Based on last week’s debate, both President Obama and Governor Romney believe that squeezing the Iranians economically is the best wayand perhaps the only wayto end their nuclear-weapons program without resorting to a military strike. Of course, nobody knows if sanctions will actually work. But if the United States is truly serious about crushing Iran’s economy, it must pursue a more aggressive strategy, and it must put more pressure on Iranian trading partners.
That raises uncomfortable questions for the major importers of Iranian oil, such as China, India, Japan, and South Korea, but also for countries that have benefited from a recent surge in exports to the Islamic Republic, such as Argentina and Brazil.
Last year, Argentina and Brazil were responsible for close to 96 percent of all Latin American trade with Iran, thanks to approximately $1.2 billion worth of Argentine exports and $2.6 billion worth of Brazilian exports. (Both countries witnessed a significant decline in their imports from Iran.) Indeed, despite international efforts to sanction and isolate the Middle Eastern country, Brazil sent more exports to Iran in 2011 than it did in “the previous four years combined,” according to a new analysis by the online publication Latinvex. All told, Brazilian exports to Iran increased by over 326 percent, compared with 2010, while Argentine exports to Iran grew by about 937 percent.
More recently, in the third quarter of 2012, Argentina and Brazil accounted for roughly 93 percent of all Iranian soy-oil imports, according to estimates from the German consultancy Oil World. Most of that soy oil came from Argentina, which supplied 129,000 of the 202,000 tons that Iran imported. Brazil contributed 59,000 tons, and Paraguay contributed another 14,000.
To be sure, Argentina and Brazil are not even close to being Iran’s largest trading partners, and their imports from the Islamic Republic are now miniscule, making each trade relationship massively imbalanced. But if our goal is to suffocate Iran’s economyand to do it quicklythen the rapid growth of Argentine and Brazilian exports to Iran is a matter of some concern.
While the Iranian economy is experiencing tremendous pain from global sanctions, it has not yet reached the point of collapse. As Reuel Marc Gerecht and Mark Dubowitz wrote last week in the Wall Street Journal, “Iran’s economy has been allowed to remain healthy enough to leave a vanishingly short time for sanctions to do the work that would head off military action.” In a study released on October 15, Congressional Research Service analyst Kenneth Katzman noted that “International Atomic Energy Agency (IAEA) reports have consistently said that Iran’s stockpile of low-enriched uraniumand its capacity to enrich uraniumcontinues to expand, as do its holdings of 20% enriched uranium.“
In other words, if sanctions are going succeed, they must be tightened even moreand soon. President Obama likes to boast that America has embraced “crippling” sanctions, but they obviously haven’t been crippling enough, for Tehran’s nuclear program is still moving forward at a dangerously fast pace. The United States must remain vigilant about closing loopholes in its existing sanctions; it must implement new sanctions; and it must pressure other countries to reduce their Iranian trade.
Argentina and Brazil each have a curious relationship with Iran. Back in the 1990s, Iranian agents orchestrated deadly bombings at both the Israeli embassy and the AMIA Jewish Community Center in Buenos Aires. While Tehran continues to deny complicity in these attacks, Interpol has outstanding arrest warrants for several current or former Iranian officials, including the present defense minister, Ahmad Vahidi. Yet the leftist Argentine government of President Cristina Kirchner is now holding high-level negotiations with Tehran to address the 1994 AMIA bombing, which left 85 people dead. Upon hearing news of these talks, the Israeli embassy in Buenos Aires expressed “great disappointment,” reminding Argentina that the AMIA massacre was approved “in the upper echelons of the Iranian government.”
There is another wrinkle to this story, and it relates to the Argentina-Iran economic relationship: Back in March 2011, Argentine journalist Pepe Eliaschev obtained a classified document indicating that the Kirchner government had offered to freeze investigations of the 1992 and 1994 bombings if Tehran agreed to expand bilateral trade. As I mentioned earlier, Argentine exports to Iran grew by 937 percent last year. Now the two countries are meeting to discuss the AMIA bombing. Is that merely a coincidence?
As for Brazil, it warmly embraced Iran during the presidency of Lula da Silva, who served from January 2003 to January 2011. In May 2010, Lula’s intervention in the Iranian nuclear dispute prompted Jackson Diehl of the Washington Post to ask whether the Brazilian leader had become a “useful idiot“ of the mullahs. But Lula’s successor, Dilma Rousseff, has adopted a much less friendly approach to Tehran. In particular, she has taken a stronger stance on human rights. Last January, a senior adviser to Iranian president Mahmoud Ahmadinejad told a Brazilian newspaper that President Rousseff had been “striking against everything that Lula accomplished” and had thus “destroyed years of good relations.” Nevertheless, Brazilian exports to Iran soared during Rousseff’s first year in office.
Again, Brazil and Argentina are not nearly Iran’s most important economic lifelines, but they have definitely become two significant Iranian trading partners, even as Tehran has moved closer and closer to a nuclear weapon. That is troubling.