Monday, July 14, 2014

Latin America: Fertile ground for Russian President Vladimir Putin's foray

LatAm: Fertile ground for Putin's foray

By Christian Molinari
Business News Americas:

Russian President Vladimir Putin is due to step foot in Latin America on a tour of a region that seems to be getting cozier with the Kremlin's courting.

The approach is in stark contrast to US President Barack Obama's lukewarm advances, as Washington has disregarded its southern neighbors in favor of the Asia Pacific and Middle East regions.

Add to that US secretary of state John Kerry's end-2013 announcement that "the era of the Monroe Doctrine is over" and you have a forsaken emerging market region, parts of which may be ripe for Putin's picking.

The Russian leader's serenades may largely fall on deaf ears in Latin America's western countries grouped under the Pacific Alliance, which remain fairly aligned with the US, but other traditionally left-leaning nations are eager for attention.

First stop on Putin's itinerary, unsurprisingly, will be Cuba – a staunch ally with whom the relationship has just been sweetened by the Russian parliament's agreeing to write off 90% of the US$35bn in Cuban debt, which was racked up in Soviet-era times. (All the more magnanimous considering that Russia's government is looking to tighten its belt to offset Western sanctions as a result of the Ukraine crisis.)

The debt forgiveness will speak volumes in the next stop on Putin's tour: Argentina, where President Cristina Fernández is currently measuring her options in whether to negotiate with bond holdouts or face another debt default.

Putin will then end his tour in Brazil to participate in the BRICS summit to be held there, while at the same time President Dilma Rousseff will hand-off World Cup hosting responsibilities to the leader of Russia, home of the 2018 tournament.

The tour comes on the heels of news proclaimed by Russia's defense minister, Sergei Shogu, that Moscow is looking to build military bases in a number of countries, including Cuba, Venezuela and Nicaragua. Testing the waters, so to speak, a Russian warship docked at a Havana naval base a few days after the February announcement.

What's clear is that for better or worse, US influence is waning in Latin America.

With a single focus on its strategic economic interests in the region, China has stepped in to fill part of that vacuum. The Asian giant, however, is facing an economic slowdown of its own – and slower Chinese growth will have significant implications for Latin America.

Coming into its own with a vast emerging middle class, regional giant Brazil is also taking a historic place on the Latin American stage. But the country has been plagued by high inflation and low growth.

And struggling for position, the Kremlin is eager to take advantage of economic opportunities in the region. Russia's big oil and gas companies want a piece of the Latin American pie, getting involved in Venezuela but also looking into the famous Vaca Muerta shale play.

Perhaps he will fall short in his goals of restoring the defunct Soviet Union's reach and glory, but Putin's actions will at least serve as a thorny, troublesome bush in 'Washington's backyard'.

July 08, 2014