Tehran looks to Latin America to boost its economy and Rouhani’s leadership
Yesterday, Iran’s foreign minister began a six-nation mission to Latin America centred on trade and diplomacy. Oil, energy, and maritime issues will dominate meetings. The region is vital for Iran’s domestic economy. The nuclear deal has not brought real benefits, helping domestic hard-liners (and Ahmadinejad). Norway opens a US$ 1 billion line of credit.
Teheran (AsiaNews) – Iranian Foreign Minister Mohammad Javad Zarif left yesterday on his first trip to Latin America, leading a 60-person delegation, including public and private sector executives, that will visit six countries: Cuba, Nicaragua, Ecuador, Bolivia, Chile and Venezuela.
The goal of the visit is to establish new economic, trade and diplomatic relations with the region, to boost government action - at the centre of fierce domestic criticism - and overcome the stalemate in which the country finds itself after the optimism of the past months following the nuclear deal.
Whilst over the years Iran has nurtured relations of friendship and economic cooperation with many countries in Latin America, it has not fared so well.
According to Deputy Foreign Minister Majid Takht-Ravanchi, “there exist many areas for cooperation and joint ventures, but until now we have not been able to benefit completely from these capacities.”
The goal is to open a new chapter in relations between Iran and Latin America, signing contracts in the fields of oil, energy, maritime, and transport.
Talks are underway to further economic, industrial and technical cooperation in pharmaceutical products, dam building, housing, dairy industry, as well as oil and gas.
For Iran, cooperating with Latin America (Tehran just reopened its embassy in Chile after 35 years) has become crucial. The area has a population of some 600 million and scores of countries, some of which are openly hostile to the United States
Iran’s economy is also stagnating and the agreement over the nuclear issue has not yet brought any economic dividends. In force since January, the deal was supposed to bring an easing of economic sanctions.
However, this has not yet happened. This, in turn, has helped Iran’s hard-liners and undermined President Hassan Rouhani’s reform agenda. The latter has sought to boost his image by standing in front of the country’s new long-range missile defence system.
Washington recently reiterated its objection to the use of the US dollar in banking transactions with Iran, stopping new economic agreements inked after the nuclear deal.
The European Union has also done very little to help Iran boost its economy and trade, after years of a harsh embargo.
According to the International Monetary Fund, trade between Iran and Latin America tripled between 2007 and 2008, rising to .9 billion, and up to billion in 2013.
Relations with Latin American countries helped Tehran to overcome the US embargo due to its nuclear programme.
From here the intention to further strengthen the relationship, by virtue of the fact that the (partial) suspension of sanctions has not in fact guaranteed the Iranian economy beneficial effects.
The impasse has strengthened the positions of the Pasdaran and Iran’s hard-liners who have always opposed the agreement and are now trying to push former President Mahmoud Ahmadinejad to run for a third term.
A source in Tehran told AsiaNews that " hardliners are trying to stop Rouhani from participating in the next presidential election”.
Every day, those who oppose Rouhani’s stalled reforms are putting “new obstacles”, and the “normalisation of economic and diplomatic relations” appear increasingly remote.
According to the source, anonymous for security reasons, "hard-liners are trying to ridicule" the president, saying that the nuclear deal "brought" only benefits to the West, whilst Iran "received nothing in return and all the sanctions are still in place.”
For this reason, Iran is planning to raise the issue of "US violations of the agreement" at the next 5+1 meeting set for September in Vienna, on the margins of the UN General Assembly.
"Rouhani,” the source said, “has failed to carry out his political reform agenda and there have been no real improvements in economic terms. European banks are reluctant to renew ties and business with Tehran "and even the tourist sector "that had recently made progress, appears today in steep decline. "
There are real fears that hard-liner Ahmadinejad might make a comeback even though his candidacy might be blocked by the country’s top leaders, including Supreme Leader Ayatollah Khamenei, because of differences during the former’ president term of office.
"Reformers back Rouhani but it is unclear whether this will be enough for a second term,” the source added. “A different direction will be needed to boost employment and foreign investment."
Norway has come to Iran’s rescue recently by opening a US$ 1-billion line of credit. The decision came after a meeting between the foreign ministers of the countries in Tehran.
Børge Brende and Mohammad Javad Zarif signed three "export credit" deals aimed at funding "development and infrastructure projects", Iran's foreign ministry said in a statement.
For Iran, this is a shot in the arm to help cope with its economic crisis and troubled banking sector.
Iran currently faces a liquidity, caused by the uncontrolled growth of financial institutions that have replaced the government and the central bank in money management, causing stagflation.
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