BY: CLAUDIA A. GONZALEZ
Amid deteriorating socio-political, and largely economic turmoil in Venezuela, President Nicolas Maduro met with his Russian counterpart, Vladimir Putin, this past Wednesday to discuss strategic cooperation. This meeting comes at a crucial time as Venezuela´s government seeks to stay afloat and secure international allies, in light of the recent sanctions imposed by the United States and European Union.
During this meeting, Mr. Putin stated that he was happy to discuss topics of trade, as well as political issues with Maduro. He also praised Maduro´s government for managing to reinstate talks with opposition leaders. As for President Maduro, he announced he had met with President Putin to discuss international politics and the possibility to sketch a new debt structure with Russia, as he reiterated his denunciation of an attempt to “shackle” the Venezuelan economy, limiting the use of the country’s resources.
WHY IT MATTERS:
Russia and Venezuela have increased their collaboration on a diverse range of issues, which was a result of former Venezuelan President Hugo Chavez’s initiation of stronger economic and military relations with Russia. Since 2006, Russia has provided loans and credits lines to Venezuela that add up to nearly 17 billion dollars.
If Russia decides to further its financial support for Venezuela, it would be providing Venezuela with the credit lifeline Maduro´s government desperately needs in order to cope with its struggling economic, social and political crisis. Nonetheless, considering the magnitude of the debt Venezuela already has with Russia, alongside the deals Venezuela´s PDVSA negotiated with Russia´s state oil company Rosneft this past August, it seems Russia will find itself in an increasingly advantageous position with respect to Venezuela´s crude market.
It is possible that Russia, using its position as lender of last resort to gain control over the state’s crude reserve, will gain leverage over the country, which is part of the OPEC market, and advance its control of oil assets in the region.
Details of the debt restructure will be needed in order to categorize what type of financial relationship Russia is seeking to develop with Venezuela. In the meantime, this meeting comes as a vital show of strength for Venezuela amidst recent sanctions.