reflections

Nov 25, 2009 | 01:35 GMT

6 mins read

Brazil and Iran: An Unlikely Partnership

It can be difficult to separate the important from unimportant on any given day. Reflections mean to do exactly that — by thinking about what happened today, we can consider what might happen tomorrow.
IRANIAN PRESIDENT MAHMOUD AHMADINEJAD wrapped up a visit to Brazil — the first stop on his Latin America tour — and headed to Bolivia on Tuesday. His trip to Brazil — the first of its kind by an Iranian president — was lambasted by Western critics and hailed by Iranian supporters. A concerned Israel even sent President Shimon Peres to preemptively meet with Brazilian President Luiz Inacio Lula da Silva. All of this diplomatic activity belies the fact that the Iranian-Brazilian relationship is relatively limited, and that any real cooperation with Iran would threaten the thing that Brazil needs most: foreign capital to develop its energy sector. Iran has pursued ties with Latin America for several years. Relations with Venezuela have been warm, and the two have invested in various development projects — amid rumors that Iranian-supported militant organization Hezbollah uses Venezuela as a base of operations. Iran and Venezuela even signed a memorandum of understanding promising Venezuelan gasoline to help circumvent potential U.S. sanctions (though the deal remains stalled). Iran also has engaged other Latin American countries, including Nicaragua, Ecuador and Bolivia. The selection of partners presents a fairly clear strategy of cozying up to those countries that have hostile, unsympathetic or limited relations with the United States as a way of irritating Washington. Iran has pursued ties with Latin America for several years. Ahmadinejad’s high-profile visit to Brazil stands out as an anomaly for two reasons. First, although Brazil is not the closest U.S. ally in the region, it certainly has never shown an interest in siding with Venezuela against the United States. Second, there is no question that the relationship between the United States and Iran is unremittingly hostile. Brazil finds itself in a unique position. For most of its history, South America’s largest country has remained isolated. Although it borders all but two of South America’s 13 other countries, the physical barrier formed by the Amazon to the north and west protects Brazil. The country's only real threat would be Argentina, but the two remain, for the most part, shielded from one another by the three buffer states of Bolivia, Paraguay and Uruguay. With no real external pressure to deal with, Brazil has remained a largely inward-looking country. Economic and political turmoil commanded its attention through most of the 20th century, and it was not until the (relative) economic stability of the late 1990s and first decade of the 21st century that Brazil was able to consider international engagement. In its push to expand its international influence, Brazil has not limited itself to engaging the countries in its immediate abroad — countries that currently are uncertain about supporting Brazil as the self-declared leader of the region. Brasilia has promoted close relationships with countries such as India, South Africa, China and European states. A focus on developing relations throughout Africa as a whole has allowed Brazil to curry favor in an attempt to secure sufficient votes in the United Nations to gain a permanent seat on the Security Council. For some time, da Silva also has been presenting Brazil as a potential mediator for the ongoing conflict between the Israelis and the Palestinians. By jumping into Middle Eastern politics, Brazil has drawn attention to itself from both sides of the conflict. But the Middle East already has its fair share of mediators, and by engaging Iran, Brazil risks alienating the United States — not something a rising power of the Western Hemisphere can afford to do lightly. But Brazil is not your typical Latin American state. While most Latin American countries rely heavily on exports to generate income, exports accounted for only about 13 percent of Brazil’s GDP in 2008. Trade with the United States is even smaller; exports to and imports from the United States equaled only about 3 percent of GDP in 2008. Brazil's independence from the United States was underscored with the onset of the international financial crisis: China’s demand for Brazilian commodities surged and demand from Argentina and the United States plummeted, causing China to replace the United States as Brazil’s top trade partner. Though this likely will change once U.S. imports pick up, it emphasizes to Brazil that the country is by no means reliant solely on the United States for economic stability. This is not to say that Brazil would not be hurt by severed trade links with the United States. Should things ever come to such an extreme pass, though, Brazil is better prepared than most. Brazil’s relative insulation from international markets — and from the U.S. market in particular — gives it a great deal of leeway when it comes to making friends all over the world. On a political level, da Silva has a great deal of bandwidth to do whatever he pleases at home — his popularity ratings are up to 70 percent — despite vocal criticism of his engagement with Iran. Many Brazilians have no idea why the government is engaging abroad when it has no threats to face. But in its attempt to engage all comers — from the United States and Israel to Venezuela and Iran – Brazil acquires a reputation of neutrality by showing that it does not intend to subordinate its interests to those of the United States. While Brazil is not looking to throw away its relationship with the United States, it certainly can flirt with Iran without putting its entire economy at risk in the way that other more trade-dependent countries would. Further mitigating the risk is the fact that real cooperation between Iran and Brazil is destined to be relatively limited. Iran does not have the spare capital to invest meaningfully in Brazil, and sheer physical distance makes the prospect of a serious economic relationship ephemeral at best. There is, however, one critical factor that could dampen Brazil’s friendliness. STRATFOR sources in Washington have indicated that Congress is considering measures to restrict the ability of U.S. organizations — particularly the Export-Import Bank of the United States — from providing financing to Brazil on the grounds that it is engaged with Iran. With plans to invest $174 billion in its energy sector, Brazil is not in a position to alienate itself from U.S. capital — or from the high-quality technologies wielded by U.S. companies. This may explain why Brazil recently announced that it would consider withdrawing investments from Iran’s energy sector, and could pressure Brasilia to back away from its relationship with Iran. When push comes to shove, Brazil will not be willing to sacrifice a relationship with the United States for ties with Iran. Future calculations will depend on how hard the United States is willing to push Brazil in order to achieve its goal of completely isolating Iran.

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