Iran is capitalising on its tensioned relationship with the West. On June 11 the Islamic Republic signed a strategic cooperation agreement with Venezuela. The 20-year deal comes in line with similar agreements Iran has struck with so-called anti-Western camp: Syria, China, and, most likely, Russia.
Iran and Venezuela remained largely secretive about the provisions of the agreement, similar to its arrangement with China and Syria. Without revealing on of the details, joint statement outlined high level cooperation in areas of economy, tourism, culture, and energy; areas of cooperation in oil, energy, petrochemical refineries, and defence were mentioned in the statement, though without giving away any specifics. New airline flights between Tehran and Caracas were announced to begin operating on 18 July 2022, “in order to promote tourism and the union between our countries,” said Venezuelan President Nicolas Maduro, adding that “Venezuela is open to receive tourists from Iran.”
What drives the Islamic Republic of Iran to establishing strategic relations with countries that historically are more foes than friends to the West? In the case of its newly signed partnership with Venezuela, Iran may be pre-empting a possible American-Venezuelan rapprochement following a rare visit by top US Officials to Caracas last March.
Why Venezuela now?
Two key reasons are in play brining Iran and Venezuela closer than ever. On the one hand, the Latin country has had a tense relation with the US. Prolonged American sanctions has hindered Venezuela’s ability to keep its energy infrastructure operational and adequately maintained, though Iran has provided energy aid in times of crises. On the other hand, Iran-Venezuela relations are not entirely new. Their relations flourished under former president of Iran Mahmoud Ahmadinejad, though it faltered for a while during the term of his successor President Hassan Rouhani, only to return to Iran’s top foreign agenda under current president of Iran, Hassan Rouhani.
For over two years Iran has been assisting Venezuela’s sanction-stricken energy sector. The new strategic partnership was preceded by a €110m energy deal signed last May, which will see Iran take on maintenance of Venezuela’s El Palito Refinery. These deals have served Iran as a work around US sanctions. It allows Iran access to liquid assets away from US sanctions.
As mentioned earlier, the two-decade partnership agreement comes at a time of heightened Iranian anxiety at the prospects of restored US-Venezuela relations. Talks must have preceded the announcement of the long-term agreement, but Iran is keen on strengthening its ties with a country that has for the longest time in its modern history resisted US pressures. Iran wants to thwart any chance of Venezuela returning to the global energy market having reached an understanding with the US, in which case the Islamic Republic would lose Venezuela’s lucrative market, together with its bargaining chip to influence global energy markets, particularly as the West stumble under Russia’s energy cuts.
Therefore, Iran’s aim is to signal its ability to resist global economic and political pressure. The new agreement with Venezuela produces an opportunity for Iran to manoeuvre mounting Western sanctions led by the US, which has impacted Iran’s economy; the risk of failed nuclear negotiations seem ever greater as well. Fully aware of the potential risk a new US-Venezuela understanding may bring, Iran is adamant on protecting its workarounds for overcoming Western sanctions.
Different Reasons
Iran’s move comes at a critical timing in its relations to the West. Venezuela joins a host of anti-Western states that Iran has chosen to build relations with, starting with Syria, China, and ultimately Russia.
According to Iranian President Ebrahim Raisi, the arrangement “shows the determination of the high-level officials of the two countries for development of relations in different fields,” adding that “Venezuela has passed hard years but the determination of the people, the officials and the president of the country was that they would resist the [US] sanctions.”
Yet speculation surrounds the possibility of another similar agreement between Iran and Turkmenistan following a visit by Mr Serdar Berdimuhamedow, the president of the central Asian republic, in June. During the visit Iranian President Raisi said “it became clear that the two countries have a serious will to develop relations and implement the agreements reached. More importantly, the two countries are determined to sign a strategic document of 20 years of cooperation.” Yet by comparison, Turkmenistan’s relations with the US and the West are far less tensioned than that of Venezuela’s. In recent years Ashgabat has been opening to foreign investment in the energy sector, especially as US aims to pull Central Asia countries away from Russian influence and limit China’s ambitions in the region.
Overall, the motives underpinning Iran’s move to establishing long-term agreements with countries of strained relations with the West could be summaries in three main points:
1. Resisting Western pressure:
Tehran sees itself as building a resistance front against what it describes as a ‘Western hubris”. The front would include other countries facing similar pressure exerted by the West, either through political and economic sanctions, or as a result of conflict on spheres of influence. Seen through this lens, Iran has signed major strategic agreements with countries that fall into this category. It continues to lead this ‘front of West resistance’, however, gaining public currency in its view domestically.
2. Strengthening its economy:
Iran’s agreements with China and Syria chiefly aim to secure its economic interests. It deepens the Islamic Republic’s ties with China’s Belt and Road Initiative. In addition, these agreements strengthen Iran’s presence in Syria and facilitate the building of vast networks of transit trade for Iran to reach neighbouring countries. This way Iran secures important workarounds sanctions imposed on its economy owing to its role and involvement in prolonged conflicts in the region.
3. Reviving its energy sector:
Iranian energy and oil sector has been most affected by the western and American sanctions. Prolonged lack of resources has prevented Iran from upgrading its energy infrastructure. These sanctions have also hindered Iran’s oil exports to the region and especially after the US ended exemptions from sanctions for 8 countries (Turkey, China, India, Italy, Greece, South Korea, and Taiwan) since May 2019.
For instance, the strategic agreement with China has enabled Iran to export oil to Beijing, directly challenging US sanctions. China announced its first shipment of crude oil coming from Iran of more than 260 thousand tonnes January this year. And more Iranian oil is expected to come in near future.
Similarly, a strategic agreement with Venezuela allows Iran to export oil to its Latin partner. Right after signing the agreement, Iran sent 2 of 4 agreed on oil tankers, and invested in Venezuelans oil refineries. These movements by Iran defy US sanctions. And Iran aims to grow an alliance that challenge US energy sanctions: since June this year, Venezuelan President Nicolas Maduro made a series of official visits to Algeria and Turkey, in addition to Iran.
Iran is also expected to strike an important and strategic agreement with Russia. The deal would entail Russian contracts to develop Iran’s infrastructure. The Russia-Iran agreement would largely benefit Tehran who is in turn helping Russia bypass European and American sanctions owing to its ongoing operation in Ukraine. A case in point is Greece’s seizure of a Russian-flagged oil tanker last April, off the Evia Island as part of EU sanctions imposed on Moscow over its war on Ukraine before the ship was released a couple of months later.
Iran in conclusion is aiming to widen its options in case it continues to be subject to severe economic sanctions and the negotiations over its nuclear programme fail. Iran is pre-empting such situation by establishing strategic partnerships with allies who share its anti-Western sentiment. These long-term agreements will serve as a platform for Tehran to evade economic and political sanctions, and perhaps buy more time to find alternative solutions to political and economic crisis, domestically and regionally, at least for the foreseeable future.
