Iranian President Mahmoud Ahmadinejad has begun a four-nation tour in Latin America that will include Nicaragua, Cuba, Venezuela and Ecuador.
In part, the trip is for propaganda purposes. With the European Union joining in an Israeli-inspired US boycott of Iran’s Central Bank, which in essence translates into a boycott of buying Iranian petroleum, Tehran is desperate to underline that it still has friends in the world. Most of these are in Asia, but Latin America still does have regimes that will defy the US attempt to isolate Iran.
In one sense, these are not important countries geopolitically or economically. But an embargo strategy of the sort that the US is pursuing depends heavily on there being no significant leaks.
Venezuela has $4 billion worth of joint projects with Iran. (This article stresses a military dimension, with Revolutionary guards posted to the Iranian embassy in Caracas and a comparison to Soviet policies in Latin America, which led to the Cuban missile crisis. I see these Iranian moves more as an aid to espionage than being military in character.) Venezuela is also significant because in 2009 it established a joint bank with Iran, which allows Iranian financial institutions to interface with other banks via Caracas. Some in the Israel lobbies in the US Congress have urged financial sanctions on Venezuela in order to close this loophole. But that step would make it difficult for the US to pay for Venezuelan petroleum, a significant source of America’s oil imports.
As it is, the US Government won’t accept contracts from the Venezuela state petroleum company because the latter helps Iran with gasoline production. I doubt the US government itself did much business with the company so it sounds to me like another symbolic sanction.
The US just expelled the Venezuelan consul in Miami over a Univision investigative report alleging a Cuban-Venezuelan-Iranian plot to hack US nuclear facilities. (Note to the Cuba and Israel lobbies: This story is not very plausible and you wouldn’t want one of its members to be in the US — hackers can be anywhere and like anonymity.)
Iran has sought similar banking cooperation with Ecuador, and has more than 30 economic projects planned there, including building power plants. In 2008, Ecuador’s national bank concluded an agreement with Iran’s central bank and extended it a $120 mn US credit line. Ecuadoran businessmen are afraid that the US sanctions regime will be extended to Ecuador as a result.
Forcing the US and the Europeans to try to close off banking ties not just with Iran but with a large number of countries in order to cut down on leakage makes the boycott policy increasingly unwieldy and unworkable. China, Russia, and Turkey are much more important in this regard, but for Iran, the more friends it has the better.
Iranian trade with Latin America has also expanded significantly, though it is hard to quantify its importance and many memoranda of understanding remain on paper. It has offered Nicaragua a $230 million loan to build a hydroelectric plant, and the Iranian ambassador in Managua says this trip will much expand such projects.
Finally, Iran is wooing Latin America diplomatically because it wants to thwart possible US moves against it at the UN General Assembly, where a global south solidarity against Northern power is often an important dynamic.
Iran is also very much aware that the US views Latin America as its sphere of influence, and so there is a certain amount of taunting involved in this diplomatic and economic push.
Some have read a lot into the absence of Brazil on Ahmadinejad’s itinerary. I am not sure an absence can be seen as firm evidence. You would want to look at bilateral trade and especially financial relations, and at how Brazil votes at the UN. I doubt Brasilia much likes the idea of a US-Europe financial and energy boycott of a country of the global South.
This analyst from Colombia argues that Brazil has correct but not warm relations with Iran. It has not signed on to any big joint projects, unlike Venezuela and Ecuador. President Dilma Roussef is clearly not as eager to support Iran as her predecessor, Lula, had been. In part, she has moved closer to Argentina, which has bad relations with Tehran because it blames Iran for the bombing of a synagogue in the early 1990s. Some Brazilian intellectuals nevertheless argue that Brazil could play an important role in Iran diplomacy, given its own history of developing and then abandoning a nuclear program, and given its closeness to Russia, India, China & South Africa (the BRICS), which reject the US approach of harsh sanctions and boycotts.
In any case, a combination of anti-imperialism, a desire for independence from the US, and Iran’s oil wealth is giving Tehran a continued opening in parts of Latin America.