Venezuela, a back door against sanctions and a foothold in the Caribbean in the face of America once again: Venezuela’s Maduro selling oil to Putin.

Venezuela tried to build their economy the wrong way, by selling oil and other natural resources rather than developing the infrastructure by which they might process the oil and other resources in order to sustain and advance their economy.

Venezuela is one of the pariah states along with Belarus and North Korea that the Russian Federation likes to play games with; the RF is now swooping-in for a foothold, for what could be increasing geopolitical control over the Caribbean and Gulf of Mexico.

Breitbart, “Report: Moscow Takes Control of Venezuelan Oil Assets amid Socialist Meltdown”, 14 Aug 2017:

Venezuela needs cash, and Russia has it. Venezuela has oil, and Russia wants it. According to a special report at Reuters, the socialist meltdown in Venezuela is likely to end with Moscow controlling a good deal of that tormented country’s most valuable asset: its oil fields.

According to Reuters, Russia’s giant state-owned oil company Rosneft has been holding secret negotiations with its opposite number in Venezuela, PDVSA, to purchase “ownership interests in up to nine of Venezuela’s most productive petroleum projects.”

The number of Venezuela projects Russia would have substantial or ownership stakes in would jump from five to 14 if these deals go through. The new acquisitions would include projects in some of Venezuela’s richest oil and natural gas fields.

The article goes on to note that Rosneft has already floated a billion dollars to PDVSA for promised future oil shipments, and the regime of socialist dictator Nicolas Maduro used Russian money to avoid defaulting on bonds at least twice. Russia announced one of these seemingly risky advance payments immediately after the United States announced a new round of sanctions against Maduro at the beginning of August.

Barron’s explains that Russia’s advance payments for Venezuelan crude are essentially a stealth strategy for buying the oil fields themselves. Russia writes huge checks for barrels of oil, Venezuela is unable to deliver the product or pay the debt, and Russia swaps the debt for equity in the oil projects.

New York Times, “Is Putin Getting What He Wanted With Trump?” 10 June 2017:

In the Senate last week, Richard Burr, a Republican from North Carolina, asked the fired F.B.I. director James Comey if he had “any doubt that Russia attempted to interfere in the 2016 elections.” Mr. Comey responded with a single word: “None.”

Indeed, he went on to tell the American public that the Russians “did it with purpose, they did it with sophistication, they did it with overwhelming technical efforts.” And he warned: “They will be back,” adding, “they are coming after America.”

Vodka shots in the Kremlin, right? Not exactly.

Doubtless Vladimir Putin continues to derive satisfaction from having assaulted American democracy and embarrassed Hillary Clinton. But the Russian president had one paramount priority: to lift Western sanctions.

As MR has noted, the parasite “federation” that is the Russian Federation, works with rogue nations such as North Korea and Belarus. The Times article adds -

[ibid]

According to one estimate, a quarter of Russia’s global weapons exports in 2015 were to rogue Venezuela, in transactions predominantly effected via loans. Last week, Moscow cut $1 billion from projected state budget revenues.

The Express -

Express, “TRUMP’S NEW THREAT? US President urged to act as Venezuela forges closer links to RUSSIA”, 8 April 2017:

DONALD Trump could be forced to step in to save Venezuela amid fears the failing South American country could be about to turn to Russia or Iran for support.

The Trump administration in Washington is already dealing with a string of crises across the globe - including deadly conflict in Iraq and Syria and the fight against Islamic extremism.

But improving relations with Russia, who today claimed its relationship with the US was in “tatters”, could prove to be the government’s biggest challenge to date.

Russia has not been a threat to America since the Cold War era - yet Moscow could now have found a sneaky way to stir up new tensions with the US without even lifting a finger.

Venezuela has always enjoyed warm relations with Russia, purchasing more than £3.2billion worth of arms from the former Soviet state since 2005.

And in 2009, Russia approved a whopping £1.6bn loan for the Latin American nation as it struggled with an inflation crisis that has left thousands of people struggling to afford food.

However, experts in the US have now warned there could be more to the ‘friendship’ than meets the eye.

Speaking to the Senate Armed Services Committee, a US top military official warned Venezuela could be a “destabilising” factor in Latin America - claiming a “regional response” could be needed following the country’s growing humanitarian crisis.

But he also warned the relationships fostered by Venezuela could pose a real threat to the US in the future.

Admiral Kurt Tidd, the commander of the United States Souther Command, said: “Over the past decade, China, Russia, and Iran have established a greater presence in the region.

“These global actors view the Latin American economic, political, and security arena as an opportunity to achieve their respective long-term objectives and advance interests.”

He added they may be “incompatible with ours and those of our partners.”

Venezuela’s President Nicolas Maduro has previously accused Washington of leading a push to topple his administration as part of a wider offensive against leftist governments in Latin America.

The socialist leader’s popularity plummeted in late 2015, as the economic crisis battering his country continued to worsen - with Venezuela now owing more than £112bn in foreign debt.

Then just a week ago, Venezuela’s supreme court devolved the opposition-controlled National Assembly in a shocking blow to democracy, as Maduro pushed ahead with what many are calling a left-wing dictatorship.

But the US appears to have taken little notice of the chaos occurring just yards from its doorstep, and government and senior officials now seem to have turned to other foreign nations including Russia for support.

Russia’s foreign minister has already expressed the Kremlin’s support for Maduro’s socialist rule - while the country has become a crucial investor for the government as many other states pull out over concerns about the country’s instability.

And Venezuelan foreign minister Delcy Rodriguez has announced his country would be “open to dialogue” with Russia - with the country later agreeing to a series of deals and arms contracts with the former Soviet state.

However, it is not just Russia the US will need to watch out for.

Iran and China have also an interest in forging stronger ties with Venezuela - a nation with the largest oil reserves in the world and just 1,160 miles from the US coast.

Admiral Tidd’s comments come amid strained relations between the US and Russia.

And local chronicles

Caracas Chronicals, “Could U.S. Sanctions Deliver Venezuela into Russia’s Sphere of Influence’, 2 August 2017:

Venezuelans are only now beginning to wake up to the geostrategic aspect of the crisis we’re in. Used to thinking in government-vs.-opposition terms, we struggle to wrap our minds around a new situation where big outside powers pick over the carcass of our institutions for influence. It’s a brave new world out there.

We know Nicolás Maduro is mere days from attaining his chosen Weapon of Mass Destruction: la Constituyente may convene as early as Thursday. The US continues to levy targeted sanctions aimed at Maduro and his cronies. We appreciate the gesture, but measures like these won’t return democracy to Venezuela. International sanctions seldom work. Gary Hufbauer, from the Peterson Institute for International Economics, analyzed over 200 cases of international sanctions in the last 100 years and he concluded that it’s better to keep our expectations modest.

Trouble is, Trump doesn’t do “modest”.

And so he’s considering his own “nuclear option”: sectoral sanctions to asphyxiate the Chavista economy —a move rumored to be crippling like nothing seen so far.

Would such devastating sanctions be more effective?

There’s reason to doubt it. The target is a tyrant willing to sacrifice his country rather than resign from power. What sanctions will deliver, though, is hunger and still more civilian casualties.

For some, this is the cost of putting a cruel regime on its knees —sooner or later, Nicolas Maduro will compromise or resign. Do they really have the measure of the man? I doubt it.

Chavez’ successor finds inspiration in North Korea, Syria, Iran, Russia, and of course, Cuba. Regimes that have survived an extensive range of sanctions, letting civilian populations absorb destructive impact without giving up an inch of power.

The Russian Factor…

In the event of strong U.S. sanctions against PDVSA, where do we think Venezuela will turn to for supplies? For the diluent needed to move its extra-heavy oil? Where will PDVSA go for capital, for technology, for oil field services? Russia is the obvious answer.

The answer to the “Cui Bono” question on sanctions points straight at Moscow.

Today, the Kremlin is re-assessing its presence in Latin America. Trump has clawed back the U.S.’s opening to Cuba, forcing Raul Castro —short of cash and better options—  to reach out to Putin. In the inevitable chaos of a Venezuela asphyxiated by the loss of its primary client, and with the USA no longer attached to a strategic commercial relationship, Russia could present itself as guarantor of order. Having aligned interests, Maduro’s survival would become raison d’Etat for Russia.

Russian generals have openly expressed their plans of returning to their Cuban bases, a gesture that would be interpreted as highly aggressive. All they need is an excuse to justify naval and submarine operations in the Caribbean spanning a triangle made up of Cuba, Nicaragua, and Venezuela. A client government in need and the ownership of some oil fields could be two good excuses.

The “Nuclear Option” on Venezuela is a boomerang: The United States would be making room for Russia’s strategic objectives, not in Eastern Europe or the Middle East, but in its backyard. Were anyone other than Donald Trump in the White House, the U.S. would register that for what it is: a crisis.