Their support for president Nicolas Maduro has members of the Trump Administration ironically telling them not to stick their nose in America's backyard (umm, Ukraine...). Last week,
Secretary of State and ex-CIA director Mike Pompeo went so far as to blame the Russians for Maduro's remaining in Caracas when he was allegedly ready to fly the coop to Cuba. Russia's Foreign Ministry called it fake news. Now Foreign Minister Sergei Lavrov will have a meeting with Pompeo this week. Venezuela will be the bulk of their talks.
For the U.S., Russia's role in Venezuela is not much different than Vladimir Putin's protection of Bashar Assad of Syria. The Senate went so far as to tighten sanctions against Russia because of Putin's support for Assad. In theory, if not for Russia, one can argue that Assad might have fallen -- another victim of the maligned American regime change policy.
For Russia, the U.S. is meddling in an allied country and they're not going to stand for it. It's like the Middle East to them. A stand for Maduro is a stand against regime change. Putin has said numerous times that countries should choose their own leaders and their destinies. Russia's Venezuela policy speaks to that view.
To the U.S., and to many Venezuelans in the country and in exile, no one chose Maduro in May of 2018 when he was elected to his second term. Maduro's Supreme Court banned key opposition leaders from running against him. Many people boycotted the election. Maduro's approval rating is the worst of any leader in the Americas. The country is in its third year of a great depression. Hundreds of thousands of people have been protesting the government for just as long. Over three million have fled the country. In other words, the majority are not even close to being in charge of their destiny in Venezuela, nor were they given a choice in leadership.
Pompeo will try to convince Lavrov of this when the two meet.
What's at stake for the Russians?
, based largely on known investments made by Rosneft, Russia's biggest oil company. Since 2016 Rosneft has lent around $6 billion to PdVSA in the form of pre-payments for oil deliveries. According to Rosneft's 2018 financial statements, Venezuela's outstanding debt to Rosneft was $2.6 billion as of Dec. 31, 2018. That suggests that around $400 million has been repaid.
Rosneft also holds minority stakes in five oil ventures with PdVSA.
They have a sizeable stake in Citgo, PdVSA's oil refiner and gasoline station. Pompeo knows this, of course, and could offer Russia assurances that Rosneft won't lose its position should Maduro and the ruling Socialists United leave power. But if Russia keeps protecting Maduro, then anything goes with Rosneft and Citgo. It's plausible. Rosneft is already sanctioned by the U.S. and so the Treasury Department could easily make life more difficult for Rosneft to own Citgo assets in the U.S.
Beyond Citgo, a bankrupt Venezuela is going to have a hard time paying the Russians. Any new financial restructuring of Venezuela will require the government to make decisions about how much to pay existing bondholders who were defaulted on in 2017. Depending on the structure of the loan they have with the Russians, it is likely they will take a haircut on that debt.
"Regime change in Venezuela could lead to substantial financial losses for Russia, as a new Venezuelan government is likely to write down sovereign and quasi-sovereign debts, as well as Rosneft's participation in joint oil ventures with PdVSA," says Agathe Demarais, global forecasting director for The Economist Intelligence Unit in London.
A political shift in Venezuela would deprive Russia of one of its most vocal international allies.
"In reality, geopolitical implications of regime change in Venezuela are secondary for Russia," Demarais says. "In contrast with Syria, which hosts Russian military bases and lies on the periphery of Russia's sphere of interests, Venezuela has limited strategic significance."
This week's meeting is just another active diplomatic effort by the U.S. to approach Russia and make them part of the transition process, given all the money they have invested there.
There is a South American position on Venezuela -- led by Brazil and Colombia -- two countries Russia is friendly with and are probably getting a lot of flack for their support of Maduro. Russia is unlikely to put those relationships at risk just because of Maduro.
"There is an increasing divide within the Russian political and economic elite about Venezuela. Cuba is the key actor," says Alejandro Arreaza, a Latin America economist at Barclays Capital.
In other words, for Venezuela, it's not Putin that's keeping Maduro in power. It's Raul Castro, Fidel's brother in Havana.
"A change in Cuba’s position is unlikely, given the vital relationship it has with Venezuela. However, if a significant portion of the military shifts in favor of transition, Cuba’s capacity to prevent it would be diminished."
Lavrov and Pompeo will meet during an Arctic Council meeting in Rovaniemi, Finland, which begins on Tuesday.