Reports about the delivery of 1.5 million barrels of gasoline to Venezuela by Iran in early June once again threw the saga of relations between those two countries into relief. Media, commentators and scholars have been heatedly debating the enigmatic Iran-Venezuela partnership ever since, and how this alliance can challenge the global dominance of the United States, which has long punished both countries with merciless sanctions.
Geographically, there is little that Iran and Venezuela share. They are nearly 12,400 kilometers away from each other. Culturally, contemporary Iran subscribes to a conservative religious tradition, which manifests itself in different aspects of daily life, while Venezuela is part of the vibrant Latin American civilization.
And as to their historical evolution, Iran and Venezuela have trodden completely different paths to become what they are today.
It is even the case that Iran and Venezuela might have good reasons to be at loggerheads.
Communism is alive and well in Venezuela, as evidenced by the continued primacy of the Partido Comunista de Venezuela, the oldest continuously existing party there, while socialism is the overarching socioeconomic doctrine of the state. On the other side, the rigid version of Islam practiced in Iran is fundamentally opposed to socialism and hardline Shiite jurists consider communism a major “enemy” of Islam.
All the same, hostility toward the United States and resisting its “imperialism” constitute the backbone of the marriage of convenience between two revolutionary governments that might otherwise be rivals for palpable reasons: ideology and ambition.
History of Iran-Venezuela ties
Relations between Iran and Venezuela date back to early 1940s. In 1960, they joined forces, along with three other oil-rich nations, to establish the Organization of the Petroleum Exporting Countries.
After the 1979 revolution in Iran, it was the pro-reform president Mohammad Khatami who expanded relations with Venezuela, visiting the South American country three times while he was in office.
In March 2005, Khatami inaugurated the joint venture Veniran Tractor Company in Ciudad Bolivar. The same year, the two countries inked their first free-trade agreement. And the Venezuelan president at the time, the late Hugo Chavez, conferred his country’s highest distinction, the Collar de la Orden del Libertador, on his Iranian counterpart.
Khatami’s firebrand successor, Mahmoud Ahmadinejad, elevated the connections, and cultivated a special personal relationship with Chavez. Both presidents were stalwart anti-American apostles and conceived the growth of the Tehran-Caracas relationship as a pathway to sidestep the growing list of US sanctions against both countries and a driving force for the initiation of a transcontinental anti-American bastion.
Under Ahmadinejad, the two countries signed more than 270 accords, including trade deals, agreements on construction projects and automobile production, and energy initiatives, and in 2010, they launched the Iran-Venezuela Bi-National Bank.
Rouhani changes course
With the coming to power of the moderate President Hassan Rouhani in 2013, who ran on a platform of engaging with the Western powers to bring an end to Iran’s nuclear impasse, relations with Venezuela lost its prominence as one of Tehran’s foreign-policy priorities.
Rouhani shifted toward the European Union, traditional allies in Asia such as India, South Korea and Japan, as well as Turkey and some of Iran’s neglected neighbors in Central Asia, hoping to redeem the country from the global isolation that Ahmadinejad’s reckless foreign policy and diplomatic ineptitude had exacted.
US President Donald Trump’s abrogation of the internationally embraced July 2015 nuclear deal was a big blow to Rouhani’s standing and aspirations. With the reinstatement of US sanctions, Iran’s economy is now in a state of despair.
International companies have departed en masse, hyperinflation is tormenting the middle class, the price of foreign currencies has spiked to historical proportions, and investment in the oil industry, the country’s economic lifeline, has almost flatlined.
Perhaps it is against the backdrop of this resurfacing recession that the Rouhani administration has decided to approach Venezuela yet again and revive a partnership that was once, at its height, genuinely lucrative for both countries.
But will exporting a one-off shipment of 1.5 million barrels gasoline to Venezuela tangibly alleviate the pains of the Islamic Republic’s economy and change anything in the sour reality of Iran’s position as a hermetically sealed state with almost no effective energy, transportation, banking and trade relations with the outside world?
Also, is this transaction as important as the Iranian government insinuate, meriting flamboyant celebrations in the state media over the epic flouting of the sanctions?
Follow the money … or not
There were rumors that Iran had delivered the fuel to Venezuela gratis and that Tehran had merely dispatched the flotilla of five supertankers, Clavel, Faxon, Forest, Fortune and Petunia, as an indication of goodwill to a long-standing ally and also to show off its defiance of the United States and the sanctions regime. Iranian authorities denied the allegations.
The shipment is believed to have been worth US$45.5 million. However, no credible report on the reception of money by Iran from the Venezuelan state-owned oil company PDVSA (Petróleos de Venezuela SA) was published.
Only a hardline member of Iran’s Expediency Council, Ali Aqamohammadi, who generally doesn’t comment on such matters, told local media that the funds had been received and deposited in the treasury. He didn’t give any figures about the value of the transfer.
He was contradicted by Iran’s ambassador to Venezuela, Hojjatollah Soltani, who announced that Iran was compensated for the fuel through barter trade and obtained food, cocoa and coffee from the South American nation.
Unconfirmed reports suggest that in return for the gasoline, Iran took delivery of 9 tons of gold bars by way of a passenger plane bringing the consignment from Caracas to Tehran. Nonetheless, neither the gold batches nor the food and cocoa compendiums can give the Iranian authorities a genuine reason to rejoice at effectively circumventing the US sanctions or evading international isolation.
When the Joint Comprehensive Plan of Action was signed in July 2015, Iran’s oil exports soared to about 2.8 million barrels per day, representing some 9% of the total OPEC crude-production. In fiscal year 2016-17 alone, Tehran’s oil and natural-gas export revenue was estimated to have totaled $57.4 billion.
Now, with the JCPOA on life support, pessimistic estimates put Iran’s total oil exports at a minuscule 70,000 barrels per day. This makes it clear that the only thing that can salvage Iran’s incapacitated economy is either the resuscitation of the JCPOA or a diplomatic breakthrough of similar magnitude, not media hype about supplying a limited amount of fuel to an equally ailing economy.
The other bottom line is that if Iran is serious about regenerating its foreign trade, it is naive to content itself with a rare shipment of gasoline to Venezuela, which happened under intense international scrutiny, and was pulled off thanks to tight security measures and the escort of its tankers by the recipient nation’s navy and air force.
What Iran needs is regular, unimpeded trade with its partners, and to achieve this, it should ponder a permanent settlement of its differences with its rivals that are dictating its present isolation and economic strains.
Whether it is negotiating with the United States, easing tensions with its Arab neighbors, returning to full compliance with the JCPOA, refraining from regional provocations or maintaining reasonable ties with the European Union, Iran should exhaust all options to ensure that its image and role as a pariah state is overturned, and that its people live more stress-free lives.
Kourosh Ziabari is a journalist based in Iran. He is the recipient of a Chevening Award from the UK’s Foreign and Commonwealth Office. He is also an American Middle Eastern Network for Dialogue at Stanford (AMENDS) Fellow.