Countering Iranian Influence in Latin America (Updated)


01/15/2012 by Richard Weitz

Iranian President Mahmoud Ahmadinejad’s recent five-day, four-country Latin American tour, his fifth to the region as president, has been designed to bolster his reelection chances by showing his supposed global clout, achieve economic gains through bilateral deals, and circumvent international sanctions, which are becoming increasingly severe.

As he left he underscored the broader strategic point of his visit.

“Here I want to declare very clearly that from now on, Latin America will no longer be the backyard of the United States,” Ahmadinejad said Thursday. “The Latin American peoples possess a culture, a civilization, dignity and a good future.”

Many national security experts worry about Iran’s activities in Latin America, but an objective assessment would recognize the clear limits of Tehran’s influence.

The Iranian President is on a 5-Day trip in Latin America Image Credit: Bigstock

Only a few Latin American countries have important ties with Iran, and these are primarily commercial and economic, not military. Many of the international commercial deals that Iran announces with great fanfare are never implemented, such as Iran’s 2007 pledge to spend hundreds of millions of dollars constructing a seaport for Nicaragua at Monkey Point. In Latin America, as elsewhere, Iran has some foreign business partners but few foreign allies. Even these ties reflect an alignment of what these regimes are against rather than what positive agenda they favor.

The government of Iran finds itself globally isolated due to its suspect nuclear policies, its ties with international terrorist movements, the repressive domestic policies of the current Iranian government, Iranian hostility to Israel, and other issues. Some of these opponents have drawn attention to Iranian activities in Latin America, arguing that they threaten US interests in the region. But except for a few prominent exceptions, Iran’s influence in Latin America is severely constrained by the gap between Tehran’s ambitions and its capabilities. Although expanding its activities in the region, Iran has yet to establish the means to challenge core US economic, security, and other interests in the region.

Iran’s presence in Latin America has increased noticeably since Ahmadinejad became Iran’s president in 2005. Under Ahmadinejad, Iran has sought three main goals in the continent: develop economic partnerships, build support for its nuclear program, and acquire diplomatic allies against the United States. Since 2005, Iran’s trade with several Latin American countries has grown significantly, several regional leaders have endorsed Iran’s self-proclaimed nuclear ambitions, and Tehran has opened six embassies in Latin America.

Nonetheless, it is important to examine Iran’s relations with each Latin American country separately.

Iran has achieved good ties with only a handful of countries—namely the four he is now visiting:  Venezuela (Jan. 8-9), Nicaragua (Jan. 10-11), Cuba (Jan. 12) and Ecuador (Jan. 12-13). But Iran’s relations with other countries remained strained or weak. And even these four leftist regimes have little to offer Tehran’s regime due to their weak economies and limited regional influence.

Under Hugo Chávez, Venezuela has become Iran’s most important ally in Latin America. Iran and Venezuela have longstanding energy ties since both were founding members of OPEC in 1960. As Chavez is the leader of anti-Americanism in Latin America, any decisions taken in the meeting between Venezuela and Iran are sure to set the tone for the rest of the other “acolyte countries” to follow.

Both Chavez and Ahmadinejad are eager to decrease US influence in the region. Chavez, who has visited Iran nine times as president, shares the same leftist rhetoric and outlook. They both rail against “US global hegemony,” which Chavez’ eight-nation Bolivarian Alliance for the Americas was established to combat. One of Chavez’ most valuable services has been to act as a marriage broker and help Ahmadinejad establish relations with other Latin American leaders unfriendly toward Washington. These include the current populist governments of Bolivia, Ecuador, and Nicaragua, all of whose leaders work closely with Chavez.

Venezuelan officials have strongly defended Iran’s nuclear program as peaceful and legitimate. Iran is helping Venezuela mine natural uranium. When the IAEA enacted a resolution criticizing Iran for building a secret uranium-enrichment plant near Qom, the Venezuelan delegate voted against it. The US government has sanctioned an Iranian-owned bank in Caracas for assisting Iran’s suspect nuclear weapons activities.

In recent years, the two states have created a joint oil company, Beniroug, which has initiated small projects in several countries. Both governments have also signed several other agreements that allow one country’s energy companies to participate in the development of the other’s energy resources. Additional joint projects include plants to manufacture methanol, cars, and petrochemcials. More recent bilateral memoranda of understanding provide for joint mineral exploration, technology development, and agriculture research. The United States has sanctioned several Venezuelan companies for their dealings with Iran, including Venezuela’s state-owned oil company, Petroleos de Venezuela SA, in May 2011.

In 2008, Iran established a new bank in Venezuela, Banco Internacional de Desarrollo. The US Treasury Department says the bank has links to the Iranian military and could be used to evade international sanctions. According to the latest US intelligence annual threat assessment, Iran’s seeks to circumvent international sanctions by making “contingency plans for dealing with future additional international sanctions by identifying potential alternative suppliers of gasoline – including China and Venezuela.”

Nonetheless, Venezuela only ranks as Iran’s fifth largest trade partner in Latin America, probably because the two countries have little to offer each other in the economic domain. Venezuela and Iran do not need to purchase each other’s oil and gas. Many of the economic deals the two leaders have announced in the past have failed to be realized. Despite the establishment of direct flights between Venezuela and Iran in March 2008, few people travel regularly between the two countries. Chavez’ influence in the region has already been waning and could decline even further if his health problems worsen.

Chavez is the axis holding the anti-US spokes of the wheel together in Latin America. As his influence declines, so does Iran’s.

After Venezuela, Ahmadinejad will visit Nicaragua to attend the swearing-in ceremony of President Daniel Ortega, who was re-elected in November due to a lack of a strong competitor. Iran’s relationship with Nicaragua became important only after Ortega’s first inauguration in 2007. Since then, Iran has declared it would fund generous aid projects, including $230 million for hydroelectric dams, $2 million for a new hospital, $200 million in energy and agricultural projects, and $350 million for the construction of a seaport. In June 2008, Ahmadinejad hosted Ortega in Tehran, where the two presidents agreed to cooperate in the agricultural and energy industries. Ortega has publicly declared that Iran has the right to pursue peaceful nuclear energy. Even so, at some point Nicaraguans will realize that few if any of the lavish gifts Ahmadinejad has promised in the past have materialized.

Iran and Cuba have maintained close relations since 2005. Here again, Ahmadinejad has promised economic assistance in return for diplomatic gains. In 2008, Iran provided a $300 million loan provided to support Cuban purchases of Iranian products. In June of that year, the two countries signed a memorandum of understanding to expand their trade, economic, mineral, and industrial cooperation. The volume of trade between Cuba and Iran doubled between 2007 and 2008.

Cuba brings an important asset in its relationship with Iran. Although a small, distant, and impoverished country, Cuba has enormous diplomatic clout. Presidents Fidel and Raul Castro have served as the Secretary-General for the Non-Aligned Movement, a coalition of more than one hundred countries professing independence of any great power, from 2006– 2009. Under Raul Castro’s leadership, the Non-Aligned Movement issued statements supporting Tehran’s right to pursue peaceful nuclear energy.

With Chavez serving as a mediator, Ecuadorian President Rafael Correa has cultivated ties with Iran since his inauguration in 2007. The volume of bilateral commerce soared from $6 million in 2007 to $168 million in 2008, with Ecuador replacing Peru as the main Latin American purchaser of Iranian exports. Tehran has also exploited the opening created after Ecuador defaulted on its debt, which alienated the country from international financial institutions. The Iranian Bank opened a branch in Ecuador in 2009, which the US Treasury Department believes could be used to circumvent international financial transactions since that country uses the US dollar as its currency. Ecuador’s Foreign Minister, Maria Isabel Salvador, has defended Iran’s nuclear program as peaceful and civil in nature.

Under President Juan Evo Morales, relations between Iran and Bolivia have blossomed. Bolivia has benefited diplomatically, while Iran has made diplomatic gains. Iran has given Bolivia millions of dollars in aid and promised even more. Iranian enterprises have built several high-profile projects, including two cement factories and three milk production facilities in Bolivia. Iranian investment also flows to Bolivia’s agriculture, mining, and hydroelectric sectors. The Iranian government provides scholarships for Bolivian students seeking to study in Iran. Iran is also helping Bolivia develop its natural gas industry.

Ahmadinejad and Morales have conducted several diplomatic visits to each other’s countries since their initial meeting. The Bolivian government moved its only embassy in the Middle East from Cairo to Tehran in 2008. Bolivia severed relations with Israel as a result of the January 2009 Gaza War. Morales has supported Iran’s nuclear program, declaring it peaceful and scientific in orientation.

But bilateral ties between Iran and Argentina graphically demonstrate how Tehran’s increased economic influence in Latin America does not invariably yield greater diplomatic ties. Bilateral Argentinean-Iranian trade increased from $30 million in 2007 to $1.2 billion in 2008, a 209% increase.

Yet, Iran’s political relations with Argentina remain worse than with any other Latin American country. This is due largely to Argentina’s holding the Iranian government responsible for the Hezbollah’s terrorist attacks on Argentina during the 1990s. In 1992, Hezbollah bombed the Israeli Embassy in Argentina, killing 29 people. In 1994, it attacked a Jewish community center in Buenos Aires, resulting in 85 deaths. Argentina has been an outspoken critic of Iran’s nuclear program and endorsed using UN sanctions to impede it.

And Iran’s relations with Brazil, perhaps the most influential country in Latin America, underscore how dependent Tehran’s ties are on personalities. When new leaders come to power, they often change their country’s policies towards Iran. President Lula da Silva sought good ties with Iran, while his successor, Dilma Rousseff, has shunned Ahmadinejad while criticizing his government’s human rights record.

Iran developed good economic ties with Brazil even before Ahmadinejad became president. For example, energy cooperation began in 2003, when Iran granted Brazil’s Petrobras Oil Company rights to explore for oil in Iran’s Persian Gulf. More recently, Brazilians have found ways to circumvent US and UN economic sanctions on Iran by using commercials intermediaries in Dubai, the United Arab Emirates, and elsewhere. Trade between Iran and Brazil was estimated at $1.26 billion in 2008, making Brazil Iran’s most important economic partner in Latin America. But since Brazil does not need Iran’s oil or gas, and Iran has little else to sell, the trade relationship is already highly imbalanced in Brazil’s favor.

In the past, Iran also has benefited from Brazil’s support for Iran’s controversial nuclear program. Until recently, Brazil was serving a two-year rotating term on the UN Security Council. On the Council, Brazil’s delegation joined with Turkey as perhaps the most vocal opponent of imposing additional sanctions on Tehran for its suspicious nuclear activities. Now Brazilian diplomats, though still supporting increased dialogue between Iran and the international community and a peaceful resolution to the dispute over Iran’s nuclear program, have adopted a low profile regarding the issue.

Even while pursuing good relations with Iran and other countries, Lula sought to maintain decent ties with the United States. His government was cultivating ties with Iran in part to help Brazil achieve a greater role on the world stage. Such as strategy was also evident in Brazil’s participation in the BRIC [Brazil-Russia-India-China] bloc as well as Brazil’s drive to achieve permanent membership on the UN Security Council. But many Brazilian business leaders are eager not to antagonize the United States. Ahmadinejad is not popular in Brazil; his November 2009 visit saw thousands of protestors in the streets denouncing Ahmadinejad, his human rights record, and his position on Israel. He wisely chose to skip Brazil on his current trip.

Iran’s relations with Colombia are also strained due to Tehran’s ties to Venezuela, Columbia’s main adversary. Colombia also depends heavily on US assistance to combat the FARC terrorist movement, which receives Venezuelan assistance. Unlike many Latin American countries, the government of Colombia opposes Iran for ideological reasons related to Tehran’s support for foreign terrorist movements. Columbian authorities arrested people in 2001 and 2008 who, they suspected had ties to Hezbollah. Nonetheless, the two maintain official diplomatic ties and correct formal relations.

Iranian efforts to improve ties with Mexico collide with the ineluctable fact of the overwhelming US influence in that country.

Economic ties between Iran and Mexico remain amazingly insignificant, with bilateral trade levels estimated at only $50 million in 2009. This has not been due to the lack of effort by Iran. In 2008, Tehran hosted Mexican diplomats in a joint economic commission meeting where they discussed increasing their bilateral economic cooperation.

The Iranian government has proven equally unsuccessful at securing Mexican diplomatic support for Iran’s nuclear program. Instead, Mexican diplomats have adopted a low-key stance on the issue, despite pressure by Tehran and Washington to join their competing camps. Mexico-Iranian ties have recently been further strained due to US claims that members of the Iranian Revolutionary Guard sought to hire a Mexican hit man to assassinate the Saudi Arabian ambassador to the United States in a downtown Washington restaurant.

In recent years, Iran has sought to expand its economic ties as well as diplomatic partnerships and influence in Latin America. Thus far, Iran has only managed to develop close ties with a few regional governments that share ideological affinity with the current Iranian regime, seek its economic assistance, and are eager to find extra-regional balances to the United States. Iran has little to offer most Latin American countries.

Even those regimes seeking anti-US allies can find stronger partners in Russia and China. Despite Iranian ambitions, Tehran lacks the economic, diplomatic, and military resources to project much power in the region.

Whatever Tehran’s ambitions for Latin America, its ability to influence events in the region is dwarfed by the United States as well as China, Russia, and the EU.

Although Moscow and Beijing are careful to shun the explicit anti-Washington rhetoric of Tehran, they have much greater economic and military potential in the region and lack the terrorist baggage and Middle East focus of Iran. The EU offers an alternative economic partnership with even fewer drawbacks. Given this unfavorable environment, there is no obvious reason why Iran’s influence will soon increase much further or present a plausible threat to the core US economic and security in Latin America.