Iran's Latin America Strategy

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Speaking in Washington at the annual dinner of the American Jewish Committee in May 2007, Argentina's then-senator Cristina Fernandez de Kirchner publicly reiterated her unwavering commitment to justice for the victims of the 1994 AMIA bombing, an Iran-sponsored terror attack against the Jewish cultural center in Buenos Aires that left 85 people dead and 229 wounded. But since becoming president, Kirchner has pursued an entirely different course. In January she signed a memorandum of understanding with Iran that will inevitably deny Iran's culpability.

For Iran, the motivation is clear. There is the immediate gain for most senior officials - including Ali Akbar Velayati, who was then foreign minister, and Mohsen Rezai, who was then the Revolutionary Guards' commander. Velayati was indicted by an Argentine judge for the attack and Interpol issued an arrest warrant for Rezai. Though neither succeeded in their bid for president in Iran's recent elections, they still maintain a high profile in Iran's power structure and a negotiated deal would rid them of this unpleasantness. More broadly, whitewashing Iran's involvement would give Tehran - a primary sponsor of terrorism across the globe - a dubious but technically clean bill of health that would further facilitate Iran's entrée in the region.

Argentina is also an important strategic addition to Iran's Latin America policy.

Iran's booming relations with the Bolivarian republics - Bolivia, Ecuador and Venezuela - are well documented. Since 2005, Iran's outgoing president, Mahmoud Ahmadinejad, visited Latin America at least once a year and opened new embassies across the continent - including in Bolivia, which appears to be the gateway to Latin America for Iranian spies, with reportedly 145 Iranian accredited diplomats.

All these countries offer Iran opportunities for political influence - they provide sympathetic votes in international forums - and an array of instruments to evade international sanctions. Iran, in turn, uses its soft power to help its Latin American partners - mostly developing countries and members of the non-aligned movement - to develop infrastructure, which brings hard currency to Iran's sanctions-battered financial system. Establishing cultural centers and mosques is also buying Iran influence among the small but influential population of Muslim immigrants and their descendants.

None of this, however, matches the potential of renewed friendship with Argentina - as evidenced by the fact that Iran's bilateral trade with the Bolivarian republics is almost non-existent; by contrast, 96 percent of its trade is with Argentina and Brazil.

Argentina and Brazil are in truth Latin America's regional powers. Since Brazil's former president Ignazio Lula de Silva left office, bilateral relations between Tehran and Brazil have significantly cooled, with Lula's successor, Dilma Vana Rousseff, distancing herself from president Ahmadinejad both in word and deed.

Argentina, meanwhile, is blessed with natural resources, a robust industrial infrastructure and advanced technology. But unlike Brazil, years of economic mismanagement have brought Argentina back to the brink of bankruptcy. Seeking to rebound, the country's leadership views Iran as a means to gain access to a trading partner that is starved for both raw materials and manufactured goods because of sanctions and international isolation.

Bilateral trade has already boomed in recent years - with Argentine exports to Iran hovering around $1 billion since 2008 and peaking in 2010 at almost $1.5b., providing Argentina with a large trade surplus.

Improved relations could also solve the problem of Argentina's desperate need for energy. With a prolonged and difficult debt restructuring process and a growing protectionism that makes its economy less competitive, Argentina has found it increasingly difficult to buy energy to satisfy its needs - despite having been a net energy exporter until 2010.

The government tried to solve this problem by nationalizing Spanish-owned energy company YPF but the move only worsened Argentina's energy predicament and compounded its credibility problem with international markets. Iran, with oil sales drastically down due to European and US sanctions, is looking for buyers.

But that's not all. Argentina is, alongside Brazil, the only nuclear power in Latin America. Iran briefly obtained nuclear fuel from Argentina in the 1980s, but that relationship ended by the early 1990s due to concerns over Iran's nuclear program.

Argentina is also a leader in missile technology - something Iran covets for its own program, but finds difficult to obtain elsewhere due to sanctions and growing international scrutiny over its imports.

Finally, Argentina, with its historic ties to Spain and Europe, still has a robust trade with the EU. Setting up shop in Argentina can enable Iran to leverage this Latin American hub as a transhipment point for technology, which it can pay through barter with its own oil.

Everyone could gain then - Argentina would get energy without the need to pay debts, get a better credit rating or drop protectionist measures. Iran would get a new friend and trading partner in Latin America that has the added value of offering European- quality technology.

Until recently, the major impediment to a full rapprochement was the 1994 AMIA bombing and Argentina's legal advocates, who would not forgo justice in return for their president's misguided realpolitik. In one fell swoop, President Kirchner can now make sure that nearly 20 years of investigation, standing indictments and international arrest warrants can be swept under the rug.

With that, Iran and Argentina are actively drawing closer. Iran has found a way to break out of its international isolation, while Kirchner has made it clear that her promise for justice takes a back seat to the promise of economic recovery.

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