When Vladimir Putin came to power in Russia, his main goal was to return the country to the global power status that it once held before the disintegration of the Soviet Union. With that in mind, Putin’s Russia forcibly seized areas that had once been strategic for the former USSR to strengthen its current ties and presence. One of these areas is Latin America, which, while not physically seized, can be said to have been heavily influenced politically by the former Soviet Union and Mr. Putin.
Moscow began to see Latin America as an area of growing economic importance in 2003 and resumed the sale of arms and military equipment with more intensity in 2004, following Vladimir Putin’s visit to Mexico, Chile, and Brazil.
Arms sales and business in the energy sector have been the mainstays of Russia’s return to the region. This strategy began by selling weapons, then introducing other economic products, and now it is focusing on trying to exert political influence through the media and, obviously, through contacts at the diplomatic level.
In present-day, amid the escalation of the crisis between Russia and what it calls the West (USA, NATO, and the EU) over Ukraine, Moscow insinuated that it could be among its plans to deploy military forces in Latin America, specifically in countries like Cuba, Venezuela, and Nicaragua.
“I don’t want to confirm anything… I don’t rule it out,” said Deputy Foreign Minister Sergey Ryabkov. Without a doubt, this veiled threat to send troops (or even something else) forces us to reflect on the role of Latin America in the Russian government’s strategy.
At a general level, Russia’s largest trading partners in the region are not Venezuela, Cuba, and Nicaragua, but Brazil, Mexico, and Argentina. As evidence shows, from 2006 to 2016, Russia’s trade with Latin America increased by 44% to $12 billion, with half of Moscow’s trade deals concentrated in the latter mentioned countries.
Although Russia’s arms supply to Cuba, Nicaragua, and Venezuela accounts for less than 15% of the country’s arms exports, their relationship remains strong enough for one to consider the deployment of military actors a credible threat. Hence, why Russia’s geostrategic and geopolitical repositioning could work to counter US influence in the region.
In regards to Russia’s imports, they are concentrated in the food sector, with meat, fruit, and vegetables. The nation supplies the Latin American region with 41.1% of Russian agrochemical products, 21.4% of metals, and 18% of minerals, in addition to other products like food and military equipment, according to the Observatory of Economic Complexity (OEC).
However, Russia will never be capable of matching the trade figures that the United States and China have in this sector. According to a 2019 report from the Elcano Royal Institute, Russian imports from Latin America make up less than 5% of the country’s total trade, with the figure for exports averaging around 2%. This explains why the Putin administration doesn’t have much to gain in commercial terms.
Despite Russia’s exports being incomparable to the US’s and China’s in Latin America, the region’s markets have been struggling as the supply chains from Russia have tightened. especially for agrochemical products, metals, and some minerals from the Eurasian country.
Food prices have risen, and Latin America has already experienced this impact to varying degrees. According to market indicators, since February 25, wheat futures prices have risen more than 37%, and corn has also hit a high, with a more than 21% increase. These basic products in all populations’ diets were already becoming more expensive, reaching their highest prices in the last ten years due to the pandemic.
This has occurred due to the effects of sanctions against the invading country by the United States and the European Union, as well as Ukraine’s difficulties in chartering its ships and keeping export quotas to Latin American ports afloat. In terms of crops, Ukraine produces 16% of the world’s corn, and together with Russia, they are the producers of 29% of the wheat that supplies world markets.
Another example of Russia’s effect on the region can be seen in the resounding rise in hydrocarbon prices for two weeks, but also day after day, as the value of products imported from the aggressor country rises.
All of these instances have generated economic turbulence in the region due to the ongoing war. The United Nations Statistics Center has focused on compiling the figures of the main commercial exchanges between Latin America and the region in conflict.
As of now, these exchanges have different levels, with the Dominican Republic being the nation with the greatest commercial link, followed by Costa Rica, Mexico, Brazil, Peru, and Colombia. But also for small economies, such as those of Honduras and Suriname, which are smaller in size, trade with Ukraine is significant.
Overall, with the intensity of fighting in the Russo-Ukrainian War climbing and the casualty count soaring into the thousands, it is clear this conflict is far from finished. Through its “compromise” of exports and imports, Russia intends to continue forging allies in Latin America to forcefully challenge the United States’ security and economic interests. Meanwhile, the economic ramifications risk impacting many Latin American countries if sanctions lead to a major global recession as anticipated.