(Bloomberg) — Venezuelan President Hugo Chavez heads to Moscow today to shop for air defense systems, submarines and other weaponry as Latin America’s arms race quickens amid signs that his regional influence is waning.

Past Venezuelan arms purchases from Russia have strengthened ties with Moscow as its rivalry with the U.S. intensifies over President George W. Bush’s plans for an Eastern Europe missile defense system and other issues. Chavez, 53, also plans to visit Belarus, a Russian ally that the U.S. considers a dictatorship.

Chavez “regularly refers to us as an `empire,’ opposes our initiatives in the Americas and seeks out our adversaries as friends and allies,'’ Assistant U.S. Secretary for Western Hemisphere Affairs Thomas Shannon said July 17 in testimony to a congressional committee.

Chavez will order $2 billion worth of weapons, including Project 636 diesel subs, Mi-28 combat helicopters and airplanes made by Ilyushin Co., the Russian newspaper Kommersant reported May 12, without saying how it obtained the information. The Russian Interfax news service, citing an unnamed defense ministry official, said today Chavez may order $1 billion of weapons, including three Varshavyanka subs and up to 20 Tor-M1 air-defense systems.

`Some Shock’

“What Chavez likes to do is to shock, and this will create some shock in Washington,'’ said Riordan Roett, a professor of Latin American studies at Johns Hopkins University.

Chavez, who plans to meet Russian President Dmitry Medvedev tomorrow, has bought more than $4.4 billion of Russian arms since 2003. He says the hardware, including jets and submarines, is needed to counter a military threat from the U.S. and its main regional ally, Colombia.

Russia last year announced plans to build two factories to make Kalashnikov assault rifles in Venezuela.

Russia has used Venezuela to diversify its arms-selling business beyond China and India, said Dmitry Vasiliev, an analyst at the Center for the Analysis of Strategies & Technologies, a Moscow-based defense research center. Venezuela was Russia’s third-biggest arms customer last year, he said.

Trade between the two countries surged to $1.13 billion in 2007 from $517 million the previous year, according to a statement published on the Venezuelan Information Ministry’s Web site.

`Ideal Partner’

“Russia is trying to be good friends with Chavez because he is an ideal partner in arms trade,'’ said Fyodor Lukyanov, an analyst at the Council on Foreign and Defense Policy in Moscow.

The Venezuelan president said this month he’ll also discuss the creation of a joint development bank and an investment fund with Russia.

Latin American countries have gone on a military spending spree in recent years as their governments collect record income from commodities, including Venezuela’s oil windfall. Regional arms spending jumped 55 percent over four years to $38.4 billion in 2007, according to the International Institute for Strategic Studies.

The buildup comes amid increased regional rivalries. Chavez was outmaneuvered this month when Colombian President Alvaro Uribe rescued 15 hostages from the Revolutionary Armed Forces of Colombia, including former presidential candidate Ingrid Betancourt and three Americans.

Chavez had been trying to negotiate the captives’ release from the guerrilla group, while denying accusations by the U.S. and Colombia that he had supported the FARC rebels with arms and funding. Uribe has been increasing military pressure on the FARC since becoming president in 2002, with the help of $5 billion in military assistance from the U.S.

Colombia-Brazil Accord

Colombia and Brazil on July 19 signed an accord to strengthen military ties, promote the sale of weapons and expand joint training exercises.

Venezuela ordered troops moved toward the Colombian border in March, after Colombia conducted an anti-FARC raid into neighboring Ecuador, a Chavez ally. The three countries later moved to mend relations.

In May, Chavez said he was prepared to scramble his fighter jets after a U.S. Navy S-3 aircraft flew into Venezuelan airspace. The U.S., which buys about 1.36 million barrels of oil a day from Venezuela, says the incursion was due to a navigational error.

The U.S. has tried to isolate Chavez. It cut off U.S. arms sales to Venezuela in 2006, refusing to sell it F-16 jet replacement parts, and declared that the government “isn’t fully cooperating'’ in the war on terror.

Missile Test

Since then, Chavez has stepped up purchases from Russia. Last month, the Venezuelan military fired its first test missile from a Russian Sukhoi fighter jet.

Chavez will also travel to Spain and Portugal this week to discuss energy and trade accords. Lisbon-based Galp Energia SGPS SA, Portugal’s biggest oil company, has agreed to work with state oil company Petroleos de Venezuela SA to build liquefied natural gas plants.

Chavez last month threatened to stop selling oil to Europe and outlaw investment from European countries after the EU passed legislation allowing detention of undocumented workers.

“With all due respect, I recommend that the leaders of Europe make a sustained effort to understand what’s happening in Latin America,'’ Chavez said in a speech last month. “They don’t understand us.'’

 By Jim Kouri  

Recently, Mexican military officials claimed they seized five-and-a-half tons of powdered cocaine from a commercial aircraft that landed in Mexico following a a trip from Venezuela. The street value of the drugs was estimated to be upwards of $100 million.

Mexican cops reported that the cocaine was discovered inside over a hundred suitcases marked “private.” The military officers announced that they made three arrests as a result of the cocaine seizure.

Mexican officials claim that cocaine is increasingly being imported from Venezuela, with the US or Europe being the drugs’ final destination.

In this case the Mexican authorities waited for the plane to land at the airport of Ciudad de Carmen, about 550 miles east of Mexico City, after being tipped off by Interpol. The co-pilot of the aircraft was arrested. The pilot and co-pilot of another plane, which was believed to be ready to take the cocaine on to the next location, were also detained.

A Drug Enforcement Administration report last year indicted that Venezuela has become a key transshipment point for narcotics due to “rampant corruption at the highest levels of law enforcement and a weak judicial system”. Venezuelan President Hugo Chavez terminated joint anti-drug operation with United States drug agents from the DEA. The paranoid president accused DEA agents of being spies.

The enormous amount of corruption within the Venezuelan government coupled with its president’s seizure and control of the press has made the country ripe for the transit of illegal drugs and other contraband. No journalist in Venezuela who wants to remain out of prison or worse will report on the corruption, drug trade, crime or any other issue that would embarrass the Chavez government.

A prison riot that occurred in Venezuela highlights the systemic corruption that exists within their criminal justice system:

The riot left 10 inmates dead and one wounded the day after officers seized weapons and illegal drugs from gang members in the prison. Venezuela’s prisons and jails are notoriously overcrowded and undersupervised. Firearms, illegal drugs and knives are often smuggled into prisons and sold to prisoners by guards.

As reported by the Associated Press, violence is common in the country’s 30 prisons, which were built to house 15,000 inmates but house around 20,000. Over 280 inmates died in violence and at least 449 were injured during the first nine months of 2005, according to the Venezuelan Prisons Observatory, a human rights watchdog. For all of 2004, at least 327 inmates were killed and 655 were wounded, the group says.

Meanwhile, at least one metric ton of cocaine per month, and smaller quantities of heroin, are exported to consumers through the country’s principal airport, several foreign counter-drug officials who did not want to be identified because of the sensitivity of their investigations told The Miami Herald.

One of the officials also estimated that as much as $2 million is paid out monthly in bribes to airport officials, policemen and National Guard personnel who collaborate with the drug runners. One informant told another investigator that airport jobs go to those willing to participate in the scheme.Counter-drug officials also say private airplanes that traffic drugs from Colombia to such nearby destinations as the Caribbean islands regularly pass through Maiquetia, landing there to get a change in identification numbers and perhaps a new paint job.

‘’The airport has been a problem, is a problem and will be a problem,’’ one of the officials told The Miami Herald.Venezuela has clearly become a major transshipment point for illegal drugs leaving Colombia.

Estimates vary, but U.S. officials say the country could be a transit point for upward of 200 tons of cocaine per year—half the estimated annual production in Colombia, the world’s leading cocaine producer.Venezuela’s own statistics showed an eight-fold increase in drug seizures since 1999.

Media reports have alleged the existence of drug smuggling cartels led by high-level National Guard officers. For their part, Venezuelan authorities have said the United States has no moral authority to comment on drug trafficking since it is the world’s leading consumer of illegal drugs.

There are some who believe that the corruption goes directly into the office of President Hugo Chavez.

It is significant that the drugs came via Venezuela, because the Colombian army has long alleged that Venezuela’s socialist president, Hugo Chavez, is sympathetic to the Marxist rIebels, according to Venzuelan political analyst Aleksander Boyd.

Boyd says, “Evidence, as is often the case with his ‘revolution,’ indicates that since Chavez’s arrival in power, Venezuela has become the favourite launching pad for Colombia’s drug traffickers. It is argued that 80% of the cocaine produced in neighbouring Colombia and the region enters the international markets via Venezuela, as heretofore unseen quantities have been seized in various countries.

“On the other hand Chavez’s cozy relationship with the FARC is no secret. So much so that the deranged president disrupted ties with Colombia, Venezuela’s second largest commercial partner, over the capture in Caracas of FARC’s leader Rodrigo Granda, who had Venezuelan citizenship, whose wife and step-daughter were welcomed by close associates of Chavez … Rodriguez Chacin, and who was a guest of honor in one of his Bolivarian get-togethers.”