Venezuela’s second-largest refinery, Cardon, took delivery of 200,000 barrels of Iranian heavy crude earlier in April, and another 400,000 barrels were discharged at Puerto José in May.
Venezuela’s state oil and gas company PDVSA continues to receive supplies of condensate from its Iranian partners, and the El Palito refinery has resumed a crude distillation unit through elaborate repairs and upgrading completed using equipment acquired from Iran.
From 2001 to 2013, nearly 300 agreements were signed by the governments of Tehran and Caracas on a range of projects including affordable housing, cement plants, car factories, hospitals, department stores, dairy farms and seafood companies. Investment and loans made by Iranian entities in Venezuela are estimated to value between $15 and $20 billion.
As the embattled Raisi administration turns to Maduro’s Venezuela as an economic lifeline and a political ally, Caracas is embarking on a delicate rapprochement with the United States, which in light of Russia’s invasion of Ukraine and spiraling global oil prices, could restore Venezuela as a key global oil exporter.
Iran’s outreach to Venezuela is partly driven by economic interests and partly a desire to gain a foothold in “America’s backyard,” as the government parlance asserts. That explains the increasing appetite of the Islamic Revolutionary Guard Corps for building up ties in Latin America and even entertaining the idea of a military presence in Venezuela’s waters.
But according to Richard Hanania, president of the Center for the Study of Partisanship and Ideology and a research fellow at the University of Texas, Iran and Venezuela ultimately have little to offer each other.
“The problem for each of these states is lack of access to global capital. They’re both financially isolated from the rest of the world, so [they’re] not really in a position to help one another. Some of the things they’re promoting, like direct flights, should have practically no impact on geopolitics or the global economy,” he said.
“This seems like a political ploy more than anything, [and] it is difficult to see how a trip by Maduro to Iran could have been economically justified. It looks bad for a nation to be isolated from the rest of the world, so it’s beneficial to show oneself with friends, regardless of how useful those friends are,” Hanania told Asia Times.
Other critics concur that the small, beleaguered Latin American nation is incapable of making any meaningful contribution to the economic rehabilitation of Iran while a revival of the Joint Comprehensive Plan of Action (JCPOA) and related sanctions relief are still distant hopes.
“Venezuela doesn’t have much to offer Iran. Its economy is in shambles – it may, even, be in worse shape than Iran’s economy, and its oil and petrochemical facilities are in a state of disrepair. Iran has had some success at selling its oil to China and others in defiance of US sanctions, but Venezuela’s oil sales have dropped to nothing, both due to sanctions and the physical deterioration of its facilities and oil fields,” said Gregory Brew, a historian of Iran-US relations and Henry A Kissinger postdoctoral fellow at Yale University.
“So, the gains for Iran are largely political and strategic, strengthening ties with a state antagonistic toward the US at a time when US-Iran relations are set to worsen, given the declining chances of a return to the JCPOA,” he said.
Brew told Asia Times the United States is interested in bringing Venezuela back into the global oil market and efforts are being tentatively pursued with that goal in mind.
“While there are no US oil companies with an open interest in pursuing commercial ties with Iran, Chevron maintains a standing interest in Venezuelan oil and continues to lobby for an end to the sanctions regime.
“Venezuela arguably has more to gain from a rapprochement with the US than with a new relationship with Tehran and that may mitigate the effectiveness of Tehran’s outreach to Caracas, assuming the US effort bears fruit.”
Claudia Gago Ostos, a research intern at the Newlines Institute for Strategy and Policy, a Washington-based non-partisan think tank, argues Iran and Venezuela can benefit each other but not enough to be mutual economic lifelines.
“With oil prices rising, certain benefits or a little breathing room might come, but not enough to consider either country as a lifeline against sanctions.”
“Similarly, Iran has signed a 25-year cooperation agreement with China, and a proposed 20-year deal with Russia exists, although both lack details and concrete plans. More profitable contracts for both countries could come from their alliances with China, Turkey or Russia, all more prominent economic players,” she said.
In the first year after the signing of the JCPOA under then-president Hassan Rouhani, the heads of state and governments of Greece, Switzerland, Italy, Serbia, Croatia, Bulgaria, Finland, Bosnia and Herzegovina and Slovenia traveled to Tehran, exemplifying an unprecedented eagerness by EU member states and wider Europe to revive relations with Iran.
Today, toward the end of President Raisi’s first year in office, no Western leader has visited Iran, underscoring its enduring isolation.
“Iran’s renewed interest in forging close ties with Venezuela does not mean that Tehran’s relations with the West are inevitably going to be tense and fraught for the foreseeable future, but it does show Tehran is hedging its bets on improved ties with the United States, which is not surprising given the extreme hostility of the Trump administration toward Iran and the slow progress of negotiations with the Biden administration on reviving the JCPOA,” said David Wight, a visiting assistant professor of history at the University of North Carolina at Greensboro.
As the Biden administration navigates options to bring down the global oil prices, including by engaging Venezuela, experts believe Iran’s continued bromance with its Latin American partner could be a double-edged sword of risks and benefits as long as relations with the US are not restored.
“I think it’s risky for Iran to court Venezuela like this. It strengthens the argument among American hawks that Iran is an offensively-minded country that threatens America rather than a defensively-oriented country focused on its own region. This viewpoint could be used to topple the regime in Tehran,” ventured Max Abrahms, an associate professor of political science at Northeastern University.
“On the other hand, Venezuela arguably gives Iran some strategic benefits in terms of projecting power into the Americas, so there are cross-cutting strategic effects of this bilateral relationship,” he added.
This article was originally published in Asia Times
