After facing questions concerning his country’s nuclear program and basic human rights violations at New York’s Columbia University and the UN General Assembly early last week, Iranian President Mahmoud Ahmadinejad visited friendlier Latin America allies in Bolivia and Venezuela.
While there, Ahmadinejad sealed economic accords accounting for over US $1 billion in Iranian aid and investment and strengthened political ties with two of the United States’ most outspoken opponents – Bolivian President Evo Morales and Venezuelan President Hugo Chavez.
A New Ally in Bolivia
Over the next five years, Iran will invest over US $1 billion in Bolivia to promote energy, mining and rural development. Much like the June 2007 announcement that Iran would invest nearly US $500 million into Nicaragua, Ahmadinejad’s move was expected. Like Nicaragua, Bolivia has become increasingly reliant on foreign investment to assist in the development of its natural resources as its ability to invigorate its own economy has diminished (Previous Report).
It is not surprising then, that Bolivia has agreed to assistance from Iran in an effort to bolster its weak economy and poverty stricken people. Chavez’s government, another strong Bolivian ally, has also promised more than US $8.8 billion in aid, financing and energy funding to Bolivia and other allies.
Additionally, Bolivia-Iran trade will likely increase in the coming years. In the past decade Bolivia has had limited exports to Iran and Iranian exports to Bolivia have also steadily declined, reaching an all time low of US $10 million in 2006. Both statistics are likely to increase as Morales and Ahmadinejad continue to forge ties.
Same Old Same Old in Venezuela
It was business as usual in Venezuela as President Chavez met Ahmadinejad with a warm embrace and both took turns denouncing US “imperialism” and defending Iran’s nuclear research, insisting its program is for peaceful energy use despite charges it is aimed at developing nuclear weapons. Both leaders maintained that ties between the two countries are strong and growing.
The two nations have signed more than 180 trade agreements since 2001, totaling approximately US $20 billion in potential investment and are also considering the possibility of jointly funding future petrochemical projects.
Strange Bedfellows
It is unlikely that Iranian investment will allow for significant Bolivian economic gains. In fact, Morales will hardly be able to deliver on his promise of using gas profits to ease increasing poverty in the nation. Iran alone cannot invest in Bolivia the amount needed to expeditiously develop Bolivian resources in order to parry potential domestic shortages and ward off worries about looming contracts to major clients.
In addition, neither Iran nor Bolivia has commented further about specific development projects or investments, leading to speculation that increased investment in the Bolivian economy is a political move rather than a concrete economic one.
Still, because of the perceived investment advances in Bolivia, President Morales keeps the appearance that he is working to alleviate poverty and bolster the economy, when in reality he is likely more interested in seeking strengthened political ties with Venezuela and only subsequently Iran. Venezuela, after all, has pledged much more money in the region than Iran. Morales believes it’s in his best interest to increase relations with Iran, even if the actual economic impact will be less than agreed.
President Chavez continues to strengthen ties among countries that are distrustful of the US’s regional and global intentions. Ahmadinejad achieves the same, buttressing political ties to two outspoken anti-US leaders. It is no mistake that Iran seeks to increase political ties to Latin American nations that sit at the US’s “backyard.” As the US tries to isolate Ahmadinejad internationally, most notably with UN sanctions, he is able to take political stabs at the US by increasing his political swagger in a region in which the US is losing influence.
Strategic Partnerships
Iran’s goal of winning a non-permanent seat on the United Nations Security Council (UNSC) may also be a factor. The election for the open seat will be held at the United Nations (UN) General Assembly in 2008 and Iran may already be seeking support from UN members.
Tehran’s investment to increase political and economic ties in South America includes not only Bolivia and Venezuela, but more latent spending in Nicaragua, Cuba, Brazil, and Ecuador as well. Not spending haphazardly, Iran may hope to buy enough allies needed to sway the two-thirds of UN member states to vote in a nation to the Council.
Time to Counteract
As Iran continues to gain support in Latin America, the US continues to lose it. To that end, US policymakers have begun forging a 10-year, $2.5 billion program aimed at reducing poverty and expanding the middle class in Latin America with hopes that future development and aid programs will “re-establish [US] leadership in the hemisphere.”
The plan would increase development assistance by more than one third. However, Latin American countries may be resistant, as many remain skeptical of US intentions for the region. Additionally, and more tangibly, Venezuelan and Iranian aid comes with little to no qualifications on the part of recipient nations, while the US plan would require countries to contribute and seek additional aid from non-governmental organizations and businesses.
