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Iran and Latin America: dollars, cents, reais, rials

Brazil seems to be playing a bigger role in Middle Eastern politics. President Lula da Silva hosts the Iranian president just days after mediating talks between Shimon Peres and Mahmoud Abbas. But what exactly do these guests want from Brazil?

Last modified: 22 Nov 2009 22:11
Photo from AFP
Mahmoud Ahmadinejad is making a one-day stop in Brasilia, Brazil on Monday for meetings with President Luiz Inacio Lula da Silva. It will be the third meeting between the two leaders, and the first time for an Iranian president to come to Brazil. The visit comes just a few days after Shimon Peres and Mahmoud Abbas dropped in for official visits with Lula. This has led to speculation, which I touched on in a previous post, about Brazil perhaps trying to take a more active diplomatic role in the peace process in the Middle East.
 
Lula seems to relish the idea.  And he is not trying to damper the expectations, just the opposite. In fact, on Sunday, he said this:
 
“I spoke about peace with President Shimon Peres, with Mahmoud Abbas and I will speak with Ahmadinejad about it. I am going to speak about it because I think only peace can guarantee the growth of countries, and tranquility of peoples and a better life for people. I have a notion of the significance of the conflicts in the Middle East. I have a notion of the role of Iran, and that of Israel, and the role of Palestine, and of Syria.” -Brazilian President Luiz Inacio Lula da Silva.
 
But Peres and Abbas (not to mention Ahmadinejad’s) stops in Brazil igniting talk of regional diplomacy misses a larger point. Iran, Israel, and the Palestinian Authority have different and varied motives and interests in Latin America.
 
 
Iran, under Ahmadinejad, has been strengthening ties with key Latin America nations ever since Tehran hosted the First International Conference about Latin America in 2007.
 
Consider some highlights of where Iran-Latin America ties are strongest:
 
Venezuela: Ahmadinejad makes no secret of his admiration of President Hugo Chavez’s Bolivarian Revolution, and it’s more than just talk. Iran promised about $4 billion in oil producing projects in the Venezuela’s Orinoco Basin and reportedly dispatched 400 Iranian engineers to assist with the project. Iran has observer status in ALBA, the Bolivarian Alliance for the People of the Americas. Iran Air inaugurated Tehran-Damascus-Caracas flights. Chavez has visited Iran several times. The most recent trip Dima Khatib, Al Jazeera’s correspondent based in Caracas, went along to report on the trip and wrote a fascinating, behind-the-scenes Reporter's Diary along the way. 
 
Nicaragua: Iran has said it will invest $1 billion in Nicaraguan agriculture projects and build a deep water port. And Tehran granted a loan of $231 million for the construction of hydroelectric plant.
 
Ecuador: President Rafael Correa, in a visit to Tehran, signed more than 25 bilateral accords with his counterpart.
 
Paraguay: An Iranian delegation that visited Asuncion made promises to import soya and meat in exchange for Iranian investment in the agriculture and technology sectors.
 
Bolivia: Tehran promised $1.1 billion in energy sector projects. Bolivian President Evo Morales in turn closed his countries’ embassy in Cairo and moved it to Tehran, making it Bolivia’s only diplomatic outpost in the region.
 
But it's Brazil that is the undisputed regional powerhouse in every way. Brazil’s GDP remains more than Argentina, Colombia, Venezuela, Peru and Chile combined. And foreign direct investment in Brazil is more than Venezuela, Argentina, Colombia and Chile combined. And Brazil's internal market of over 198 million people dwarfs anywhere else in the region. 
 
Ahmadinejad knows this. And so do his advisors. And I would suspect he probably wants Iran in on the action because - despite all the Iranian ties in the region and Brazil’s surging economic might - Brazilian exports to Iran have tanked, and Iranian imports to Brazil are miniscule.
 
Consider the data:
 
Exports (in USD)
2007: Brazil to Iran = 1.8 billion
2008: Brazil to Iran = 1.1 billion
2009: Brazil to Iran = 900 million
 
(Source: O Estado de S. Paulo)
 
So when Ahmadinejad’s feet touch down on Brazilian soil on Monday, I suspect he will come armed primarily not with any peace plan, but rather sharply focused on a business plan.
 
He knows the economic clout and influence of Brazil. And he knows it wouldn’t hurt to tap into it.
 
Ahmadinejad is apparently bringing with him a large delegation that includes key businessmen. It’s telling that on the official agenda for Monday is a meeting with over 200 Iranian and Brazilian business leaders from sectors such as agriculture, mining and energy, among others, according to the Brazilian foreign ministry.
 
And it points to something larger: The increasingly fervent attempt to develop south-to-south trade models between developing countries to counter the ‘Washington Consensus’ model of doing business. No longer does trade and commerce and deal-making always have to drive through the toll booth of rich countries.
 
So on Monday it might be tempting to view the visit of Ahmadinejad in only diplomatic terms. But, in reality, I suspect behind closed doors the end game of the day will be ‘dollars and cents,’ Brazilian reais, and Iranian rials.