The US, Iran and Venezuela in the Caribbean: The Big Picture

President Rouhani in meeting with Venezuelan President Nicolás Maduro
Credit: Tasnim News Agency / CC BY

The entry of Iranian oil tankers into Venezuelan territorial waters has caused a flurry of speculations that it might lead to increased tensions with the U.S. Two vessels have arrived without mishaps, the others are due in June. The tankers are carrying approximately 1.5 million barrels of fuel, worth $45.5 million on the open energy market, a godsend for Venezuela’s gasoline-starved economy. The shipments, though, will provide only a temporary respite — they are barely enough for two weeks at current, restricted consumption- from Venezuela’s ongoing tribulations. And any future shipments of oil from Iran will most probably cause a tougher U.S. response. 

Despite the rabble-rousing, there have been few indications that the shipments could lead to an encounter in the high seas. The U.S. authorities have been surprisingly circumspect on the approaching vessels. Even the Admiral in charge of the U.S. Southern Command, under whose authority the U.S. would respond, has refrained from explicit comments. Still, both Teheran and Caracas are the objects of maximum pressure campaigns by the Trump administration, that include severe sanctions and oil embargoes destined to oust the Venezuelan strongman Nicolás Maduro from power and to force the Iranian regime to renegotiate the nuclear agreement and halt its regional ambitions in the Middle East.

The fearmongering, on this occasion, has come mostly from Teheran and Caracas. The former has asserted that any actions to stop its vessels would be an act of piracy that will provoke retaliation, whereas the Venezuelan armed forces have defiantly escorted the tankers into its territorial waters. Meanwhile, the accusations of Iranian and Venezuelan authorities that a U.S. flotilla, which includes destroyers and surveillance aircraft, now patrolling Caribbean waters are there to stop the tankers ring hollow. The naval force has in fact been in the region since early April on anti-narcotics operations, mostly aimed at Venezuela’s flourishing drug traffic. The country has been labelled a Narco-State, with high ranking military officers and civilian officials accused by the DEA of running elaborate drug cartels.

U.S. options

The cards, for the time being, are on the U.S. side. How it responds will determine if the U.S. and Iran clash in the Caribbean, an eventuality that could have more severe repercussions in the Middle East, where both foes have on several occasions been on the brink of war. The sanctions and oil embargoes per se are controversial, as they have been detrimental to the populations of both countries. They are unilaterally imposed by the U.S., with limited international support, and in any case the sanctions contain no provisions for the boarding and searching of ships. There are also no UN resolutions prohibiting trade between Iran and Venezuela, so any exchange is not in breach of international law.

Thus, if the U.S. decides to board the remaining ships it could create controversy, including a degree of international condemnation. The tankers are carrying desperately needed fuel — strict rationing means that Venezuelans have to queue up for days just to buy 30 litres of petrol.  All five tankers are flying the Iranian flag and belong to state-owned or state-linked companies, since they can no longer carry foreign flags of convenience from other countries, as is customary in merchant shipping. Since mid-2019, these so-called flag states began de-listing Iranian vessels due to the U.S. pressure

There are thus few options available for the U.S. The U.S.-backed interim Venezuelan government of Juan Guaidó — recognized by some 60 democracies around the world as the legitimate government — has not formally requested Washington to detain the vessels when they enter its territorial waters. And its claims that the tankers could be transporting equipment to construct a listening post with which to eavesdrop on communications in the Caribbean have not been substantiated as of yet. (It is more likely they are also carrying equipment and parts to try and reactivate Venezuela’s paralyzed refineries.) Among the few other courses of action for the U.S. would be if the tankers ferry a detachment of Islamic Revolutionary Guards Corps (IRGC) as a deterrent force, as they have been labelled a terrorist organization by the State Department. In that case, the U.S. could interpret their presence as an act of defiance and decide to board the remaining ships. 

The best scenario would be for the U.S. to waive the tankers through without any incident. That eventuality should bear in mind that in the confrontational mindset of both rogue regimes, it could be considered a victory and thus flaunted. Such triumphalism, in turn, could very well provoke a change of opinion and an aggressive response from the unpredictable and impulsive U.S. president — the vessels, after all, have to return home, with the presumptive IRGC on board. 

A U.S.-Iran détente in the Middle East?

The lack of a confrontation in the Caribbean will almost certainly not go unnoticed in the larger geopolitical bilateral rivalry centred in the Middle East. For, despite the animosity between Iran and the U.S., both parties have in recent months been willing to reduce tensions in the region. The tit for tat exchanges throughout 2019 and early 2020 that have on several occasions almost led to a full-scale confrontation — one that would further destabilize an already volatile region and disrupt international oil markets — have discreetly been replaced by the willingness to cooperate. Largely undetected and undeclared, have been Iranian gestures at détente, gestures that have been quietly reciprocated by the U.S. Teheran, for example, supported the nomination of U.S.-backed Iraqi Prime Minister Mustafa al-Khadimi last May, and mostly called off attacks on U.S. military forces in Iraq by its proxy militias, as well as on oil tankers and merchant ships in the Persian Gulf. Moreover, Iran does not want Iraq, a critical neighbour with which it shares a long history, to further destabilize. The U.S., for its part, has prolonged to four months a sanctions waiver allowing Iraq to buy gas and electricity from Iran. The waivers provide the cash-strapped country with desperately needed revenues.     

Despite the bravado concerning its oil tankers in the Caribbean, Teheran will take note if all its tankers sail through the Caribbean unscathed. Further discreet gestures of détente could follow, both in Iraq and the wider Middle East. But a rapprochement between Teheran and Washington does not seem likely, not under a Republican administration. The Iranian volte-face does not appear to be strategic but rather tactical. A confrontation with the U.S. at this time would likely strengthen Trump’s re-election aspirations. For Teheran, there’s a better chance of renegotiating a more stable and long-lasting détente with a Democratic administration. Plus, as the UN Security Council votes in October on whether to extend an international arms embargo against the country, Iran probably does not want to antagonize its members. Teheran’s revolutionary fervour is tempered by pragmatism.

Iran and Venezuela’s bromance

The shipments of Iranian fuel to Venezuela have led to conjecture they could lead to a renewed Iranian interest in Latin America. Teheran, in fact, has had both a formal diplomatic and a shadowy clandestine presence in Latin America since the advent of the Islamic Revolution in 1979. But, just as in the Middle East, that presence was spearheaded by Iranian-aligned Lebanese and Syrian Shiite communities in the region, and most noticeably by Hezbollah, the powerful Lebanese political party and militia that is Iran’s most loyal proxy force. 

That early foothold grew exponentially in the early part of this century with the personal affinity between Venezuelan military strongman Hugo Chavez and the populist messianic Iranian president Ahmed Ahmadinejad. Closer bilateral ties ensued, some of it seemingly legitimate and innocuous, some of it suspicious and illicit. A bilateral development bank was created to finance numerous industrial, agricultural and mining ventures. In rapid succession, Iran acquired a tractor factory, a cement plant and a car assembly plant to produce Iranian (sic) cars. There were ambitious promises to build housing for the poor. There were joint ventures to explore oil and build a petrochemical plant. But some of these commercial and banking projects have been used as cover to pursue shadowy operations. An explosives factory was agreed to be built; the “tractor” plant ended up producing weapons instead. And a gold mine Iran bought just also happens to produce uranium

Moreover, the establishment of regular “commercial” flights between Caracas and Teheran, with a stopover at a Syrian military airport, became a source of concern as there are no official records of passengers nor cargo, and no formal immigration or customs controls. The flights, dubbed “aeroterror”, are believed to carry weapons, drugs and cash and, on the corporeal side, Hezbollah and Iranian operatives. Particularly worrisome has been the military cooperation, notably an agreement between a Venezuelan state military contractor and an Iranian chemical company to produce key components for the production of solid rocket fuel

Iran has also been complicit in Hezbollah’s even more furtive activities in Venezuela, including money laundering, drug trafficking, smuggling and the supply of arms. There have also been accusations that, following a secretive meeting between then Foreign Minister Nicolás Maduro and Hezbollah leader Hassan Nasrallah, the Shiite militia was able to place active cells in the country and, alongside Cuba, has helped train Venezuelan security and intelligence officers. The existence of local sympathetic Levantine communities has helped these operatives to blend in. Meanwhile, high ranking Venezuelan officials of Lebanese descent have been denounced for facilitating passports.

Venezuela also used its then considerable regional sway to facilitate diplomatic relations between Iran and leftist anti-U.S. regimes in Bolivia, Ecuador and Nicaragua. But Iranian promises of extensive mining operations and the construction of ports and petrochemical and industrial plants have gone unfulfilled — a testimony more to the grandiose political nature of the agreements rather than any real capacity to implement them. In any case, ties with Bolivia and Ecuador have soured as both these countries have left the Venezuelan revolutionary orbit and transitioned towards more moderate governance. Iran’s accession to an alliance of likeminded Latin American countries — with Venezuela as a gateway — has largely floundered. 

A mismatched alliance 

Beyond the fact that Iran and Venezuela share an animosity towards the U.S. and are considered rogue regimes within the international liberal community, both have little in common. There are no historical links nor cultural or religious affinities. Their political and economic systems differ. Their common ideology is mostly anti-Americanism. They are, in fact, rather odd bedfellows, more an illegal affair of convenience than a marriage of convenience. 

Iran’s hybrid regime — it is both a theocracy and a republic — was born out of internal and regional strife. Notwithstanding stringent decades-long international economic and arms sanctions, and now more severe U.S. sanctions and an oil embargo, Iran has been able to forge a sphere of influence in its vicinity, showing nimbleness in developing low cost and high impact strategies. Its search for strategic depth has been spearheaded not by traditional military power but rather by the IRGC’s diligent training and financing of local Shiite militias. Iran has been able to build both an endogenous military-industrial complex impressive in scope — though subpar in quality — and an extensive refining industry that mostly makes its own equipment and produces motor fuel. But the success of its forward-defense policy has created a broad alignment of countries bent on neutralizing its scope. Furthermore, the U.S. sanctions have crippled the economy and the Covid-19 pandemic has ravaged the population. At this juncture, the Iranian regime seems to have realized that it has overextended itself in the Middle East, and is in the process of a discreet retrenchment, albeit probably a temporary one.  

Meanwhile, Venezuela has imploded due to the regime’s ineptitude. The economy has contracted more than 60 percent in just a few years. Industrial production has crumbled and poverty has skyrocketed. Venezuela is today beset by constant power outages, food shortages and water cuts. Once a major OPEC oil producer with the largest proven oil reserves in the world, production has plummeted to barely 600,000 bpd, not because of onerous U.S. sanctions, as the Maduro regime argues, but mostly because of the sustained politicization of the once mighty national oil company, PDVSA, as well as overall gross incompetence and corruption. Venezuela used to be a major exporter of fuel to the region; today its refineries are all shut due to years of neglect and mismanagement. Even its closest major power allies, China and Russia, have grown cautious. Russia’s energy giant Rosneft recently sold its Venezuelan assets, presumably to avoid U.S. sanctions, but also because of the plunge in oil prices. The departure has worsened Venezuela’s plight, as Rosneft was responsible for importing most of the country’s petrol in exchange for producing and exporting 60 percent of its oil

A rather innocuous affair

There are, of course, shady aspects to the oil tanker deal. Reports indicate that the fuel, as well as previous cargoes of chemical products to help jumpstart Venezuela’s refineries, have been paid by the surreptitious transfer of nine tons of Venezuelan gold bars from the Central Bank, a charge Caracas and Teheran vehemently deny. 

Still, compared to both countries’ history of clandestine activities, the shipment of fuel seems a rather innocuous affair. While Caracas desperately needs the fuel to assuage an angry population and lubricate its economy, Iran desperately needs revenues and foreign clients for its sluggish energy exports. And even if the tankers are, indeed, also transporting equipment to reactivate Venezuela’s collapsed refineries, it is dubious whether Iranian technicians can do so given the differences in refining technologies and quality of oil — Iran’s is light and of the highest quality, whereas Venezuela’s heavy crude is difficult to refine. It is more likely the exchange is a bilateral survival manoeuvre rather than an ideological revitalization of relations. If Iran is retrenching in the Middle East — its vital strategic sphere of influence — it is highly unlikely it intends to expand halfway across the world. Moreover, Venezuela is a chaotic ally that has fallen into disrepute.

Even if the remaining vessels do go through, the Trump administration will probably not allow a repeat. It would contradict the stringent intentions of the sanctions and embargoes on both countries. It is one thing to let Iran sell energy to Iraq, a vital ally beset by political and economic instability; it is another to let it systematically sell fuel to a hostile country close to home. Teheran has cunningly used Venezuela to circumvent sanctions. This apparent first Iranian shipment of fuel to Latin America will likely not be repeated.

The views and opinions expressed in this article are those of the author.