Friday, 8 January 2016

Dr. R. Evan Ellis: Russian Influence in Latin America

Dr. R. Evan Ellis is a frequent contributor to SDR and one of the worlds leading experts 
on Latin American Studies.  His observations are often quoted within the 
Think Tank and OS Intelligence community.


On November 30, 2015, on the sidelines of the United Nation COP21 Climate Change Summit in Paris, the Presidents of Peru and Russia signed an agreement establishing a strategic partnership. The accompanying joint declaration included expanded cooperation in defense, counternarcotic activities, development, next year’s Asia-Pacific Economic Cooperation (APEC) summit in Lima, and the challenge that had ostensibly brought both to Paris—climate change.
The accord is one example of Russian President Vladimir Putin seeking to advance the nation’s position in Latin America, and arguably, to demonstrate to his own people that his government is returning Russia to a position of strength and greatness as a major global actor. The agreement is consistent with Russia’s surprising September 2015 offer to sell $480 million worth of new Sukhoi fighter aircraft to the bankrupt and crumbling regime of Nicolas Maduro in Venezuela. Both highlight Russia’s significant loss of strategic position in Latin America and the Caribbean over the past year, and its attempt to compensate for its increasing marginalization in the region.
In February 2014, as tensions escalated between Russia and the United States over Ukraine, the Russian government announced that it was considering agreements with Venezuela, Cuba, and Nicaragua for access by Russian military forces to ports and airfields in those countries. The initiative reinforced a trend of expanded presence by Russian military assets in Latin America and the Caribbean, prompting the head of the U.S. Southern Command, General John F. Kelly, to note in his posture statement before the U.S. Senate Armed Services Committee that “it has been over three decades since we last saw this type of high-profile Russian military presence” in the region. Russia’s star seemed to be rising across the region, in the face of a United States distracted from its attention to the Western Hemisphere by events from Ebola in Africa, to revolutions and violence across the Arab world, to the rise of China. 
In July 2014, President Putin made a high-profile visit to Latin America, with stops in Cuba, Nicaragua, Brazil, and Argentina.  This included a surprise dinner “summit” in Buenos Aires with the Presidents of Argentina, Uruguay, Bolivia, and Venezuela. The visit seemed designed to showcase Russia’s return to the region in a manner that challenged the United States, through high-profile meetings and announcements of agreements.  For example: 
  • Cuba: Putin announced that Russia was forgiving 90 percent of the $35 billion in outstanding debt that Cuba had run-up with the Soviet Union during the Cold War, and following the visit, the Russian government announced that it was considering the re-opening of its signals intelligence collection facility in Lourdes, Cuba.
  • Brazil: Putin participated in the annual BRICS summit in Fortaleza, where he secured the organization’s neutrality on Russian activities in the Ukraine.
  • Nicaragua: An agreement was announced that Russia would provide security for the future Nicaragua Canal. 
  • Peru: Russia announced a $528 million sale of 24 Mi-171 transport helicopters to Peru, to be accompanied by the construction of a maintenance facility in Arequipa.
  • Argentina: Russia finalized a deal to sell 12 Su-24 Fencer combat aircraft to Argentina.  Later, during an April 2015 visit by Argentine President Christina Fernandez to Moscow, the two countries announced $3 billion in energy deals, including petroleum exploration by Gazprom, construction of a new nuclear reactor in the Atucha complex near Buenos Aires, and possible participation by Russian companies in the construction of the Argentine hydroelectric facility Chihuido-2. 
How much difference a year makes.
By December 2015, international petroleum prices had fallen half of what they had been in June 2014, putting severe fiscal pressure on the Russian state, already severely stressed by U.S. and European sanctions, and the cost of supporting a prolonged proxy war in Ukraine. Russia’s entry into the Syrian civil war, however much it expanded its position in the Middle East and made U.S. initiatives in the region look ineffective, only deepened the fiscal pressures on the Russian government, arguably limiting its latitude to underwrite allies and pursue initiatives in other parts of the world.
At the same time, Russia’s military and economic activities in Latin America and the Caribbean have been beset by more difficulties than is clear from the rhetoric on the “Russian threat” to the region.
During Russia’s 2014-2015 diplomatic offensive in Latin America and the Caribbean, Ecuador and Bolivia were notably absent. This contrasted markedly with the participation of both during Russia’s previous wave of diplomatic engagementwith the region in the context of tensions with the U.S. over Russia’s role in the civil war in the Republic of Georgia. Moreover, although Russia had previously mentioned its interest in base access agreements with Venezuela and Cuba, the only such accord to materialize when Russian Defense Minister Sergei Shoigu visited the region in February 2015 was a relatively minor deal with Nicaragua.
In the area of arms sales and military engagement, one of the principal features of Russia’s activities in Latin America, Russian arms companies and its arms export organization Rosboronexport lost important ground in 2015, mostly to the Chinese.  Financial troubles in Latin America, U.S. sanctions against certain Russian companies, and relatively better Chinese products account for this Russian loss.
  • Brazil: Russia had already suffered major setbacks in Brazil, when, in 2011, the later suspended plans for a follow-on to its 2008 purchase of Mi-35 attack helicopters, and later, when its Su-35 fighter did not even make the final cutin the selection for Brazil’s FX-2 fighter modernization effort, which ultimately chose the Saab JAS-39E Gripen. Adding insult to injury, Russia’s sale of the Pantsir S1 defense system and IGLA-S missiles to Brazil, a $1 billion contract which seemed to be a sure bet, needed to support the 2016 Olympics in Rio, was suspended as Brazil’s fiscal crisis deepened.
  • Peru: Rosboronexport lost out to the Chinese in a bid to sell the country a truck-mounted multiple rocket launcher system, replacing its aging Russian BM-21 system. In addition, in September 2015, Peru’s Banco de la Nacion blocked payment for the delivery of part of the previously contracted order for 24 Russian Mi-171 helicopters to Peru, on the grounds that Rosboronexport and the affiliated military technology organization Rostec were on the list of organizations covered by U.S. sanctions against Russia.
  • Venezuela: Since 2005, Venezuela purchased over $11 billion in Russian arms. Defense experts in the region consulted off-the-record noted that Venezuela’s armed forces were dissatisfied with receiving second-hand, remanufactured Russian equipment with outdated equipment packages and poor maintenance support, including Rosboronexport reportedly haggling over providing minor spare parts for its Su-30 fighters, resulting in the temporary grounding of a sizeable portion of the Venezuelan fleet.   In December 2014, the Venezuelan Naval infantry took delivery on a series of new Chinese VN-1 armored personnel carriers, whose quality, electronics suite, and associated Chinese service support reportedly made the Venezuelan Naval infantry the envy of their Army counterparts, who were stuck with older, less well-equipped Russian BTR-80s and BMP-3s. Indeed, it was arguably Russian nervousness over Chinese inroads with Venezuela, its most important military client in the region, client that contributed to the seemingly unaffordable and ill-timed Russian offer in October 2015 to sell the Maduro regime $480 million in additional combat aircraft.
Beyond the defense sector, Russia’s economic weight in Latin America and the Caribbean pales in comparison to that of the PRC and the U.S. In 2013, Russia’s bilateral trade with the region amounted to $18.8 billion, by contrast to the $257.9 billion in bilateral trade between the region and the PRC. With few exceptions, Latin American political leaders and businesspersons simply do not dream of selling to a vast Russian consumer market, or attracting deep pocketed Russian banks and investors, in the way that they dream of doing so with the PRC.
As 2015 unfolded, one-by-one Russia’s principal political supporters in Latin America and the Caribbean entered into problems that either restricted their ability to deepen relations with Russia, or called into question the survival or future direction of their government.
  • Cuba: The December 2014 announcement of U.S. President Barack Obama of U.S.-Cuba talks to restore diplomatic relations suddenly put at risk Russia’s most significant, long-standing partnership in the Western Hemisphere.   Indeed, although the Russian signals ship Leontov visited Cuba three times, including visibly putting into port in Havana’s public cruise ship dock as senior U.S. officials met with their Cuban counterparts on the other side of town, the Cubans, who felt a lingering bitterness over the suffering inflicted on them when Russia abruptly cut off its economic aid at the end of the Cold War, now held Russia at arms-length and kept a relatively low profile, hoping to escape from under the 50-year old U.S. sanctions regime.
  • Nicaragua: The Sandinista regime of Daniel Ortega, arguably Russia’s closest ally in Latin America, finds itself in an increasingly difficult position as Wang Jing, the benefactor behind the controversial Nicaragua Canal, has seemingly run out of money to take the project forward, at least during 2016, while the PRC has yet to embrace the project politically, or as an investor. The potential collapse of the canal project not only puts Russia’s role as a security provider at risk, but given the amount of political capital the Sandinista government has invested in it, in the context of Nicaragua’s November 2016 presidential elections, the high-profile failure puts into question the future of the Sandinista regime as Russia’s lynchpin in Central America.
  • Brazil: The deepening Petrobras bribery scandal, exposed by “Operation Car Wash,” continues to unfold, paralyzing both the government and deepening the nation’s fiscal crisis and economic contraction, undercutting the ability of President Dilma to advance a South-South development axis involving Russia through the BRICS forum.
  • Argentina: The nation’s November 27 presidential election was won by Mauricio Macri, businessman and engineer whose campaign positions and cabinet choices to date indicate that he will move the nation back toward a more balanced international engagement posture, rebuilding relationships with Brazil and the United States that were badly damaged during the Kirchner era, and moving the nation away from its embrace of Russia and China.
  • Venezuela: The December 2015 legislative elections brought an opposition coalition to power, denying Venezuela of both the political and economic ability to act as a reliable Russian ally in the region.  Indeed, in the Venezuela-Guyana border dispute over the Essequibo region, Russia has already been forced to do a delicate dance between supporting an increasingly unreliable and unstable Venezuelan ally, versus courting the new APNU government in Guyana, a long-time friend of Russia and the Soviet Union.
  • Peru: Even the meaning, and long-term consequences of Russia’s new “strategic alliance” with Peru is questionable, with the relatively unpopular regime of Ollanta Humala facing scandals from the activities of its intelligence organization DINI, to the resignation of the Justice minister following his dismissal of a prosecutor attempting to investigate the first lady for money laundering, and with national presidential elections in April 2016.
While U.S. policymakers may take heart over the erosion of Russia’s fortunes in Latin America and the Caribbean, they cannot take credit for it.  Indeed, most of the change in the strategic environment in the region owes to two partially contradictory, partly reinforcing dynamics, neither of which are substantially a product of U.S. policy: first, the advance of the PRC in Latin America and the Caribbean, and second, the partial collapse of the region’s experiment with socialist populism under the weight of its own economic contradictions.
For President Obama, Secretary of State John Kerry, and the rest of the U.S. foreign policy team, Latin America and Russia’s relationship with it may seem to be a bright spot in an increasingly challenging global dynamic.  Yet Russia has not ceased to pursue initiatives in Latin America and the Caribbean, despite only seeing its position weaken.  Moreover, Russia remains a nuclear-armed power ill disposed toward, and competing with, the U.S. globally.  In addition, the problems of underdevelopment, inequality, poor governance, and transnational crime that give rise to the willingness of regimes in Latin America and the Caribbean to open a door to Russia, remain unsolved—and are arguably worsening.
The United States has a brief window of opportunity to leverage the good fortune that is currently befalling it across Latin America and the Caribbean.  The U.S. can support the success of regimes pursuing a more pro-U.S. path, and in the process, inoculate the region against a Russia that would exploit anti-U.S. sentiment in the region as a base for its own global ambitions, however unrealistic that may be.  But despite the many other global demands on the attention of U.S. policymakers, the nation must act soon, and with adequate resources, because the window of opportunity will not stay open for long.
Dr. R. Evan Ellis is a research professor of Latin American Studies at the U.S. Army War College Strategic Studies Institute. The views expressed in this article are strictly his own.

This article was first published at: The Cipher Brief
Republished with the permission of Dr. R.Evan Ellis.