Cablegate: Medvedev Bolsters Russia?S Latin American Outreach

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1. (SBU) Summary: The MFA and experts saw President Medvedev?s
November 22-28 trip to Latin America as pragmatic, and focused
on trade and economic issues, not driven by ideology or
efforts to compete with the U.S. or China. In a meeting with
the Ambassador December 2, Deputy Foreign Minister Sergey
Ryabkov characterized the trip as a "success on a number of
fronts," and said it was not "overloaded (except by Venezuelan
President Chavez) with a political message to the U.S."
Ryabkov downplayed the military cooperation elements of the
visit, noting that the Russian military needed to train, which
included exercising its reach. Medvedev's trip capped a
series of high-level GOR visits over the last few months,
producing some new accords, including a USD 350 million loan
to Cuba, the creation of a Russian-Venezuelan development
bank, Russian-Venezuelan visa-free travel, a 25-year energy
cooperation agreement with Venezuela, a military-technical
cooperation agreement with Peru, and the possibility for
nuclear energy cooperation with Venezuela, Brazil, and
Ecuador. Russian ambitions to expand its influence in the
region have been overtaken by a domestic preoccupation with
the economic fallout from the global financial crisis. End

"Pragmatic Cooperation"

2. (SBU) Continuing senior Russian leaders' efforts to expand
Russia's relations with Latin American countries, President
Medvedev visited Peru, Brazil, Venezuela, and Cuba November
22-28, participating in the APEC Summit in Lima and a
Bolivarian Alternative for the Americas (ALBA) summit in
Caracas. The focus was principally on the trade, economic and
energy fields, and several agreements were reached in areas
previously lacking in the relationship, according to Ryabkov.
While Lavrov had said that trade between Latin America and
Russia had shown an annual growth of 25-30 percent, and was
expected to reach a record of USD 15 billion in 2008, MFA Head
of the Latin America Regional Problems Department Igor
Romanschenko told us the global financial crisis would
probably cause growth to slow substantially in the foreseeable

3. (SBU) Despite extensive media portrayal of Medvedev's trip
to the region, particularly Venezuela and Cuba, as challenging
the U.S. and showing that Russia can play in America's
backyard too, Ryabkov told the Ambassador that Russia was not
trying to play "childish games," but simply needed to have
better relations with Latin American countries over the long
term. Lavrov told the press that Russia's Latin American
links were not aimed at third parties, emphasizing that
Russian arms deals were only for defensive measures. Military
exercises, such as the ones between the Russian and Venezuelan
Navies, were merely good training opportunities. Romanschenko
insisted that upgrading Latin American relations was not
intended to be a response to U.S. support of Georgia during
the war in August, and emphasized that Russia's main interest
in the region was to strengthen its economic ties. He
acknowledged, however, that developing stronger relations with
Latin America would help promote Mevedev's view of a "multi-
polar world system."

4. (SBU) While experts discounted any overarching ideological
motivation behind the trip, they acknowledged that it was part
of Russia's effort to expand its influence. Director of the
Latin American Institute Vladimir Davidov noted that Russia's
commitment to expanding political and economic ties with all
Latin American countries was critical to Russia's foreign
policy goals. Pyotr Romanov, Latin America Commentator for
Ria Novosti, said that in the past, Russia's priority in the
region had been ideological and anti-U.S. Now, although
Chavez wanted to talk about a "strategic relationship" with
Russia, Moscow was not interested. "It's all business,"
Romanov claimed.

Russia vs. China?

5. (SBU) Both Medvedev and the MFA dismissed media speculation
that Russia was seeking to compete with China in the region,
with Medvedev characterizing Chinese ties to Latin America as
"normal competition" for Russia. Romanschenko said there was
limited economic competition between Russia and China in the
region, given that the two countries were interested in
different resources. He added that with China's trade volume
with Latin American countries reaching USD 100 billion, while
Russia's was only USD 15 billion, there was little scope for
significant competition. Vasiliy Mikheyev, Director of the

MOSCOW 00003526 002.2 OF 003

China and Japan Center at the Institute for World Economy and
International Relations, agreed that Russia and China were
unlikely to compete in the region, because of their divergent
goals. Russia was interested in offering technological
expertise in exchange for access to Latin American resources,
while China was more interested in providing capital
investment in exchange for raw materials. Mikheyev also noted
that while China had started developing Latin American
relations some years ago, Russian interest in the region was
still in the early stages of development and had not yet
yielded many substantive cooperative arrangementsbm+h$\[QQ6DQ--
Medvedev in VenezujAD=QKmQQqd aluminum
mining, with USD 4 billion earmarked for the bank?s initial
capital. He stated that the two sides also focused on the
"possibility" of using the Ruble and the Bolivar as the main
currency for mutual settlements through the bank. An accord
between Gazprom and Petroleos de Venezuela SA (PDVSA), and a
MOU between the Russian United Shipbuilding Corporation and
PDVSA were also reached for joint exploration of t~{2"y agreement,
which could also be extended for an additional 5 years, was
signed, and included dialogu2$y-QQ- (SBU) Although no time tables were given for any of these
agreements, Rosatom CEO Sergei Kiriyenko told the press that
Venezuela and Russia planned to develop a nuclear cooperation
program by the end of 2009. Chavez told supporters that the
GOR had offered to help Venezuela build a nuclear reactor in
the Zula region. However, Romanschenko told us that he had no
details concerning possible nuclear cooperation with
Venezuela, but noted that the GOR was always ready to push
forward on economically beneficial projects.

Medvedev in Peru, Brazil and Cuba

8. (SBU) In Peru, Medvedev had been expected to sign a number
of accords, but only one agreement on military cooperation to
build a plant to repair and service Russian-built helicopters
was reached. Other negotiations were reportedly held back
over issues including double-taxation of Gazprom. Medvedev
also invited President Alan Garcia to visit Moscow in the near

9. (SBU) Ryabkov highlighted Medvedev's visit to Brazil,
noting the importance of bolstering economic ties. Medvedev
and Lula discussed the future of and participation in global
institutions, including the UN Security Council and G20, and
called for a new BRIC summit to be held in Russia next year.
Agreements on aerospace cooperation, defense industries
cooperation, and development of nuclear energy cooperation
were signed.

10. (SBU) Despite the media frenzy about increased Russia-Cuba
ties, no new deals were signed, although possibilities for
"economic cooperation" were discussed. Seeing little
likelihood of any significant arms deals or military
cooperation, Romanov told us the main stumbling block was
Cuba's inability to pay. The only concrete deal actually
under discussion was for Kamaz, a Russian automobile company,
to open an assembly factory in Cuba to build buses.

Medvedev Meets With ALBA

11. (U) Medvedev met with leaders from Nicaragua, Dominica,
Bolivia, Ecuador, Honduras, and Cuba in an ALBA meeting on
November 27 in Caracas. According to Russian press reports,
during this meeting Medvedev expressed interest in developing
relations with these countries, and possible Russian
participation in the organization in the future as an

MOSCOW 00003526 003.2 OF 003

"associated member."

Lavrov in Ecuador

12. (U) During a side-trip to Ecuador separate from Medvedev?s
itinerary, FM Lavrov told the press on November 27 that Russia
was interested in nuclear energy cooperation for peaceful
purposes with Ecuador, and in increasing military-technical


13. (SBU) Although GOR officials adhere to the line that
Russia?s interest in Latin America is simply a normal
expansion of ties, and not intended as a challenge to the
U.S., Moscow is clearly intent on extending its influence, if
not ideologically, at least politically and economically, in
the region. Despite Russia's aspirations, the global
financial crisis is likely to slow the process, both in
Russian investment and in the region's buying power.
Grandiose schemes, such as Russia's proposed construction of
an "alternate Panama canal" (floated by DFM Sechin), appear
quaint in light of the scale of Russia?s economic downturn and
domestic economic preoccupations.

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