Medvedev, Russian Navy Head to Latin America to Boost Influence

By Lyubov Pronina

Nov. 21 (Bloomberg) — President Dmitry Medvedev travels to Latin America today as Russian warships sail toward the Caribbean Sea and Russia asserts its influence in America’s backyard more than at any time since the Soviet era.

Medvedev begins a week-long tour at the Asia-Pacific Economic Cooperation Forum in Peru, where he’s likely to meet his U.S. counterpart George W. Bush, before visiting Brazil. He ends his trip with stops in Venezuela and Cuba, whose leaders are outspoken critics of the U.S.

“This is the first time since the end of the Cold War that we’re having a major Russian initiative in Latin America,” Larry Birns, director of the Council on Hemispheric Affairs, a Washington-based research group, said by telephone. “Russia intends to put a lot of resources into cultivating its ties with the region, particularly with Venezuela and Brazil.”

Russia’s military has flexed its muscle abroad under Medvedev, most notably in routing Georgia’s army in a five-day war in August. Two strategic bombers flew to Venezuela in September, and now a convoy of warships led by the Peter the Great, an atomic-powered cruiser, is scheduled to arrive in the Caribbean for exercises with the Venezuelan navy as Medvedev meets with President Hugo Chavez.

Arms Sales

Oil-rich Venezuela spent $4.4 billion on Russian weaponry from 2005 to 2007, including 100,000 Kalashnikov rifles, 50 military helicopters and 24 Su-30 jet fighters, according to a U.S. Defense Intelligence Agency report. Chavez visited Russia in September and secured a $1 billion credit line to buy more Russian arms.

Russian officials say Medvedev’s visit shouldn’t be interpreted as a challenge to the U.S., similar to his Nov. 5 threat to deploy short-range missiles in Europe to “neutralize” a planned U.S. missile shield.

“Russia is making up for what was lost in the 1990s in Latin America, where the Soviet Union had a solid presence,” Mikhail Margelov, chairman of the Foreign Affairs Committee in Russia’s upper house of parliament, said by phone. “This isn’t an attempt to undermine America from within or from the rear.”

Foreign Minister Sergei Lavrov said media reports that portray the visit as an incursion into America’s sphere of influence “are inherited from the Cold War era, when everything that was good for the U.S. was bad for Moscow, and vice versa.” His comments were posted yesterday on the ministry’s Web site.

Dwindling Reserves

Russia’s ability to expand its influence around the globe may be hampered by the global financial crisis and tumbling prices for commodities, notably oil, which have forced the government to spend its reserves to support the ruble. The price of Urals crude, Russia’s biggest export earner, slid to a 3 1/2- year low yesterday. International reserves fell to $453.5 billion, a 24 percent decline since Aug. 8.

Latin America’s reception of Russia’s overtures may also be tempered by hopes for improved relations with the U.S. following Barack Obama’s election victory. Even Chavez, one of Bush’s fiercest critics, has indicated a softer stance toward the president-elect.

“We are not anti-U.S.,” Chavez said on Nov. 8. “Now, hopefully with President-elect Barack Obama, the U.S. can make a turn toward humanism, a turn to respect for the world.”

Lavrov stressed Russia’s desire to “compete on Latin American markets” on the eve of Medvedev’s trip. “This will be a real challenge to trading, investment and other companies,” he said.

Gazprom, VTB

Russian trade with Latin America’s 33 countries will reach $15 billion this year, according to Lavrov, less than the volume of trade with a single Central Asian neighbor, Kazakhstan.

Medvedev’s delegation will include Alexei Miller, chief executive officer of Russian natural gas monopoly OAO Gazprom, Andrei Kostin, chief of VTB Group, Russia’s second-biggest lender.

Agriculture Minister Alexander Gordeyev will be in Brazil to discuss cooperation on biofuels, while Sergei Kiriyenko, head of Russian state nuclear company Rosatom Corp. and OAO Lukoil chief Vagit Alekperov will visit Venezuela.

Talks at the APEC summit in Lima will focus on the global financial crisis and energy security, Medvedev’s economic aide Arkady Dvorkovich said.

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