Venezuela and Russia strike major arms deal

After Hugo Chavez announced an agreement in which Russia will provide Venezuela with a $2.2 billion credit line for weapon purchases and help in developing a nuclear energy programme, the United States expressed concerns about a South American arms race. The announced increase in defense capacity comes at the same time that a vast gas field has been discovered off Venezuela's coast.

The United States expressed concerns about a South American arms race after President Hugo Chavez announced an agreement in which Russia will provide Venezuela with a $2.2 billion (Dh8bn) credit line for weapons purchases. Mr Chavez visited Russia last week as part of an 11-day trip that included Iran, Libya, Algeria, Belarus, Turkmenistan, Spain and Italy. Agence France-Presse reported: "The United States voiced alarm Monday that Venezuela's weapons purchases may be fueling a Latin American arms race after a deal between Caracas and Moscow to buy tanks and anti-aircraft rockets. " 'We have concerns in general about Venezuela's stated desire to increase its arms build-up, which we think poses a serious challenge to stability in the Western Hemisphere,' state department spokesman Ian Kelly told reporters. " 'What they are looking to purchase and what they are purchasing outpaces all other countries in South America,' he said." The New York Times added: "The missiles, if the deal goes through, would put within firing range locations in Colombia or American military installations on the islands of Aruba or Curacao in the Netherlands Antilles off Venezuela's coast, where the United States operates surveillance flights. But Mr Chavez insisted that the weapons were solely for defensive purposes. " 'We are not going to attack anybody,' Mr Chavez said in a speech from the balcony of the presidential palace... 'These are just defense tools, because we are going to defend our country from any threat, wherever it may come from.' "Mr Chavez did not specify the type of Russian-made missiles that Venezuela hoped to buy, but he said that they had a range of about 186 miles. He also did not say how many of the missiles Venezuela would receive, where they would be deployed or how much they would cost. "If he goes ahead with the deal, Mr Chavez would have to find a way to pay for the missiles while he struggles to meet other obligations. With oil prices dropping sharply from their peak last year, Venezuela owes an estimated $10 billion to $15 billion to a wide variety of foreign companies, including suppliers of basic items like food." In August, Mr Chavez threatened to break off diplomatic relations with neighbouring Colombia in reaction to its plans to give US troops a 10-year lease on its military bases. "Chavez says the US has loosed 'winds of war' on the continent - a position few diplomats share," the Associated Press said. "Even so, the bases deal has created uncertainty about regional stability and provided yet another justification for nations to increase military spending. "Venezuela has poured $4 billion into Russian weapons to counter the threat Chavez sees from the billions in US military aid to Colombia. Ecuador is buying 24 Brazilian warplanes and six Israeli drones to keep a closer watch on its borders. Bolivia has opened a $100 million line of credit with Russia to buy weapons. "These purchases were in the works even before details of the bases deal were revealed last month - and defense spending around the region is up sharply, mostly in the name of routine modernisation. "The 12 South American nations spent about $51 billion last year on their militaries - up 30 per cent from 2007, according to a Buenos Aires research group. "That's low compared with the rest of the world - US spending alone is well into the hundreds of billions - but a steep burden for democracies in a relatively peaceful area that is struggling with growing poverty and economic crisis." China's Xinhua news agency said: "Chavez's trip to Libya, Algeria, Syria, Iran, Turkmenistan, Belarus, Russia and Spain netted the resource-rich country energy deals worth billions of US dollars. "Venezuela and Russia signed an energy deal on jointly producing 450,000 barrels of extra heavy oil from Venezuela's Orinoco Oil Strip. "The two countries also agreed on a technology transfer to help Venezuela produce liquefied natural gas which will be used by high-traction motor vehicles in places of low resources. "Venezuela signed with Iran an energy deal worth 760 million dollars to extract natural gas from the Persian Gulf." BBC News reported: "Chavez has announced the discovery of a vast gas field off the coast of Venezuela. "The find - estimated at 7 to 8 trillion cubic feet, about five times what Spain uses in a year - was made with the Spanish energy company Repsol. "Mr Chavez announced the find while in Spain during a tour of Europe and Asia. " 'What are we going to do with so much gas?' he jokingly asked Repsol's head Antonio Brufau in a joint interview with Spanish newspaper El Pais." The Financial Times said: "Venezuela's announcement was the second major Latin America find unveiled this week. Brazil's Petrobras said on Wednesday that its Guará field contained oil and gas equivalent to 1.1-2bn barrels of oil. At 8 tcf, Venezuela's would equate to 1.44bn barrels of oil. 'A discovery of this magnitude is a massive boost for Venezuela,' said Scott Pearson, Latin America upstream analyst at Wood Mackenzie. "International oil companies and other investors are simultaneously awed and anxious about Venezuela's energy wealth. Mr Chavez sees himself as a revolutionary, has steadily become more authoritarian during his decade in power, and has nationalised various foreign assets, including the local operation of Spain's Banco Santander. "Mr Chavez's announcement, made in the presence of Antonio Brufau, Repsol chairman, was the dramatic finale to a self-invited visit that had Spanish leaders wincing with embarrassment. 'You've grown a beard, like Fidel [Castro],' an ebullient Mr Chavez told King Juan Carlos, the monarch who famously told him in public to 'shut up' after he described a former Spanish prime minister as a fascist at a summit meeting two years ago."