Russia could be staring down a painful financial reckoning in Venezuela after the US military operation on January 3 threw into doubt years of strategic investment and cooperation between Moscow and Caracas, according to a think tank analyst.
“Russian investments in Venezuela’s oil industry over the last twenty years will now have to be, formally or informally, written off,” wrote Stephen Sestanovich, the George F. Kennan senior fellow for Russian and Eurasian studies at the Council on Foreign Relations, in a post on Wednesday.
Loans for Venezuela’s purchase of Russian weapons could meet the same fate, added Sestanovich, a former ambassador-at-large for the former Soviet Union at the State Department.
“The overall market appeal of such arms has clearly been diminished,” following the US’s military operation, he wrote.
Some $2 billion to $3 billion in annual trade between Russia and Venezuela could also “cease altogether,” he added.
Those concrete economic losses contrast with more intangible political upsides for Moscow in a shifting global order, he added.
“The Trump administration’s emphasis on preserving a US sphere of influence in the Western Hemisphere could also seem to validate Russia’s claims for a similar sphere in its own neighborhood,” Sestanovich wrote.
The developments come at a sensitive moment for Russia’s economy, as its war in Ukraine approaches its fifth year next month.
Sweeping Western sanctions and depressed oil prices are squeezing Russia’s revenues, putting pressure on the funds Moscow uses to sustain the war effort and support the broader economy.
Russian President Vladimir Putin has not commented publicly on the US’s operation in Venezuela. The Russian foreign ministry has called for deposed Venezuelan President Nicolás Maduro’s release and for dialogue between the US and Venezuela.
Meanwhile, Russian state-owned oil company Roszarubezhneft sought to draw a line around its oil holdings in Venezuela. The company said earlier this week that all its assets in the South American country are “owned by the Russian state.”
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