WEEKEND READ: Russia's Latin dance

Russia's $US1 billion loan to Venezuela is a classic Soviet tactic designed to increase its influence in the backyard of the United States.

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Russia and Venezuela came to two new agreements on Thursday, with Russia promising not only to loan Venezuela $US1 billion to implement a military co-operation program, but also offering to help build nuclear energy technology in the South American country. This is a big step for Russia in its campaign to increase its influence in the backyard of the United States.

In the first place, the idea of "loaning” Venezuela $1 billion is laughable. Not only is Venezuela is in the middle of a massive decade-long spending spree, but its oil production has declined drastically – and the commodity (and thus Venezuelan coffers) is subject to volatile global prices. This is a classic Soviet tactic for the Russians to use. Of the loans that the Soviet Union extended to prop up Third World countries all over the globe, none were paid back.

The Russian outlook, however, differs from that of the Soviet Union. No longer does Russia have to worry about winning an ideological battle by propping up unstable communist governments the world over. The Russians’ goal is to mess with the United States on its periphery in retaliation for NATO expansion to the very doorstep of Russia. Though this follows the pattern of tit-for-tat Cold War behaviour, how this plays out matters much less to Russia than it did to the Soviet Union. Without any constraining ideologies, the Russians are free to shift their focus to creating wholesale chaos in Latin America.

Without the need to create client states, the cost-benefit analysis for Russia changes. Where once massive state subsidies were necessary for creating a threat on the US periphery, now Russia (which, for the moment, has the cash to spare) need only send a few extra shipments of light arms to spark a little extra destabilization in a region rife with strife. For the Russians, a billion dollars to empower a country already working to undermine US influence is money well spent. And if the influx of arms destabilizes Venezuela itself …? Well, Venezuela is a major oil supplier to the United States. Either way it goes, Russia wins.

Beyond destabilization, Russia has a number of tools in its belt for giving US administrations a solid dose of heartburn. There is, perhaps, nothing more unsettling for the United States than Russian promises of nuclear technology in Venezuela. Much like the Russian relationship with Iran, promises of nuclear technology in Venezuela are a great opportunity for Russia to exert its influence without actually risking anything. Unlike Iran, Venezuela’s sheer physical distance from Russia makes it unlikely that any nuclear technology could be turned against the Russians. Furthermore, if Venezuela wants to pay for Russian technology to patch its sagging electricity network with nuclear energy, then the Russians have very little to lose in lending the equipment, technology and expertise.

Whether or not these deals actually come to fruition, it is abundantly clear that the Russians have a real interest in mucking about in the Western Hemisphere. And with the Russians actually spending money in the region, its promises have suddenly become more credible.

Countries such as Bolivia, Nicaragua and Venezuela have gradually lined up behind Russia and this hope of Russian sponsorship. The one country from whom we have not heard a decision is Cuba. With actual money on the table, the possibility that the Cubans will give up on attaining a more accommodating bilateral relationship with the United States has increased. As it has through history, Cuba could play a pivotal role for Russia in the Caribbean and on the periphery of the United States.

But the United States has not yet been able to respond clearly to what is an increasingly strong Russian presence in Latin America. And without a strong Latin American policy, the United States is largely left to play catch-up to Russian moves in the Western Hemisphere.