Iran’s President Ahmadinejad Travels to Latin America to Strengthen Economic Ties

Sources:
ABC News: Iran’s Leader Looks to Latin America for Support
Aljazeera: Iran’s Bear Hugs and Business in S. America
Christian Science Monitor: What’s Ahmadinejad Getting Out of His Latin American Tour?
FT: Iranian President Starts Latin American Tour
Washington Post: Ahmadinejad Travels to Nicaragua After Defending Iran’s Nuclear Program in Venezuela
Yahoo!NEWS: As Sanctions Bite, Iran Feels the Pain

Iran’s president Mahmoud Ahmadinejad visited Venezuela and Nicaragua this week and plans to visit Cuba and Ecuador, as well. Experts suggest that President Ahmadinejad’s visit is motivated by the lack of economic growth in Iran that increasingly concerns Iranians who fear that the economic situation will grow worse as a result of recent U.S. sanctions imposed on the country. Experts believe that, as upcoming elections in Iran draw near, President Ahmadinejad is trying to assure Iranian constituents that Iran has friends in Latin America that also oppose U.S. policy. They argue that President Ahmadinejad will attempt to convince Iranians that economic ties to Latin American countries can help Iran face the difficult financial challenges ahead. As the United States attempts to convince other countries to seize trade with Iran (like China, which is a major importer of Iran’s oil), Iran may be looking for new markets and to strengthen economic relationships with allies.

Experts warn that Iran’s economic circumstances may grow increasingly worse because of the sanctions. Prior to the United States’ recent announcement that it would enforce tougher sanctions against Iran because of its growing concern over Iran’s nuclear program, Iran was already experiencing low growth. It had a projected economic growth rate of 2.5 percent for 2011, the lowest of any major oil producer in the region. The sanctions specifically target Iran’s banking and oil sectors to cut off funding sources for the nuclear program. Critics are concerned that these measures will continue to devastate Iran’s domestic market. For example, Iranian businessmen have already expressed concern that U.S. sanctions on the banking sector will mean that they will have to rely on cash to do business since credit will become more difficult to obtain. Iran’s economy will also suffer if it cannot benefit from the petroleum industry on which it depends.

Critics are skeptical that President Ahmadinejad’s visit to Latin America or Iran’s commercial deals with Latin America will affect Iran’s economic position since, excluding Venezuela, Iran’s Latin American allies are mostly poor countries. Iran and Venezuela share longstanding economic interests since they both rank among the leading world producers of oil and are founding members of the Organization of Petroleum Exporting Countries (OPEC). More recently, the two countries have cooperated to build low-income housing throughout Venezuela, and Iranian-designed tractors can be found throughout the Venezuelan countryside. However, Iran has not followed through with promises it has made to help with over 100 development projects in Latin America. For example, Iran promised to build a $350 million port in Nicaragua and an oil refinery in Ecuador, neither of which it has done. Critics note that President Ahmadinejad is not visiting Latin America’s strongest economies, including Brazil, and lacks their political and financial support. Although Brazil’s former president Luiz Inacio Lula da Silva invited Ahmadinejad to visit Brazil in 2009, Brazil’s current president Dilma Rousseff did not make a similar invitation and spoke out against the Iranian regime’s violation of human rights.