Russia president, warships to Venezuela to counter U.S.

By Frank Jack Daniel

CARACAS (Reuters) - Warships, nuclear power, arms sales and perhaps cooperation on oil prices -- Russia's President Dmitry Medvedev is in Venezuela this week with an alarming sounding list to wave under Washington's nose.

The U.S. government dismisses the importance of Medvedev's visit on Wednesday to meet Venezuelan President Hugo Chavez and the deployment of several Russian warships for joint military exercises with Venezuelan forces in the Caribbean. It says Russia's weak navy is no threat and downplays its rivals' blooming friendship.

But OPEC-member Venezuela is Russia's first firm ally in the Americas since the Cold War and Moscow sees ties to Chavez as a way to answer U.S. influence close to its borders in the Caucasus.

Russia's aim to grow its Latin American presence may be hurt by falling oil prices and Barack Obama's U.S. election win, which could help the United States regain influence lost in the region during the unpopular presidency of George W. Bush.

Still, Chavez has made a career of opposing the U.S. "empire" and he welcomes a heavyweight partner like Russia as an alternative to ties with his main oil client Washington.

"Compared with Russia, we are territorially a small country, but comparing our reserves of oil and gas we are two giants uniting," Chavez said on a trip to Russia this year.

Although it is Venezuela's main weapons supplier, Moscow was for years wary of Chavez's radical anti-Washington stance. But it warmed to him after the war in Georgia in August and U.S. missile-shield deals with Poland and the Czech Republic.

Since then, Caracas's glitziest hotels have filled with successive delegations of Russian businessmen and politicians, while top Venezuelan officials have tag-teamed in and out of Russia. Chavez has made three trips in 12 months.

Moscow now promises to help Chavez build a civilian nuclear reactor and has set up a $4 billion joint investment fund. In return, Venezuela gives access to gas and gold reserves.

Russian officials say the creation of a joint consortium to further develop Venezuela's Orinoco oil field will be a central issue of Medvedev's visit.

He is also likely to discuss cooperating on oil supply with OPEC, where Chavez is a leading price hawk. Both nations depend on energy exports and are worried by oil's fall to around $50 a barrel from $147 in July.

Chavez chased away many private investors with a spate of nationalizations in the last year, and likes Russian promises to help develop Venezuelan resources.

"UP THE ANTE"

Medvedev will also visit Cuba and Brazil this week after meeting Bush at a weekend summit meeting in Peru. His visit to Venezuela is the first ever by a Russian president and coincides with the joint naval exercises in the Caribbean.

Along with a visit by two bombers to a Venezuelan base in September, the exercises are Russia's first in the Americas since sending missiles and ships to Cuba during the Cold War.