Half a dozen years ago, the Kremlin indicated it would be willing to drop its support for Nicolás Maduro in Venezuela in exchange for a free hand in Ukraine, said Fiona Hill, an adviser to President Donald Trump, during a congressional hearing in 2019.
In the first week of January, slumbering through its Christmas and New Year hiatus, Moscow lost this bargaining chip and more.
Russia’s direct financial losses from what is now likely to be Moscow’s complete withdrawal from Venezuela are set to be minimal, despite the Kremlin’s long-standing support for Caracas and frequent promises of investment. The political and symbolic costs could be much more damaging.
The Kremlin has lost a good and loyal friend in the Venezuelan regime, but that wasn’t enough to make Putin forget his fundamental realpolitik. Allies are useful, but they are not critical. They aren’t important enough to antagonize President Trump, without whose benevolence, Russia can’t expect a favorable exit from its Ukrainian calamity.
The Kremlin began actively courting Venezuela in the mid-2000s, seeing Hugo Chavez’s socialist state first as an economic partner and then as an “unsinkable aircraft carrier” off American shores. Following the 2022 invasion of Ukraine, relations with Caracas reached new heights. Just two months into the war, Maduro called Putin to discuss “countering the Western campaign of lies and disinformation” and branded Ukraine’s government “a neo-fascist elite”, parroting various Kremlin propaganda talking points.
In the summer of 2022, Venezuela’s vice president, Delcy Rodriguez, now the country’s leader, attended the St. Petersburg International Economic Forum when almost everyone else stayed away. In her speech, she said the barrage of Western sanctions “opens new horizons to us.” As if to confirm Rodriguez’s words, the first shipment of Venezuelan avocados arrived in Russia in September, and Russian tourists began to vacation there.
The love-in continued without respite. Last year, Maduro attended the 80th anniversary Victory Day celebrations in Moscow, meeting Putin and declaring, “beautiful harmony reigns between Russia and Venezuela. We will see relations flourish between the great Russia, today a leading power of humankind, and Venezuela,” Maduro proclaimed.
The presidents signed a 10-year partnership agreement, which Venezuela’s official media hailed as proof that the country was “Russia’s key partner in the region.”
On the surface, cooperation between the countries flourished. More than 350 bilateral agreements were reached, covering defense and security, intelligence and aviation, nuclear energy and auto manufacturing, and even the integration of financial systems. A jointly owned bank, Evrofinance Monsnarbank, opened in Caracas, and in 2024, the countries announced that Venezuela would start accepting cards issued by Russia’s Mir payment system.
In reality, though, Russia’s friendship with Venezuela didn’t deliver much more than avocados.
Politically, Caracas could not even support Russia in votes at the UN (Venezuela has no voting rights due to its debts to the organization). Economic cooperation did not go much further, with one notable exception: Russian arms, paid for with Russian loans.
According to Transparency International’s Venezuelan branch, in the peak oil years of 2004-2018, Russia provided $34 bn to Venezuela, primarily to purchase and maintain weapons. The Stockholm International Peace Research Institute (SIPRI) found that during this period, Venezuela was the top importer of Russian weaponry.
Maduro regularly showed off Russian air-defense systems at military parades — although when they were desperately needed during Trump’s own “special military operation”, they completely failed. This could be attributed to incompetence, both Venezuelan and Russian, experts said.
Venezuela also relied heavily on Russian support to circumvent US oil sanctions, until Moscow too fell afoul of them. Rosneft was the leading Russian player in Venezuela, and its chief, Igor Sechin, was a personal friend of Chavez. After the imposition of US sanctions, the Venezuelan state oil company PDVSA moved its European office from Lisbon to Moscow in 2019.
By the end of that year, the US acknowledged “the increasing dependence of PDVSA and the Venezuelan regime on Russia, the Russian government and Rosneft.”
Rosneft was one of the leading investors in the country and was actively engaged in oil exploration and production. In 2020, the company officially announced that it was ceasing its work in Venezuela due to US sanctions. It sold its Venezuelan assets to a specially-created Russian state operation: Roszarubezhneft. In 2022, its five joint ventures were delivering 125,000 barrels a day, significantly less than originally planned. Back in 2014, Rosneft’s two largest projects alone were expected to produce 450,000 barrels a day. In total, estimates put Rosneft’s Venezuelan losses at between $6bn -$9bn.
The flow of Russian loans and investments was first blocked by sanctions on Venezuela, and then by the sanctions on Moscow after Russia invaded Ukraine. Since 2018, Russia has not publicly announced any new loans to Venezuela, and most joint projects — from building an auto plant to developing a cartridge factory — came to nothing. Trade between the two countries barely tops $1bn a year, far less than Russian trade with China, Brazil, or Argentina.
Overall, despite warm words, Russia has not lost much economically from the regime change in Caracas. There was little chance of loans being repaid even before Maduro’s fall. Arms sales have stalled due to the Russian military-industrial complex’s inability to export during the war, and oil projects are no longer commercially attractive.
As with Bashar al-Assad in Syria, the loss is more political than commercial or financial. Its investments in Venezuela are most likely lost, even if they only existed on paper in the first place.
For the second time in two years, Russia has been unable to protect a close ally and has lost another foothold in a crucial region. It has also been deprived of its hypothetical opportunity to trade influence over Venezuela for concessions from the White House on Ukraine.
Alexander Kolyandr is a Non-Resident Senior Fellow at the Center for European Policy Analysis (CEPA), specializing in the Russian economy and politics. Previously, he was a journalist for the Wall Street Journal and a banker for Credit Suisse. He was born in Kharkiv, Ukraine, and lives in London.
More on this and other aspects of the Russian economy in a weekly summary produced by the independent publication, The Bell.
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions expressed on Europe’s Edge are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
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