Venezuela expects $4 bln loan from Russia

[allesennogwat]

* Funds will be used to buy weapons for military

* Latest loan from Moscow for arms purchases

Aug 17 (Reuters) - Venezuela expects to receive a second loan of $4 billion from Russia to keep modernizing the South American country's armed forces, President Hugo Chavez said on Wednesday.

Caracas and Moscow have forged close ties in energy and defense, with Russian investment flowing into the OPEC member's oil fields at the same time that Chavez became one of Russia's most important weapons customers.

A Venezuelan government statement did not say when the new funds would arrive, but Chavez hailed the agreement during a phone call to a military ceremony broadcast on state television.

"We can do this today because we're free. We could not do it before because we were subordinate to the Yankees, the World Bank and all the Empire's economic and financial architecture," he said, referring to previous Venezuela governments.

Last year, Chavez said Russia had given Venezuela a similar $4 billion loan to buy weapons, but did not say what arms that money would be used to purchase.

Since 2005, Chavez's government has bought at least $5 billion worth of Russian Sukhoi jet fighters, Mi-17 helicopters and Kalashnikov assault rifles.

Washington has viewed Chavez's purchases of tanks, fighter jets and air defense systems with suspicion over the past few years, but the socialist leader says he is merely modernizing Venezuela's aging military.

Poor diplomatic relations between Chavez and the United States led to a U.S. arms embargo against Venezuela in 2006.

Without spare parts, Venezuela's fleet of about 20 U.S.-built F-16 fighters has fallen into disrepair, which Chavez has used as an argument to buy new equipment from Russia and China. (Reporting by Daniel Wallis; Editing by Peter Cooney)

http://www.reuters.com/article/2011/...Name=bondsNews