Russia gives Venezuela major arms loan

MOSCOW (AFP) - Moscow announced a billion-dollar loan to Venezuela to buy arms on Thursday amid Cold-War style tensions with US and ahead of a visit by the country's fiercely anti-US President Hugo Chavez.

Chavez was scheduled to meet Prime Minister Vladimir Putin at 1600 GMT at his residence near Moscow, and then travel to the Ural Mountains city of Orenburg to meet President Dmitry Medvedev on Friday (today), officials said.

The trip, expected to focus on military cooperation and trade, is Chavez's third visit to Moscow since June 2007 and comes three days after Russia sent a massive naval fleet to the Caribbean for joint exercises with Venezuela. In the latest sign of closer ties, a Kremlin source said Thursday that Russia had granted Venezuela the one-billion dollar loan to Venezuela to buy Russian arms.

"Russia has taken the decision to grant Venezuela a credit of one billion dollars for implementing programmes in the field of military-technical cooperation," the source said, using diplomatic jargon for arms sales.

Venezuela has been asking for the loan for months, according to Russian media reports.

Chavez's visit comes as Russia's relations with the United States are in a deep chill because of Russia's war with Georgia last month, a conflict where Chavez was one of the few world leaders to support Moscow.

"We particularly note the support of Venezuela in Russia's operation for forcing peace on Georgia after Tbilisi's August aggression against South Ossetia," the Kremlin source said.

The Kommersant daily reported that Chavez was expected to make a statement supporting Russia's military action against Georgia, citing a source in the Venezuelan president's delegation. But Chavez was likely to stop short of joining Russia in recognising the independence of Abkhazia and South Ossetia, two separatist regions of Georgia that were at the heart of the conflict, Kommersant said.

Chavez and Medvedev may observe Russian army exercises taking place in Orenburg, Kommersant reported.

In deployments not seen since the Cold War, Russia this month sent two long-range bombers to Venezuela for exercises and has dispatched a flotilla of warships from the Arctic base of Severomorsk to Venezuela, near US waters.

Venezuela has signed 4.4 billion dollars' worth of contracts to buy Russian arms since 2005, according to the Kremlin.

It has bought fighter jets, tanks and assault rifles, and Kommersant reported last week that it was planning to purchase anti-aircraft systems, armoured personnel carriers and more combat aircraft.

Chavez could also discuss broader economic cooperation with Russia, including the creation of a Russian-Venezuelan bank and business opportunities for Russian energy giant Gazprom in Venezuela, Kommersant reported.

Trade turnover between the two countries was 1.1 billion dollars in 2007, more than double that of 2006, the Kremlin said.

Kommersant said Chavez's hastily-planned visit was linked to campaigning in upcoming local elections in Venezuela and would allow the leftist firebrand to stress his alliance with Moscow against Washington.

Venezuela, which is to hold local elections in November, expelled the US ambassador to Caracas earlier this month in what Chavez said was an act of solidarity with Bolivia, which also expelled its US envoy.