Leftist Governments in Latin America; Iran's Costly Diplomatic Targets

With the visit of Mohammad Javad Zarif leading a 120-member delegation from six Latin American countries, Rouhani's government has begun new efforts to revive the lifeless relations between Iran and the leftist governments of South America after three years of hesitation. Justifying this new political effort, Majid Takht-Ravanchi, the Deputy for Europe and America at the Iranian Foreign Ministry and a member of the delegation, stated that the target countries for the visit are members of the 'United Nations, Non-Aligned Movement, Group of 77 (developing countries)'; a rather weak argument that does not make the costs of developing relations with leftist Latin American countries, at least in the manner of the ninth government and the generosity of Ahmadinejad's era, more acceptable. To circumvent sanctions, the ninth government focused on establishing close relations with Venezuela, Bolivia, Nicaragua, and Ecuador using substantial oil revenues, and Ahmadinejad's friendly relations with then-President Hugo Chavez of Venezuela, along with Iran's financial generosity, made the partial realization of this goal possible. With the lifting of sanctions and a reduction in political isolation, it was expected that Tehran's foreign relations would be placed on a new trajectory compared to the sanctions era, prioritizing natural trade development and national interests over ideological or anti-American tendencies in determining trade partners. In this case, the development of relations with Latin America could have been directed toward more advanced and wealthier South American countries, including Argentina, Brazil, and Mexico, rather than merely smaller and poorer leftist countries like Bolivia, Nicaragua, and Uruguay. The historical background of Iran's relations with Latin America is influenced by the Cold War and the bipolar world system, aligned with Washington's policies in supporting poor South American countries and countering the spread of communism and the former Soviet Union's influence in the region. Before the revolution, despite having sufficient financial capacity, Iran's investment in Latin America was limited, and economic cooperation was confined to oil sales and the purchase of consumer goods and agricultural products, although there were also collaborations in nuclear research with Argentina and Brazil. In this framework, Iran established official political relations with Brazil, Argentina, Mexico, and Chile before the revolution. After the 1979 revolution, Mexico and Chile severed ties with Iran and closed their diplomatic missions in Tehran, while relations with Brazil and Argentina largely stagnated due to a lack of sufficient attraction for continuity. The July 1994 bombing of the Jewish community center (AMIA) in Buenos Aires, which resulted in 85 deaths and over three hundred injuries, pointed the finger at Iran and Hezbollah, significantly undermining the Islamic Republic's efforts to get closer to Latin America. During Khatami's presidency, only to demonstrate a desire to avoid political isolation imposed by the U.S., Tehran made efforts to approach several Latin American countries, including Cuba and Venezuela. With the imposition of new sanctions against Iran in 2006, coinciding with rising oil prices in global markets, Mahmoud Ahmadinejad made a renewed push to get closer to South American countries. Along with accepting financial commitments and generous aid to Bolivia and Nicaragua, Ahmadinejad saw potential for friendship with Chavez, who, like him, was interested in populist and political surfing, which significantly increased Venezuela's share of Iran's aid compared to other leftist countries in the region. The costs of constructing 17,000 housing units in Caracas, Venezuela's capital, establishing assembly plants with an expected annual capacity of 24,000 Paykan and Pride vehicles, and an assembly workshop for 12,000 tractors for export to Bolivia and Uruguay (a unit that some regional news outlets claimed was a missile factory aimed at the U.S.), are remnants of Ahmadinejad's era that have cost Iran hundreds of millions of dollars, and aside from the free housing in Caracas, none have achieved the desired results. Other joint cooperation projects between the two countries include cement factories, bicycle production, and soft drink manufacturing in Venezuela, which resemble Ahmadinejad's 'quick-return enterprises' more than real productive units located 15,000 kilometers away from Iran. Venezuela is the first target of Ahmadinejad's government for developing relations with leftists in Latin America and the ultimate destination of recent visits by Rouhani's foreign minister to South America: a similar trajectory that, with the exception of Chile, seems to be followed by the current government of the Islamic Republic as well. The addition of Chile to the list of 'preferred trading partners' of the Islamic Republic and the destination of Mr. Zarif's recent trip only occurred when the socialist and leftist government of Michelle Bachelet decided to reopen its embassy in Tehran after 37 years. During Ahmadinejad's presidency, in addition to spending hundreds of millions of dollars on joint projects, up to $3 billion was also committed for joint investments. In joint investment, aside from the motivation to utilize the partner's capacities (including technical skills, management, having export markets, etc.), the primary goal is the return of investment and profit for the investor. Significant Iranian investment in Venezuela does not allow for the achievement of any of the mentioned goals. Despite its vast oil reserves and due to mismanagement and administrative and political corruption, Venezuela is now a bankrupt country suffering from an annual inflation rate of up to 700 percent. Ignoring the astronomical inflation growth, the Socialist Party and Maduro's government, Chavez's successor, have recently increased wages by 50 percent to improve their position in elections, which in turn will accelerate inflation rates. To restore last year's purchasing power, Venezuelan workers need a wage increase of more than 750 percent, not just 50 percent. The commitment to pay installments and interest on Venezuela's loans amounts to over $15 billion annually, while the country's total foreign reserves are at the same level, only sufficient for purchasing imported food and consumer goods, while its economic growth is projected to be negative by up to 10 percent this year, indicating a worsening economic situation. The Rouhani government's return to the policy of developing relations with leftist Latin American countries and repeating the failed experiences of Ahmadinejad's government in this area, aligned with the post-JCPOA situation, does not guarantee strategic interests and is not commensurate with Iran's current financial and economic capacities; if such capacities were available, similar to Turkey's behavior, the development of Tehran's relations with Latin American countries should be based on economic and financial considerations rather than Tehran's preferred political tendencies.