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Russia and China, heavily invested in Venezuela, warily watch the political turmoil

Los Angeles Times logo Los Angeles Times 1/28/2019 By Sabra Ayres and Tracy Wilkinson, Los Angeles Times
Nicolas Maduro et al. standing next to a person in a suit and tie: Venezuela's President Nicolas Maduro, left, and Russia's President Vladimir Putin hold talks in Istanbul, Turkey, on October 10, 2016. © Mikhail Metzel/Abaca Press/TNS Venezuela's President Nicolas Maduro, left, and Russia's President Vladimir Putin hold talks in Istanbul, Turkey, on October 10, 2016.

MOSCOW - Venezuela and President Nicolas Maduro have been a costly investment for Russia and China as they seek to expand their influence in Latin America. They are determined now not to lose ground.

Moscow and Beijing are warily eyeing the events in Venezuela last week, when opposition leader Juan Guaido declared himself acting president and demanded that Maduro resign. The United States and other nations recognized Guaido as the rightful president.

Maduro, a pariah in many world capitals, has been a frequent guest of Russian President Vladimir Putin and Chinese President Xi Jinping. With every visit, Maduro walked away with new loans and cash.

In the 10 years ending in 2016, China lent Venezuela about $62 billion, much of which Caracas could repay with oil. Moscow in the last several years gave Venezuela $17 billion in loans and investment, and in December the two governments signed a new deal in which Russia will invest $6 billion in Venezuela's oil and gold sectors.

China and Russia are Venezuela's two main creditors, and they have been the principal economic force keeping the Maduro government afloat, making the difference between solvency and bankruptcy, financial experts say.

But the two powerful nations have different attitudes toward their financial relationship with the crumbling socialist South American nation.

China is more pragmatic; Russia is more ideological.

For its investment, Beijing wants raw materials, cheap oil and other returns. The Chinese were angry with the Maduro government when its oil industry, despite the billions poured in by China, continued to decline in production and efficiency.

"We have been watching to see if China would continue to bail out Maduro as the economy went into free-fall, and the answer is not quite," said Ted Piccone, a senior foreign policy fellow at the Brookings Institution. "It is not a blank check."

And in that pragmatic vein, Chinese officials have met with the Venezuelan opposition, according to Geoff Ramsey, assistant director for Venezuela at the Washington Office on Latin America, a research group in Washington.

In 2017, he said, an opposition delegation to China "offered certain guarantees to the Chinese government that some of the deals made with the Maduro government would be respected. I don't know whether that same accommodation has been reached with the Russians."

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Russia, unlike China, is more interested in extending its military presence and setting up a beachhead in the Americas - and within spitting distance of the United States.

Late last year, two of Russia's most modern, nuclear-capable bombers arrived in Caracas for a short visit. Talks about building a Russian military presence in Venezuela began in 2016, a move that alarmed the U.S. The arrival of the bombers drew sharp criticism from Washington.

"The Russian and Venezuelan people should see this for what it is: two corrupt governments squandering public funds, and squelching liberty and freedom while their people suffer," U.S. Secretary of State Mike Pompeo wrote on Twitter.

For Russia, investments and military saber-rattling about protecting Venezuela have always been about showing strength in the United States' neighborhood. Venezuela owes Moscow $3 billion for arms purchases.

Russia has tried to mimic what it sees as the U.S. and NATO foreign policy of entering and meddling in its perceived sphere of influence, such as Eastern Europe and other parts of the former Soviet Union, particularly Ukraine.

Putin's cozying up to leaders like Maduro and, before him, Hugo Chavez, was something of a mind meld of autocratic rulers who seem to speak the same language in terms of politics and diplomacy. It became a way for the Kremlin to show it wasn't as isolated as Washington would have the world believe.

"Russia's interest and investment in Venezuela is primarily geopolitical as a regional nuisance to the U.S.," said Vladimir Frolov, an independent analyst in Moscow who focuses on Russia's foreign policy. "It's an instrument for exacting certain costs on the U.S. in its home region, and a platform for distracting the U.S. from attacking Russia's interests where it matters most - in the former Soviet Union and Eastern Europe."

But what is at stake now for the Kremlin, should democracy prevail in Caracas, is more than just the billions of dollars in loans, Frolov said.

"What is more important in this crisis are the core issues at the heart of Moscow's view of the world order and international law," he said. "The loss of Venezuela is a geopolitical setback to the concept of Russia as a restored global power that needs to have client states in the U.S. backyard to prove Russia's great power as bona fide."

The Kremlin sees any U.S.-condoned power takeover driven by protests as another version of the "color revolutions" that erupted in Ukraine, Georgia and other former Soviet republics in the mid-2000s. Those street protests, which Moscow blamed on U.S. meddling, led to more Western-friendly policies and governments, threatening the Kremlin's influence.

And so Russia digs in behind Maduro and harshly criticizes the U.S. action as an unconscionable interference in the domestic affairs of a sovereign nation.

Moscow's condemnation was more forceful than that of China, who called for dialogue and a negotiated resolution to the crisis.

"As things go south for Maduro, Russia loses access to the largest oil reserves on the planet, and it also loses a convenient toehold in the Americas, with which they can counter U.S. interest in the region," Ramsey said.

China, already losing faith in Maduro, may remain more circumspect - and may also see opportunity in Venezuela's crash. Known for its predatory lending practices and tendency to seize a country's national assets as payment, China may be scouring for bargain-basement deals, from seaports to Venezuela's fields of coltan, a mineral used in the production of smartphones.

When Maduro traveled to Beijing last fall, taking pains to honor Mao Zedong, alarm bells went off. What else might he be willing to give away?

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(Ayres is a special correspondent. Wilkinson reported from Washington.)

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