, Belarus and Iran.

On Thursday, Russian officials again brushed aside repeated calls by the U.S. State Department not to sell arms to Chavez, whom the United States accuses of destabilizing Latin America.

Conspicuously absent from the briefing were details of the arms deal, although Rosoboronexport's Chemezov spelled out some of the details to reporters afterward.

Arms contracts with Venezuela totaled more than $3 billion in the last 18 months, including for 24 Su-30 high-performance fighter jets and 53 helicopters, Chemezov said. He said the $3 billion deal included the cost of training and maintenance centers for military equipment.

Sukhoi's Pogosyan appeared to sum up the mood of caution among officials at the briefing when a reporter asked him to comment on the defense deal.

"I don't want to comment. Interest is high and not everybody is pleased," he said, in an apparent reference to U.S. displeasure at the deal.

At the Kremlin briefing, Chavez said the first Su-30s would arrive in Venezuela by year's end.

The fighter jets are to replace U.S.-made F-16 fighters that make up the bulk of the Venezuelan Air Force, a decision announced by Chavez after Washington slapped a ban on arms exports to Venezuela in May and persuaded its allies, with the exception of Spain and Israel, to follow suit.

In June, Caracas received 30,000 of 100,000 Kalashnikov assault rifles it had bought from Russia. Venezuela will also assemble Kalashnikovs under license at two factories in the country.

Chavez said the Kalashnikovs would replace Venezuelan army rifles that in some cases dated back to the 1940s. Some of them are so old that there are no spare parts for them, he said.

Konstantin Makiyenko, a defense analyst at the Center for Analysis of Strategies and Technologies, a think tank, said Moscow should not even consider bowing to U.S. pressure over the arms deal, as it would lead to "catastrophic damage to the reputation of our country on the global arms market."

The strengthening of energy ties hailed by both leaders is also likely to worry Washington, which is eager to ensure the security of oil and gas supplies from non-Middle East exporters, such as Venezuela and Russia.

Venezuela is the world's fifth-largest oil exporter, holding about 7 percent of global oil reserves, and holds the second-largest gas reserves in the Western hemisphere after the United States.

As well as participating in his cherished project of a South American gas pipeline, Chavez said Russian energy companies, including LUKoil and Gazprom, had been invited to increase their involvement in Venezuelan oil and gas projects, including the exploration of oil fields in the Orinoco River basin.

Gazprom is involved in two Venezuelan gas fields with state-run Petroleos de Venezuela, both of which are still in the very early stages of exploration.

On Tuesday, Chavez held talks with LUKoil CEO Vagit Alekperov during his visit to Volgograd.

It was not immediately clear Thursday whether any concrete energy investments had been agreed upon, however.

Steven O'Sullivan, head of emerging markets research at Deutsche Bank, said oil-consuming countries were over a barrel when it came to Chavez's energy and arms deals.

"In an era of high energy prices, resource-exporting economies are becoming much more independent," O'Sullivan said. "There's not a lot you can do about it -- whether it's Chavez supporting Fidel Castro or Putin selling arms to Chavez. Russia is pursuing its own interests."

Outside the Kremlin walls earlier Thursday, Chavez was much less restrained in his criticism of Washington.

"The biggest threat that exists in the world is the empire of the United States," he said at the unveiling of a bust of Bolivar, a Venezuelan national liberation hero, at Moscow's Library of Foreign Literature.

He also called the United States "a mindless, blind and stupid giant that does not understand the world, does not understand human rights, does not understand anything in humanism, culture and consciousness."

Ivan Safranchuk, head of the Moscow bureau of the Center for Defense Information, a U.S. think tank, said such outbursts by Chavez fitted well with growing anti-American sentiments among Kremlin officials.

"Venezuela will serve Russia well by slamming the United States in the United Nations Security Council, using words Moscow will like but would not want to utter itself," Safranchuk said.