Chavez Arrives to $1Bln Welcome

The Kremlin had a warm welcome waiting for Venezuelan President Hugo Chavez Thursday, in the form of a $1 billion loan for arms purchases for the Latin American leader who has been fiercely critical of the United States and its leaders.

Chavez held talks with Prime Minister Vladimir Putin in his Novo-Ogaryovo residence Thursday evening and was to meet with President Dmitry Medvedev in the southern city of Orenburg on Friday.

The billion-dollar loan would allow Venezuela to partake in aviation technology programs, the Kremlin said in a statement Thursday. It did not elaborate but praised defense technology cooperation between the two countries, highlighting that 12 arms deals, worth a total of $4.4 billion, had been signed from 2005 to 2007.

National media reported that Chavez's visit, barely two months after he last came to Moscow, was hastily planned after the war in Georgia sped up military cooperation between both countries.

He and Medvedev were scheduled to watch military exercises at a training facility in the Orenburg region, Kommersant reported Thursday.

Speculation was rife in Moscow that Chavez would utter more of his trademark anti-American rhetoric and maybe even formally recognize the breakaway Georgian republics of Abkhazia and South Ossetia as independent.

Moscow's interest in relations with Caracas might have been bolstered by the conflict in the Caucasus and Russia's subsequent recognition of Abkhazia and South Ossetia, which sent its relations with the West to a post-Cold War low.

Chavez said on Aug. 30 that Russia was right in supporting independence for the two regions but has yet to recognize them officially.

But instead, Nicaragua, led by Daniel Ortega, a seasoned socialist and close Chavez ally, became earlier this month the first country to offer recognition, a move Moscow described as "a pleasant surprise."

The Hamas government in Gaza had been the only entity to recognize the independence of the two republics up to that point.

Moscow's ambassador in Managua, Igor Kondrashev, said Wednesday that Russia would also provide aid to Nicaragua in replacing its armed forces' aging weaponry, The Associated Press reported.

Kondrashev did not say whether this would involve weapons purchases by Nicaragua or the replacement of equipment provided to the country in the 1980s by the Soviet Union in the form of a gift.

Emil Dabagyan, a senior analyst at the Russian Academy of Sciences' Latin America Institute, said earlier Thursday that he believed that the Venezuelan president was likely to follow suit.

"Chavez is on his way to recognizing them. De facto, the decision has already been made, and it will soon be made de jure," Dabagyan said Thursday.

Asked why Chavez had waited, Dabagyan said he wanted to make the move in exchange for the loan from Moscow.

"He wanted get something from Russia," he said. "He has a lot of money but is spending it all on arms and, therefore, he needs more."

Venezuela is in talks to buy Russian air-defense systems and armored vehicles and has expressed interest in the new Su-35 fighter, due off assembly lines in 2010, Russian Technologies chief Sergei Chemezov said during a visit to Caracas earlier this month.

Earlier reports suggested that the country is eyeing missile-defense systems, submarines, patrol boats and Ilyushin reconnaissance aircraft.

The talks between Chavez and Medvedev are to focus on trade and energy relations, the statement said, adding that trade between the two countries had more than doubled, to $1.3 billion, from 2006 to 2007.

Last week, a Russian delegation headed by Deputy Prime Minister Igor Sechin returned from Caracas, where Gazprom and seven other companies signed deals with state-owned Petroleos de Venezuela to develop offshore gas fields.

Venezuela is home to South America's largest natural gas reserves, which are largely untapped because the country has focused on oil production.