Wireline Politics: Russia’s Telecom Diplomacy in Central & South America

Courtesy of Foreign Policy, an interesting report on Russian investment in Nicaragua and Venezuela, and some likely geopolitical quid pro quos.  As the report notes:

“…Nicaragua’s decision to legitimize Russia’s geopolitical adventures and recognize the independence of Abkhazia and South Ossetia was rather odd (I am still curious as to how many  Nicaraguans were aware of their existence, before and after the announcement). A few weeks ago Hugo Chavez also followed suit – waiting for almost a year – but the Nicaraguans clearly stole the spotlight.

Given this new special relationship between Russia and Nicaragua, it’s worth taking note of the fact that Scartel (also known as Yota), a Russian state-controlled telecom company, has just won a 50 million USD tender to provide landline technology to the country. Scartels’s offer has managed to beat those of other contestants, which included well-established companies like Claro, Movistar, and Amnet (Scartel is relatively new even to the Russian market; it is present only in a handful of Russian cities).

According to estimates by Nicaraguan telecom experts, Scartel’s bid may decrease the cost of landline telephony in the country by 10%; in late 2008 Scartel also got a deal with provide Nicaragua with 4G Mobile WiMax technology.  I wonder if these cost-savings are the direct result of under-bidding on Scartel’s part as a way of compensating Nicaragua for its smart geopolitical horse-trading.

The oddest thing is that Scartel is currently planning to expand into …. Venezuela! This looks too suspicious to be a coincidence: employing state-controlled giants to perform work abroad at reduced prices in exchange for geopolitical support seems to be the new way of promoting Russia’s foreign policy objectives. It used to be done via gas and oil subsidies – but those levers do not work that well in Latin America…Apparently, telecoms is the new gas. I am sure that Chavez got a much better deal out of Scartel than Ortega: otherwise, why would he wait for a year?…”

This entry was posted on Friday, October 2nd, 2009 at 9:47 am and is filed under Nicaragua, Russia, Venezuela.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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