Russia Vows Full Support for Maduro as U.S. Sanctions Bite

(Bloomberg) -- Russia vowed to “do everything” to protect Venezuelan President Nicolas Maduro against U.S. efforts to oust him as the Trump administration ratcheted up economic pressure on the embattled Kremlin ally amid doubts about Moscow’s ability to shore up his regime.

Russia, together with other allies, will “do everything to support the legitimate government of President Maduro” and steps to resolve the deepening crisis in the Latin American nation “within the constitutional framework,” Foreign Minister Sergei Lavrov told a news conference in Moscow on Tuesday.

He didn’t elaborate on what steps Russia might take. A top Finance Ministry official, meanwhile, warned that Venezuela could have trouble meeting payments under a $3.15 billion debt-rescheduling deal reached in 2017. A senior legislator warned Maduro’s government might not be able to hold on for long.

The Kremlin has lavished support on the Latin American country in recent years, making it one of the biggest recipients of Russian loans and investment and an outpost of Moscow’s influence in a region dominated by the U.S. But Russia has been reticent about committing more capital, especially since opposition officials have said they might not honor all the Maduro government’s obligations.

The Trump administration on Monday sanctioned the state oil company PDVSA, which will effectively stop it from exporting crude to the U.S. The U.S. and a number of countries in Latin America and Europe and elsewhere have recognized National Assembly President Juan Guaido as the rightful head of state.

The U.S. is putting pressure on the opposition to refuse concessions in discussions with the government, Lavrov said, denouncing Washington for what he called “illegal” attempts to remove the regime. He also called U.S. sanctions on Venezuela illegitimate and blasted hints from Washington of possible troop deployments to the region.

Debt Worries

Russian Deputy Finance Minister Sergey Storchak said Tuesday that Venezuela may have difficulty in meeting repayments on its $3.15 billion debt to Russia incurred from arms purchases. The next installment of $100 million is due in March. The Finance Ministry said later that Russia expects Venezuela to meet its obligations, according to an emailed statement.

Guaido reached out to Russia and China, key allies of Maduro, assuring them that a democratically-ruled Venezuela would be a better bet for protecting their “billions of investments” in an interview with CNN on Monday.

Russia is willing to provide short-term help to keep the army loyal to Maduro but it doesn’t have the financial muscle to keep Venezuela’s economy afloat, which needs about $20-25 billion a year, said Viktor Kheifets, an expert on Latin America at St. Petersburg State University.

With around $10 billion at stake in Venezuela through loans and investments, and a strategic alliance under threat, Russia might enter into contacts with the opposition if it sensed a willingness to reach an agreement, said Kheifets.

“Of course the Kremlin wouldn’t confirm them officially but they could be conducted via some unofficial channels,” he said. “They’d have to be absolutely confidential.’’

The Kremlin Monday dismissed reports that Russia had sent private military contractors to help protect Maduro. Two Moscow-based mercenary commanders said they heard nothing about any contractors being sent. Ruslan Leviev, head of CIT, an internet monitoring team that’s known for exposing covert Russian military operations abroad, said he has no information about Russian mercenaries in Venezuela.

Rosneft Role

The opposition-controlled National Assembly, which Maduro stripped of its powers in 2017, has been critical of the increasing role of Russia’s Rosneft oil company. Rosneft, which has five oil joint ventures in Venezuela with stakes of up to 40 percent, is owed around $3 billion by PDVSA. In 2016, it took a 49.9% stake in the company’s Houston-based subsidiary, Citgo Petroleum, as collateral, and gained a bigger stake in one of the oil projects as well as a half-share in developing two offshore natural gas fields.

Russian lawmaker Andrey Klimov, deputy head of the upper house of parliament’s foreign affairs committee, said that Maduro and his entourage “should understand very well that in the current conditions they can hang on for some time but not for that long.”

But he ruled out talks with the opposition, saying Moscow would prefer to negotiate directly with Washington than to talks to the “U.S. puppet” and “pretender” Guaido, Klimov said.

With some Russian media critical of the government’s policy of bankrolling Maduro’s failing administration, the authorities have stayed clear from pledges of major intervention. Kremlin spokesman Dmitry Peskov said Russia will defend its interests in Venezuela “within the framework of international law, using all available mechanisms.”

To contact the reporters on this story: Stepan Kravchenko in Moscow at skravchenko@bloomberg.net;Henry Meyer in Moscow at hmeyer4@bloomberg.net

To contact the editors responsible for this story: Gregory L. White at gwhite64@bloomberg.net, Tony Halpin

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