Russian President Dmitry Medvedev, in Venezuela on Thursday as part of a four-nation tour aimed at boosting Latin America ties, was due to attend military exercises in the Caribbean with his Venezuelan counterpart Hugo Chavez.

Medvedev, who arrived in Caracas late on Wednesday and was due to travel to communist Cuba later on Thursday, was to board the nuclear-powered Russian battleship "Peter the Great," among a flotilla of Russian ships that are the first to enter the area since the end of the Cold War.

The joint military maneuvers are seen as bringing a defiant message to the US backyard, after the indirect American involvement in the Georgian conflict of last August. 

Experts regard the visit as a retort also to US support for bids by Georgia and Ukraine to join NATO, and to US moves to expand its missile defense shield into Eastern Europe, which prompted Medvedev to warn of “retaliatory steps.”

Military exercises part of greater cooperation unlinked to US

Russian officials have denied the Caribbean exercises are in any way linked to a US decision to send a command ship and two other naval vessels into the Black Sea, on its southern border, to deliver aid and show support for President Mikheil Saakashvili after Moscow sent troops into Georgia.

Although critical of the US move (Medvedev asked at the time how Washington would feel "if we now dispatched humanitarian assistance to the Caribbean...using our navy”), both Moscow and Caracas maintain the exercises were planned months before the conflict over the breakaway regions of South Ossetia and Abkhazia

US Secretary of State Condoleezza Rice said Wednesday that the arrival of Russian ships could hardly reflect a change in the regional power balance.

"A few Russian ships is not going to change the balance of power," she said.

On Thursday, Chavez said, "This is against no one, we're practising our right. And we'll keep working with Russia on strategic defence," according to Agence France-Presse.

The maneuvers, dubbed "VenRus 2008" and including some 1,600 Venezuelan forces and 700 Russians, are due to take place between December 1 and 3.

The two leaders on Wednesday vowed closer cooperation to establish what they called a "multi-polar" world after signing a string of deals, including on a project to build a joint nuclear reactor for peaceful purposes, AFP reported.

Experts said that while Medvedev’s visit was timed partly to send a political message to Washington, there was a larger economic imperative, with Latin America – and Venezuela in particular, a potentially lucrative market for its arms and other products.

In a July trip to Moscow, Chavez bought three submarines and a dozen anti-aircraft systems, bringing his total arms purchases from the Russians to $4.5 billion in the past four years.

“They're selling a lot of arms in Latin America, not just in Venezuela, so this is also business,” André Serbin, general secretary of CRIES (Coordinadora Regional de Investigacion Economico y Social), told France 24. “It is also a message to the rest of Latin America, that - OK, you see, we can have good business in terms of selling our arms and our aircraft."

Although they signed no new arms deals on Thursday, Medvedev defended Russia's growing arms sales to Venezuela -- criticised by the United States and neighbour Colombia as potentially destabilising -- and said military cooperation with firebrand leftist Chavez would continue.

Economic imperative: Russia seeks renewed trade ties with Latin America

Chavez on Thursday denounced what he called the "dictatorship of the dollar" after announcing efforts to move away from dollar transactions in trade with Russia and other leftist Latin American countries.

Officials also signed an agreement on cooperation in the fossil fuel sector, aimed at stepping up existing exploration projects in Venezuela by companies such as Gazprom.

Serbin joined other Latin America experts in pointing out that Chavez had long sought a strategic alliance with Russia, as had many other Latin American states dependent on non-US economic trade.

He said while Russian intolerance of US encroachment on their sphere of influence was “one part of the message” of Medvedev’s visit to Venezuela, it was “largely related to the importance of diversifying the Russian economy.”

"I would say the last two or three years there had been an offensive from Russia in terms of recovering all the old links -- not only political -- the trade and business links with Russia that were lost in Latin America after the Perestroika,” he said. “In the early '90s, still there was a lot of trade between Latin America and Russia, and then it decreased, due to the economic shock that followed the collapse of the Soviet Union.”

A struggle for preeminence in Latin America

Calling Chavez the “great polariser,” Serbin said the president hoped to thwart the “emerging and very strong regional and global leadership of Brazil” in the region.

Brazil, under President Luiz Inácio da Silva, or 'Lulu', had “a completely different approach, more diversified, more based on economic priorities,” whereas Chavez, had “a strategy of building a leadership in South America by polarising the United States and the rest of Latin America.

“So you have two different approaches to what is going on the in the world: both are looking for a multi-polar world. Chavez is looking for an antagonistic approach to the US and using this as part of his strategy of forging alliances in Latin America. Brazil on the contrary is looking for a pacific existence with the United States, after the United States practically left Latin America after September 11 because it was focused on other regions."

Professor Arlene Tickner, head of the Political Science department at Universidad de los Andes in Bogota, Columbia, said: “Chavez has attempted to assert his influence regionally, challenging Brazil both indirectly and directly.

“If you look at South America as a whole, however, Chavez is not the only one purchasing weapons, but rather, the region is experiencing in general an arms race. In the case of Chavez, there is very little cause for concern.

“Many of the weapons being purchased are intended to replace older systems, while there is very little indication that Chavez – beyond his rhetoric – would actually be interested in using them to attack any of his neighbours, or even defend democracy in a country like Bolivia, as he threatened he would.”

Medvedev earlier in the week visited Brazil, which announced it had agreed to buy 12 attack helicopters from Russia.

Prof. Tickner said declining oil resources meant declining influence for Chavez in the region and said that this in itself might temper his relations with Washington.

“Anti-US discourse is going to deflate, both as a result of declining oil income and as a result of Obama’s election. He is now vying for visibility with the new government, which has ignored him, wisely I think, for now.”

Lincoln Chafee, former Republican Senator from Rhode Island, now a visiting scholar at Brown University's Watson Institute for International Studies, agreed that an Obama White House would deal differently with Chavez.

“President-elect Obama has no shortage of repair work to be done around the globe and our relationship with the Venezuelans and the Russians should certainly be a priority,” he said.