By Andrei Vasilyev, UPI Outside View Commentator

MOSCOW, Russia (UPI): Hugo Chavez, the Venezuelan president, has repeated his intention to further develop economic cooperation with Russia, which he calls a "strategic union." One of the components of this cooperation will be the strengthening of Venezuela's defense capabilities, but prospects in fuel and energy are looking good, too.

"People often ask me if Venezuela is going to buy submarines. 'Why not?' I answer. We have half a million square kilometers of territorial waters. That's a great expanse. What is strange about our buying a submarine? No one needs to worry. Will it carry weapons aboard? It will," the Venezuelan president said by way of sharing his thoughts before departing for Moscow.

His plans irritate the United States, but not because Washington sees in Venezuela a threat to U.S. security. Neither five nor nine diesel submarines, even armed with tactical missiles, can do serious damage to the U.S. Navy. In the same way, the 24 Su-30 fighter jets bought in Russia for Venezuela's air force cannot capture airspace above America. But those forces are, however, enough to keep uninvited guests as far away as possible from Venezuelan oil fields.

Venezuela is one of the world's richest countries in proven oil reserves, which are estimated at 77.7 billion barrels. It ranks sixth on the list of the biggest oil countries. Geographically, it is closer to the United States than most other producers, making it one of the main hydrocarbon suppliers for the American market. In early 2000 more than 60 percent of the South American country's oil went to its northern neighbor.

Now supplies amount to 1.5 million barrels a day. In a recent interview with America's ABC television network, Chavez said his country had no intention of reducing or halting deliveries, but added that should the United States become aggressive, Venezuela would cut off oil exports.

The Venezuelan president is capable of doing so. The country's oil sector was nationalized in 1999, before Chavez came to office. But a number of oil companies -- Exxon Mobil, Chevron and Conoco Phillips of the United States, as well as British Petroleum, France's Total and Norway's Statoil, which exploited the Orinoco oil belt, kept a measure of autonomy. This arrangement continued until Feb. 27 of this year, when Chavez signed a decree putting all oil fields under the control of Petroleos de Venezuela, or PDVSA, the state-owned petroleum company. But for foreign corporations, the document did not mean an end to their activities in Venezuela. The president proposed that they set up joint ventures with PDVSA by transferring controlling stakes to the state corporation.

"We do not want multinational corporations to leave," Chavez said at the time, stressing, however, that oil was a strategic sector of the economy and could not be held in private hands. Chavez needs oil, or rather petrodollars, not only to re-equip his army, but, above all, to carry out social reforms in the country -- in farming, health services and education. That is the purpose of barter arrangements with Cuba. Venezuela supplies oil and helps to modernize the oil refinery in Cienfuegos, built by the Soviet Union, which will process up to 65,000 barrels of oil a day, and Cuba in turn sends doctors and teachers to Venezuela.

(Andrei Vasilyev is a political analyst. This article is reprinted by permission of the RIA Novosti news agency. The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.  United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International.)