Russia and Latin America: What gives?

In the midst of the Ukrainian conflict, Sergey Lavrov has embarked on a Latin American diplomatic tour. After visiting Cuba earlier this week and Nicaragua on May 1, the Russian foreign minister headed to Peru and later Santiago de Chile to meet with newly elected Chilean president Michelle Bachelet. This journey across the Atlantic, far away from the growing unrest in Donetsk, Kharkov and Lugansk where pro-Russian separatist militias continue seizing administrative buildings, might have surprised some. Yet, the choice of each country visited by Lavrov and the timing of such bilateral talks obey clear foreign policy logic.

While the change of regime in Kiev was viewed by Moscow as an illegitimate attempt from NATO forces to step onto Russia’s traditional sphere of influence, Lavrov is keen on reminding the World that the Kremlin also possesses its own allies at the heart of what Washington considers its “backyard” since the 1823 Monroe Doctrine.

The recent Russian insecurity at the perspective of losing its military stronghold in Crimea to Western-inspired Ukrainian authorities was reminiscent of the panic in Washington 50 years ago during the Cuban missile crisis, the nerve-wracking peak of the Cold War. If the United Nations General Assembly vote held a month ago – in response to the 2014 Crimean crisis and defending the “Territorial integrity of Ukraine” – demonstrated how isolated Russia was, it also confirmed that four of the most adamant Kremlin supporters – Bolivia, Cuba, Nicaragua and Venezuela – are located in South America. 

Latin America‘s geopolitical exchequer

However, if the Castro family – from Fidel to his brother Raul – still reigns with an iron fist over Havana, the geopolitical exchequer in Latin America is much different than what it used to be only two years ago. Hugo Chavez, the key figure of the socialist alternative to US hegemony over the Americas, passed away last year and his successor Nicolas Maduro struggles to contain popular unrest in the streets of Caracas.

Venezuela, once the economic driving force of the “Bolivarian Alliance for the Peoples of Our America” – the regional integration scheme promoted by Chavez – is now stricken by economic depression and a hyperinflation which forced Maduro to increase by 30 percent the minimum wage in the country for the second time this year. This populist move, in the naïve hope of contenting demonstrators, mostly increased the already alarming deficits which culminated at a staggering 11.5 percent of GDP in 2013.

The second traditional Russian ally, Evo Morales, faces his own share of popular unrest in Bolivia, and followed suit by increasing his country’s minimum wage by 20 percent. If the Bolivian strong rentier economy should allow the country to support such a measure, the move has not calmed protests in the streets.

Even if Evo Morales remains popular and can boast the impressive achievement of reducing by the poverty rate in his country from 53.6 percent in 2005 to 29.5 percent in 2012, the country’s hydrocarbon-based economy remains highly unsustainable. The country’s main energy customers – Brazil and Argentina – are starting to develop their own resources and Morales needs to find alternative economic partners.

Its neighbour Peru, for example, achieved the same results in poverty alleviation and its openness to trade offers more guarantees for future growth to investors. It is in this perspective that the appeal from Evo Morales last July for increased investments from Russia must be understood.

Cuba is also at a crossroad. The country has been battered by decades of embargoes, draining the Fidelismo of everything but its nationalistic rhetoric. Cuban authorities themselves had to admit the failure of its economic model and the incapacity of its agricultural sector – “strategic priority” of its economy – to offset trade and fiscal deficits. The underdevelopment of the country is evident. Only 20 percent of the population owns a mobile phone and the remittances from its expatriate population represent a lifeline for the country. As a result, Cuba has had no other option but to announce it would open its economy to foreign investments.

Moscow has therefore witnessed Cuba’s slow drift towards Europe and the US as it reopened negotiations towards a cooperation agreement with the EU in February. In parallel, La Havana multiplied signs of normalisation of its foreign relations such as the recent visit from French foreign minister Laurent Fabius or the much publicised historical handshake between Barack Obama and Raul Castro at Mandela’s funeral. It was therefore crucial for Russia to act and the spectacular decision on April 28 to write off 90 percent of the Cuban debt towards Russia while reinvesting the remainder inside the Cuban economy was a welcome move to reaffirm a strategic alliance. A similar gesture was made towards Nicaragua as Lavrov promised to modernise the sandinistas military and beef up the country’s defense capabilities.

Not random visits

The other two countries visited by Lavrov weren’t picked at random. Peru has achieved impressive economic results over the past decade, with the second highest growth rate and lowest inflation on the continent. Lima is also interested in the purchase of military equipment and Lavrov’s visit marked progress towards the establishment of a free trade agreement pushed for by Lima and whose negotiation had been stalling before the events in Ukraine.

Finally, Lavrov’s visit to Santiago had broader geopolitical ramifications one month after Bachelet’s re-election to the Chilean presidency. In a continent marked by political turmoil and as Dilma Roussef and Christina Kirchner are increasingly contested within their respective Brazil and Argentina, Michelle Bachelet is set to have an important stabilising role on the continent over the next four years. During the campaign for her second term, Bachelet advocated for a larger political role of Chile in Latin America.

Lavrov is well aware of the political capital Bachelet enjoys on the continent and was cautious to avoid visiting Bolivia during his tour in order to gain the good will of the Chilean president, a week after Russia’s traditional ally filed for legal actions against Chile at the International Court of Justice in The Hague to regain territories lost during the 1883 Pacific War. Bachelet’s support is too important to risk jeopardising over the historical Bolivian claim for an access to the sea, especially when one factors in the prospect of Chile holding a seat at the UN Security Council next year.