Iran increasingly turning to Latin America to defy US sanctions

The signing of a 20-year strategic cooperation agreement by Iran and Venezuela on Saturday was not a surprise. The deal between the two major oil-producing countries that are subject to US sanctions shows the nature of their relationship.

The ties that unite these two countries are greater than the size of the sanctions imposed on them. The cooperation projects announced in the fields of energy, oil, gas, refineries and petrochemicals, in addition to the two countries’ work “on defense projects,” are not new.

The Iranian regime’s presence in South America is being intensified, mostly backed by a wave of left-leaning governments that flourish in this region, fueled by propaganda slogans against imperialism and US policies. Iran has also strengthened its diplomatic presence in the region through numerous tours by high-ranking officials.

It is clear that political hostility and ideological and intellectual slogans were factors in advancing the common interests of Venezuela and Iran in light of the American economic sanctions on them.

The sanctions created a common ground for economic and political cooperation. And Tehran wants to weaken America’s attempts to isolate it internationally by building interests and joint capabilities with Latin American countries, as well as the likes of China and Russia.

The nature of Iranian-Venezuelan relations as a whole is based on personal friendships between the heads of the two countries and their political hostility to the US. Iran deliberately defied the US sanctions by jumping into America’s backyard, taking advantage of the nature of the political regimes in that region, the spread of anti-American sentiment and the clear search for political realignment.

Iran also aims to strengthen its relations with Latin American countries, including Venezuela, to balance the international community's attempts to rein in its nuclear program, which is seen as a threat to world peace.

There is no doubt that Iran is actively working to increase its economic, cultural and intelligence presence in this region in order for it to remain an important card in its relations with Washington. It is focusing on cooperating on economic and commercial aspects, including many projects and investments in the fields of energy and oil.

Oil, which provides nearly half of the budgets of both Venezuela and Iran, has played a key role in the nature of the economic relations between them.

The level of bilateral cooperation between Iranian and Venezuelan oil companies in terms of exploration and petrochemicals continues to grow, with Tehran announcing assistance in building the platforms for developing oil fields in the Orinoco delta region, estimated at $4 billion, in return for investments inside Venezuela.

Venezuela has announced that it will defy international sanctions and supply Iran with gasoline — an attempt to weaken the US’ isolation of Tehran by exploiting its deep dependence on refined foreign oil.

The same scenario was repeated but in reverse in 2020, when the Venezuelan economy collapsed due to unprecedented levels of inflation and the high price of basic commodities, which led to the collapse of the local currency against the US dollar, a deterioration in gross domestic product and a shortage of fuel.

Five Iranian tankers carrying millions of barrels of gasoline and its components arrived in Venezuela under military escort, providing Caracas with the tools, supplies and technical expertise required to support the refining services of the Venezuelan state oil company.

Since the Khomeinist revolution in 1979, Iran has worked to strengthen its relations with Latin American countries and this has increased in the past two decades, especially during the era of President Mahmoud Ahmadinejad. Ahmadinejad and Venezuela’s Hugo Chavez were close friends and political and economic partners. Between 2005 and 2012, more than 270 agreements were signed, including trade treaties and agreements on development projects, vehicle development, energy policies and banking programs. The momentum of the two countries’ political and economic relations also increased.

It is clear that Venezuela has become an outlet for Tehran as it seeks to bear the financial burden of America’s economic sanctions

Dr. Hamdan Al-Shehri

The strengthening of ties between the two countries continued in 2015 with the signing of several diplomatic, financial and scientific agreements. And this was followed by the visit of then-Iranian Foreign Minister Javad Zarif in 2016.

Iran has long wanted to enhance its political position, both at the regional and international levels, by seeking to acquire a nuclear weapon. This would help strengthen its military position and thus change the balance of power in the Middle East. But the international community sensed the danger of the Iranian nuclear program and the UN Security Council decided to impose sanctions on Tehran between 2006 and 2008 (although these were lifted after the Iran nuclear deal was signed in 2015).

In light of this increasing international pressure, Iran resorted to Venezuela to break its political isolation, find new strategic tools and weaken the control of the US. It has been noted that, during Chavez’s rule, Venezuela was a major supporter of Iran in international forums, as it rejected recommendations to refer Iran to the UNSC over its noncompliance with international resolutions related to its nuclear program. Current Venezuelan President Nicolas Maduro has also defended the right to “free trade” with Iran, rejecting the criticism that followed the arrival of Iranian fuel in his country.

With its relations with Latin American countries, Iran seeks to project an image of global power, confront political and economic isolation, mobilize diplomatic support for its nuclear program, and respond to the US in what is considered to be its backyard. It is clear that Venezuela has become an outlet for Tehran as it seeks to bear the financial burden of sanctions. In return, Venezuela could eventually become a vehicle for Iran to convert currency, obtain high-tech facilities and enter the global financial system. However, the two countries’ economic difficulties increased after the US imposed new sanctions on Iran and Venezuela under President Donald Trump.

After the reimposition of sanctions, Iran also found in Latin America fertile ground for its suspicious activities and operations, including money laundering and arms and drug smuggling.

Economic cooperation between Iran and Venezuela expanded significantly in this period, as Tehran sought to diversify its economy to overcome economic sanctions, while illicit trade — often through Hezbollah — became an issue of particular concern to the US.

It intensified the level of cooperation and investment in many areas, but concentrated on the oil, banking and finance, and housing sectors.

Iran has used its proxies in the region, especially Hezbollah, to contribute to the implementation of many of its suspicious activities and operations, especially in the tri-border area shared by Argentina, Paraguay and Brazil.

There have been reports of suspicious activities by Iran’s agents in this area, including drugs and arms smuggling, money laundering and terrorist training. The repercussions of this Iranian impact on regional security have become an increasing threat to the interests of Washington and its allies.

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SPOTLIGHT

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Iran’s role in drug smuggling is widespread and well documented throughout Venezuela, with the US Drug Enforcement Agency reporting an extensive cocaine trade from eastern Venezuela to West Africa and then Europe.

The supply is suspected to come from Iranian facilities in the Orinoco delta, with fishing vessels and other boats used to transport the drugs. Cocaine from Venezuela is also sent to the US’ Gulf Coast via the Dominican Republic.

The proceeds from such illicit activities are laundered in various ways, such as buying used American cars and exporting them to Africa.

The movement of Hezbollah operatives and Iranian proxies would not be smooth were it not for Venezuela providing covert access to Latin America through state airline Conviasa, which runs a weekly return flight to Syria.

These flights are closely controlled, with seats only provided to those with approval from the Iranian or Venezuelan authorities.

According to a 2008 Los Angeles Times report, Western government officials feared that Hezbollah “may be using Venezuela as its base of operations.” A counterterrorism official told the newspaper that the relationship between Venezuela and Iran was “becoming a strategic alliance.”

Some sources also reveal that Hezbollah has as many as five training camps in Venezuela that have government approval. According to a 2019 US State Department report on terrorism, Venezuela has a permissive framework for established armed groups, including Colombian rebels and Lebanese Hezbollah members.

And United Press International reported in 2009 that Iranian military advisers had joined Venezuelan forces.

The Iranian regime has built a set of tactical bases in Venezuela, allowing its intelligence service and Quds Force to operate all over the country. In these facilities, the military and security forces in Latin America are trained in a variety of skill sets, including asymmetric warfare. Chavez was said to be fascinated by the Iranian doctrine of asymmetric tactics.

US officials have watched the special relationship between the two countries develop with great concern, expressing worries about the Iranian military presence and its arms sales to South American countries.

Elliott Abrams, the Trump administration’s special representative for Iran and Venezuela, warned in 2020 that the US would destroy any long-range missiles sent to Venezuela by Iran.

That state of alert came a few days after Maduro announced the formation of a scientific and technical military council with the help of “brotherly” countries, including China, Russia, Iran and Cuba, to seek the country’s independence in terms of military armament.

Iran’s money laundering operations are facilitated by the ability of some governments, especially those in the Bolivarian states, to use their power to move Iranian money through Latin American banks, thus making it available for use in Western markets.

This strategy was partially effective in getting Tehran back into the international economy.

Iranian-Venezuelan relations represent a real danger in several areas, with the most threatening being the resumption of their oil exports and the use of these revenues to finance terrorism.

And let us not forget the danger of having a regime like Tehran’s in possession of a nuclear weapon.

We are watching the Vienna negotiations falter and Iran’s failure to respond to negotiations — as seen with other files, such as its regional expansionism and ballistic missile program — shows that the regime is intent on spreading havoc and destruction on every continent.

• Dr. Hamdan Al-Shehri is a political analyst and international relations scholar. Twitter: @drhamsher7