Levers of Economic Influence

Moscow has employed economic tools such as preferential trade arrangements, discounts on oil and gas exports, debt relief, and financial bailouts to increase its global influence. All three components of the Russian energy sector (oil, gas, and nuclear power) often play leading roles in Russian diplomatic and commercial outreach. Links between government entities and criminal/corrupt activities are a standard feature of such efforts.

The Case of Venezuela

The Kremlin is now a key player in the dramatic events unfolding in Venezuela. Amid an increasingly desperate economic and humanitarian situation and sharpening tensions between Caracas and Washington, Moscow is helping prop up the beleaguered government of President Nicolás Maduro. In exchange, Russia is acquiring valuable assets at knockdown prices.

Russia’s close ties to Venezuela date back to early in Putin’s tenure but have been recently energized by a wave of U.S. sanctions against the Maduro regime and threats by President Donald Trump to intervene militarily in Venezuela.
State-controlled Russian oil giant Rosneft has invested heavily in Venezuela’s oil and gas sector.
Venezuelan state oil company PDVSA’s former president Rafael Ramírez (center) with Rosneft CEO Igor Sechin (second from right)
Billions of dollars in Russian advance payments for deliveries of Venezuelan crude have helped Maduro hold on to power.
Rosneft CEO Igor Sechin (left) with Venezuelan President Nicolás Maduro (right)
Russian financial support is critical as Venezuela copes with the effects of a chaotic default, hyperinflation, and economic collapse.
Russian debt relief and large shipments of wheat have helped the Maduro regime contend with chronic food shortages.
Graffiti in Caracas reading “We are hungry” and “Maduro dictator”
In November 2017, the Russian government agreed to restructure approximately $3 billion in loans to help ease Caracas’s debt burden.

Russia’s activities in Venezuela are just one example of how Moscow is leveraging its economic power to expand its influence in the Western Hemisphere. Rosneft’s growing role in Venezuela’s energy sector illustrates how Russian political and business leaders often blend commercial opportunities with important foreign policy objectives.

Select Russian energy deals around the world

Venezuela

Rosneft has stakes in five major oil projects and purchased two new offshore gas blocks in 2017. Venezuela owes Rosneft $6 billion.

Source: Bloomberg

South Africa

Rosatom, Russia’s state-owned atomic energy firm, signed an agreement in 2014 to build nuclear reactors worth $76 billion in South Africa.

Source: Newsweek

Turkey

Rosatom began construction on the $20 billion Akkuyu Nuclear Power Plant in 2017.

Source: Akkuyu Nükleer

Iraqi Kurdistan

Rosneft provided more than $4 billion in loans and investments to the Kurdish oil and gas sectors from 2016 to 2017.

Source: Reuters

India

Rosneft purchased Indian refiner Essar Oil in 2017 for $12.9 billion.

Source: Economist

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