VENEZUELAN-RUSSIAN COOPERATION

C O N F I D E N T I A L CARACAS 003230

SIPDIS


NSC FOR CBARTON
USCINCSO ALSO FOR POLAD

E.O. 12958: DECL: 09/10/2014
TAGS: PREL ETRD VE
SUBJECT: VENEZUELAN-RUSSIAN COOPERATION

REF: IIR 69020509

Classified By: Abelardo A. Arias, Political Counselor, for Reason 1.4(d
)

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Summary
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1. (C) Venezuelan Vice-President Jose Vicente Rangel led a
delegation to Moscow from October 2-6 for the first meeting
of the High-Level Russo-Venezuelan Intergovernmental
Commission (CIAN). Rangel discussed joint efforts to combat
international terrorism and military-technological
cooperation with Russian Deputy Prime Minister Alexander
Zhukov and Secretary of the Russian Security Council Igor
Ivanov according to press reports. The Venezuelan delegation
also discussed energy, mining, trade, scientific and cultural
exchanges. The joint declaration signed on October 5 was a
general agreement, according to the Russian Embassy in
Caracas, for future economic cooperation. Russian Emboff
confirmed that planning continues for a visit to Russia by
President Hugo Chavez in November 2004. GOV-Russia
cooperation suits the GOV because it signals the GOV's
ability to deal with major non-U.S. powers; to emphasize
non-U.S. sources of military equipment; and as a signal of
independence. End Summary.

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Economic Cooperation
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2. (C) Vice-President Jose Vicente Rangel led a 34-person
delegation to Moscow from October 2-6 for the first official
meeting of the High-Level Russo-Venezuelan Intergovernmental
Commission (CIAN). According to Mikhail Babich, a political
and cultural attache at the Russian embassy, the purpose of
this meeting was to increase economic activity between the
two countries. Babich said Russia and Venezuela had signed
an agreement regarding their intentions to increase economic
cooperation in 2001, but the political turmoil in Venezuela
had delayed the first meeting for years. Babich asserted
that Chavez perceives Russians to be fellow "revolutionaries"
and an alternative to U.S. power (with India and China),so
interest in political engagement between the two countries is
high.


3. (C) Russian Deputy Prime Minister Alexander Zhukov told
reporters Russian companies were interested in greater
cooperation with Venezuela, and that various projects existed
that could act as engines to drive bilateral relations.
Zhukov cited the Russian Aluminum Company (RusAl) intention
to invest approximately $1 billion in the construction of an
aluminum refining plant in Venezuela. Babich confirmed that
RusAl intended to invest at least $500 million in the
refining plant as RusAl president and owner, Oleg Deripaska,
told reporters. Zhukov also asserted that Russian companies
want to establish hydroelectric energy plants in Venezuela to
increase cooperation.


4. (C) Babich said that during the meetings, Venezuelan
officials and Russian representatives discussed oil and gas
cooperation. LUKOIL and Gazprom were two companies
specifically mentioned. LUKOIL first vice-president, Ravil
Maganov, told reporters he discussed a joint venture with the
Venezuelan oil company, PDVSA, with the Venezuelan delegation
on the basis of a memorandum of understanding signed by
LUKOIL and PDVSA in December 2003. According to press
reports, Venezuela and Russia also discussed Russia's entry
into the World Trade Organization (WTO),of which Venezuela
is a member.

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Military Cooperation
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5. (C) Rangel and Secretary of the Russian Security Council
Igor Ivanov discussed cooperation in military-technology and
combating international terrorism, according to press
reports. DAO reported nine Venezuelan officers representing
all the services traveled to Moscow to attend CIAN from
October 1-10 (reftel). A DAO source said, "It will be no
surprise if Venezuela comes out of this intergovernmental
commission with more equipment purchases in all services of

the armed forces." In the agreement signed on October 5, the
mention of military cooperation was limited to "develop and
strengthen cooperation" based on the May 2001 convention
between the two countries.


6. (C) Rangel and the Venezuelan ambassador to Russia, Carlos
Mendoza, both confirmed that Venezuela bought Russian
helicopters; the first 10 of which are to be delivered to
Venezuela before the end of 2004 rather than by mid-2005 as
previously reported. In statements to the press, Rangel said
the helicopter purchase for MI-17, MI-26 and MI-35 had been
underway already and that at no time was the purpose of his
trip to Moscow to sign arms contracts because, "Arming the
military is the Defense Ministry's responsibility." Babich
could not confirm if the helicopter contract had already been
signed, but noted that a contract for 40-50 helicopters "was
going to happen." Babich said he had no information about a
contract for Russian fighter aircraft.

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Future Meetings
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7. (C) A note from the Vice-President's office indicated
that President Hugo Chavez would travel to Russia on November
25-26 to sign the Cooperation Accord between the two
countries in regards to energy, petroleum, education,
military-technical and aerospace cooperation. Babich
confirmed the possibility of a Presidential visit and said
that Russia would use the opportunity to agree on more
specific cooperation goals rather than signing a general
agreement as they did in the October joint declaration.

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Comment
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8. (C) Now that the recall referendum is water under the
bridge for the GoV, it is turning its attention to external
relations beyond the confines of the Western Hemisphere. The
first major foray was Foreign Minister Jesus Perez's trip to
Iran, India and China, now followed by Vice-President
Rangel's visit to Russia. Talks between Russia and Venezuela
languished during the nearly two years of pre-referendum
political turmoil with the exception of a brief stop-over by
then Foreign Minister Ivanov in December 2003 followed by an
equally brief visit by Vice-President Vladimir Yakovlev in
January 2004. Although there appear to be a number of big
ticket economic items on the agenda, the helicopter deal has
garnered the most public attention, and paves the way for a
broader military-to-military relationship between the
countries. The Rangel vist--and the inclusion of three
Venezuelan Air Force generals in the delegation--will, along
with the helo deal fuel speculation about Venezuela's
procurement from Russia of advanced fighter aircraft. For
the time being only the helicopter purchase appears to be a
reality.
McFarland


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2004CARACA03230 - CONFIDENTIAL