The Secret Agreement between Iran and Brazil

Foreign Ministry helps Ahmadinejad circumvent sanctions imposed by the United States and the U.N. Security Council
July 1, 2009


Claudio Dantas Sequeira



Note: The English language translation of this article was generated using Google Translate.

On April 2 in London, while President Luiz InÁcio Lula da Silva was shaking Barack Obama's hand, promising the IMF $10 billion and hearing people say that "he is the man," under the spotlight of international media, diplomats in Brasilia were negotiating a way to help the government of Mahmoud Ahmadinejad circumvent U.S. sanctions against the Iranian regime. The broad outline of an agreement between Brazil and Iran, which would have been signed during a visit by Ahmadinejad in May that has since been postponed, were laid out at a meeting on March 25 at the Foreign Ministry. IstoE received the minutes of the meeting at which the Chancellor Celso Amorim and his Iranian counterpart Manoucherch Mottaki, accompanied by aides, were playing a scene capable of undermining the relationship between Brazil and the United States. Disregarding U.S. sanctions and warnings from the UN Security Council against transactions with Iranian financial institutions, Mottaki and Amorim signed the terms of extensive cooperation between the Brazilian and Iranian banking systems. Something that raised the hairs on ex-Foreign Minister Luiz Felipe Lampreia's head: "You can't just ignore a UNSC recommendation. This negotiation with Iran is like fishing in troubled waters."

The Foreign Ministry, however, does not care. And in its current emphasis on good relations with the Arab world, it opened negotiations with the Export Development Bank of Iran (EDBI), which was put on the U.S. "black list" by the U.S. Treasury Department in late 2008, alongside its subsidiaries, a brokerage EDBI Stock Brokerage Company, the company exchange EDBI Exchange Company, based in Tehran, and Banco Internacional de Desarollo, based in Caracas, Venezuela. In addition to a freeze on the assets of these companies in U.S. territory, the sanctions prohibit U.S. citizens from negotiating with them. They do not, therefore, apply to Brazilians. But, according to diplomats and experts questioned by ISTOE, by breaching the barrier, Brazil is placing US foreign policy at risk.

Amorim has openly defended impartiality and pragmatism in international relations. But the fact that the Foreign Ministry has maintained silence about negotiations with Iran does not match the history of Brazilian diplomacy, which often trumpet any agreement or deal with other countries.

"This gesture will now raise many suspicions. Why Brazil is doing this?" Asks the Iranian analyst Meir Javedanfar, author of a book on the Ahmadinejad government and an expert on the nuclear program of his country. Javedanfar foresees more tension in the relationship between Israel and the Lula government, which protested against Ahmadinejad's planned visit, and also clashes with the U.S. State Department. For ex-chanceler Lampreia, Brazilian diplomacy is in danger. "Now that it has became public, the agreement will certainly make trouble," he says. Especially when American diplomatic and economic authorities know the content of the measures negotiated between the Foreign Ministry and EBDI. The agreement provides financial mechanisms to facilitate the export and import of goods and services, including re-operations to third countries (which allows Iran to escape the ban by triangulating trade), the creation of joint ventures, the opening of Iranian banks in Brazil and the signing of an agreement between the central banks to exchange information on the financial system.

In the bilateral document, the authorities also cite "the need to seek ways to overcome the main obstacles" that hinder business between the two countries. In practice, this means helping Tehran to obtain credit and bank guarantees for investment, which are in short supply in Europe and America due to the imposition of sanctions. In the eyes of the intelligence services, for example, initiatives for cooperation are but a trick to help Iran to evade sanctions and progress in its nuclear program.

If this assessment seems paranoid, given that it has been repeatedly rejected by Tehran, the fact is that dealing with a development bank that is on the US blacklist is not the best way to pave the way for the spices of the East. "This is a mistaken gesture of President Lula. There are several ways to establish partnerships to intensify bilateral trade," says Javedanfar. One example has been made by China, which sold $10 billion to Iran between 2007 and 2008. It was followed closely by Germany ($ 7 billion) and UAE (U.S. $ 6.6 billion). In the same period, Brazil has $ 2.2 billion. The volume of trade of these countries proves that there are less explosive ways to stimulate exports.

"The problem is not economic but political," warns the Brazilian GhelfiRaza Salvador, professor of the Center for Hemispheric Defense Studies, an academic arm of the Pentagon.

"Having the right to make a deal does not mean it is legitimate to do so. It is clear that the Lula government has made an ideological choice," said Raza. He points out that the Export Development Bank of Iran has financed several projects in Cuba, El Salvador, Ecuador, Bolivia and even set up a partnership with Venezuela, the Banco Internacional de Desarollo, with headquarters in Caracas. Recently, Presidents Mahmoud Ahmadinejad and Hugo Chávez announced the investment of U.S. $ 200 million for joint economic, industrial and mining projects. But the goal for joint capital is set at $ 1.2 billion.

"Negotiating with Ahmadinejad is the same as negotiating with Adolf Hitler. He preaches the end of Israel and the extermination of the Jews," according to Israeli analyst Raphael Israeli, a professor at Hebrew University in Jerusalem. "I do not think Iran is a bogeyman, but I think the structure it advocates the end of the State of Israel and the extermination of the Jews," says Israeli analyst Raphael Israeli. Israeli believes that the trade route opened by the Lula administration comes at a high cost, "that of the route of human lives." Israeli is referring to the actions of repression against the demonstrators who were on the streets of Tehran for questioning the outcome of the election that maintained Ahmadinejad in power, which ended in the deaths of two dozen people. Raza says that Brazil is betraying its history by supporting an oppressive regime which is against democracy.

The head of the Foreign Ministry's Export Promotion Programs Division, Rodrigo de Azevedo, who signed the agreement with EBDI, refutes the criticism and says that Brazil will not abandon the sovereign right to negotiate with anyone else. The government, he says, is not concerned whether the agreement with Iran will affect relations with the United States. "Our view is commercial, not political. Moreover, there is a demand for Brazilian businessmen to negotiate with Iran," says Azevedo. The only concession that Brazil agrees to make, he says, is to abide by the UNSC resolutions regarding nuclear energy. The rest is trade.