Could a new Iran-Venezuela deal end the two countries’ economic difficulties?

LONDON: A recently signed cooperation agreement between Iran and Venezuela will allow the two pariah states to further combine their economies. However, an oil-rich state without legitimacy cannot solve another’s ills, experts say.

On Saturday, embattled Venezuelan President Nicolás Maduro appeared in Iranian state media in northern Tehran to sign a 20-year “cooperation agreement” with his Iranian counterpart, Ebrahim Raisi.

According to Mr Raisi, this agreement will enable the two countries to cooperate in the oil, petrochemical, defense, agriculture, tourism and culture sectors. But more than the economy, the real threat posed by the signing of the agreement — an unlikely pact between a theocratic Shia regime and a communist dictatorship — is the sanctions regime imposed by the United States on each of the two countries. as their relationship with the wider international community.

“Venezuela has shown exemplary resistance to sanctions and threats from enemies and imperialists,” the Iranian president said. “The 20-year cooperation document shows the willingness of the two countries to develop their relations.”

Sanctions and threats against the Iranian nation over the past forty years have been many, but the country has turned them into benefits in the service of the country’s progress.

But for Yossi Mekelberg, an associate member of the Middle East and North Africa (MENA) Regional Program at Chatham House, the deal does nothing to tackle bad governance, a fundamental problem in both countries.

“Iran and Venezuela could be some of the richest countries in the world, but they are not,” he said in an interview with Arab News. “You only have to look at their natural resources, not to mention Venezuela and its natural reserves, to understand that their oil industry is collapsing.”

Against a backdrop of strong demand for oil and gas, Venezuela and Iran are expected to prosper, but their governments have prevented the “gold rush” that other energy-exporting countries are currently experiencing and using to prepare for the post-fossil fuel age .

“Iran and Venezuela are rich countries, but their problem is bad governance. Whether left-wing or ecclesiastical parties, these are failed states,” Mekelberg said.

He points out that the two countries also have a contentious relationship with the United States and the wider international community.

“Their alliance is that of countries that, under sanctions, are not really able to solve their own internal problems, and then fall victim to their own regions; they then try to find a way out by supporting each other,” he continues.

“It all has an internal logic, but I don’t think it will help them much. They have to face the world. Two failing economies don’t make one successful.”

Will the agreement signed in Tehran, specifically on energy – the main export product of each of the two countries – contribute to the growth of their economies?

Iran and Venezuela are both big producers of oil and energy, “they will not export to each other,” Mekelberg said.

However, the two countries have made some progress in the exchange of expertise. Iranian engineers have helped repair dilapidated Venezuelan facilities and will soon begin work on Venezuela’s largest refinery.

“But what they really need is investment,” added Mr. Mekelberg, who doesn’t believe either of the two countries will be able to do that in the required proportions.

While the economics of the deal raise questions, the two countries have collaborated for years on the illegal exchange of oil and other commodities. South America, the Middle East and the United States are said to be concerned about the potential for deeper defense cooperation.

As early as 2006, Venezuela and Iran began to cooperate militarily. In a 2009 speech to the Brookings Institution, the New York County prosecutor sounded the alarm, saying Iran was training Venezuelan fighters to turn them into Hezbollah-like terrorists.

“It has been reported that since 2006 Iranian military advisers have been integrated into the Venezuelan forces,” said the late Robert Morgenthau. “Asymmetric warfare taught to members of the Iranian Revolutionary Guard Corps (IRGC), Hezbollah and Hamas has replaced the US military’s field manuals as the main Venezuelan military doctrine.”

Perhaps even more worrying is the potential for nuclear cooperation. According to a 2008 report by the Carnegie Endowment for International Peace, Venezuela has some 50,000 tons of uranium stocks ready for exploitation.

While the potential for nuclear cooperation has been warned for years, the stagnation of progress in the ongoing Iranian nuclear negotiations in Vienna, along with increasingly weak expert-predicted breakthrough times, means that the new deal could play an inordinate role in the Iranian development of nuclear weapons.

The new deal will allow the two pariah states to further combine their economies. (AFP)

“Venezuela’s support for Iran’s nuclear program has fluctuated in recent years, with intelligence sources previously indicating that the late President Hugo Chavez was considering buying uranium from Iran at the same time he started talking about buying a nuclear reactor from Argentina,” Rhiannon Phillips, associate analyst for the Mena region at political risk consultancy Sibylline, told Arab News.

“Cooperation on defense projects may indicate Iranian partnerships in offensive and combat drone technology, raising great concern among Western allies. It’s not a new trend either, as Israeli Defense Minister Benny Gantz raised concerns about Iranian Mohajer drones in Venezuela earlier this year, with reported ranges of up to 200 kilometers.”

The analyst added: “Iranian support for terrorism is already a major driver of geopolitical hostilities in the Middle East, particularly between Tehran on the one hand and Saudi Arabia and Israel on the other. But it could heighten the concerns of Latin American countries if Venezuelan capabilities exceed or exceed the regional security threshold.”

Diego Molano, Colombia’s defense minister, has previously expressed concern about the presence of Iranian proxies in Venezuela, namely Hezbollah militants, and the likelihood that these groups will attempt to use Iranian military technology to launch attacks against the country.”

Rhiannon Phillips also claims Iran has a long history of involvement in terrorism in the Middle East — a threat that threatens to revive the Iran-Venezuela cooperation agreement.

The 1994 suicide bombing by Amia on a Jewish cultural center in Argentina killed 85 people and injured hundreds more. In 2006, Argentine prosecutors officially accused the Iranian government and Hezbollah of carrying out the attack. It seems Argentina has not forgotten this attack.

Both parties are major energy and oil producers and will support each other in their projects. (AFP)

On Sunday, Argentine authorities grounded a Boeing 747 sold to Venezuela by Iranian airline Mahan, which is closely associated with the IRGC and sanctioned by the US government.

According to a document from Argentina’s Interior Ministry shared with Reuters by Argentina MP Gerardo Milman, 14 Venezuelans and five Iranians were on board the plane. Milman warns: “We suspect this plane is behind intelligence activities in Argentina.”

It is not clear what the officers were investigating. What is clear, however, is that Argentina, which is deeply and tragically familiar with Iranian terrorism, does not want to risk waiting too long to find out.

This text is the translation of an article published on

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