Iranian Foreign Minister Hossein Amir-Abdollahian recently visited Nicaragua and Venezuela to discuss ways to enhance bilateral cooperation. Iran’s advance in Latin America at a time of international condemnation and isolation reflects its intent to achieve wider diplomatic support and tackle its economic crises.
Abdollahian met Nicaraguan President Daniel Ortega and his counterpart Denis Moncada in Managua and signed a memorandum of understanding (MoU) for political cooperation and consultation. The agreement comes in the context of close engagement between both countries in recent years. In 2022, both countries signed a comprehensive cooperation agreement that aimed to boost bilateral relations. Earlier this year, Iran also expressed its interest in enhancing bilateral cooperation in the fields of health and medicine. However, Iran’s more concentrated efforts to strengthen bilateral relations with Nicaragua have been in the energy field as in the case of the investments in the Supremo Sueno de Bolivar refinery that is jointly owned by Nicaragua, Iran and Venezuela.
During his visit to Caracas, Abdollahian met Venezuelan President Nicolas Maduro and discussed the growing need to protect national interests against “external pressure” and highlighted the need to expedite the implementation of projects taken up by both countries. Tehran has deepened its bilateral energy cooperation with Caracas in recent months, especially as several refinery systems in Venezuela remain inoperative. Iran has stepped up efforts to revamp Venezuela’s large oil refinery complexes. Iran won a 110 million euro contract to assist in fixing the refineries and it announced its first overseas refinery, El Palito, last year. Iran in recent years has provided crude and condensate along with technical expertise to overcome the failures and breakdowns in Venezuelan refining installations. Moreover, recent reports suggest that the Paraguana refinery complex is soon to start a 100-day revamp to increase its crude distillation capacity as part of the joint efforts of Venezuela’s Petróleos de Venezuela (PDVSA) and Iran’s National Iranian Oil Refining and Distribution Company (NIORDC).
In the current context, several factors and considerations shape Iran’s growing presence in Latin America and deepening cooperation with countries like Venezuela and Nicaragua. Firstly, US sanctions have deeply affected the economies of Iran, Venezuela and Nicaragua. The shared concerns and mutual animosity against the United States have been the fulcrum of Iran’s increasing influence in the region. As the economies of both Venezuela and Iran are primarily based on oil revenues, cooperation between both countries to circumvent US sanctions is crucial. Secondly, the US decision to lift some of the sanctions on and resume oil imports from Venezuela could change the regional dynamics. The US Department of the Treasury last year allowed Chevron to buy oil from Venezuela and Washington reversed its earlier decision to recognize opposition leader Juan Guaido as Venezuela’s president. The evolving US approach suggests that Washington is now aiming to fix the shortcomings in its oil supplies amid the war in Ukraine and could gradually increase its imports from Venezuela. However, the prospects would hinge on Venezuela’s ability to repair its refineries and increase its output. Recently, Iranian officials warned about Washington’s intent when Venezuelan President Nicolas Maduro expressed his willingness to normalize ties with the United States. Thirdly, Iran over time has realized the challenges of investing in Latin America and intends to overcome them. Despite several MoUs and bilateral agreements, transport and logistical hurdles as well as payment obstacles because of US sanctions significantly lower the prospects for tangible outcomes. Some earlier reports by Nicaraguan newspapers revealed that the “ideological partnership” between Iran and Nicaragua failed to translate into “concrete economic development projects.” Fourthly, as the nuclear talks remain stalled, the prospect for Iranian oil to enter the global market remains bleak, hence, the Iranian regime is increasing its efforts to deepen its cooperation with its allies to maximize economic prospects and project a show of unity in the face of US pressure. Nicaraguan President Daniel Ortega recently extended his support to Iran’s nuclear program and said that North Korea and Iran have the right to develop nuclear weapons. Fifthly, Iran intends to diversify its cooperation and gradually increase its military presence in Latin America. Earlier in January, the Iranian navy’s 86th flotilla sailed across the western shores of Latin America to strengthen its presence in international waters and strategic maritime chokepoints including the Panama Canal which is a serious security concern for Washington.
Iran will likely explore newer ways to increase its footprint in Latin America and use its alliances and partnerships to challenge Washington from closer proximity. However, the key Iranian focus in the coming years will be to increase cooperation, particularly in the energy field. This focus is likely to be aided by the coming to power of leftist and anti-US governments in Latin America, with the pink tide heralding a new dawn in the region’s politics.
