According to a recent article in a Brazilian news magazine (ISTOE), Brazil and Iran are seeking to deepen financial cooperation and trade ties, including in ways that could mask Iran's involvement and help it circumvent sanctions. The final agreement, drafted in late March, was supposed to have been signed in May, according to ISTOE, during a visit to Brazil by Iranian President Mahmoud Ahmadinejad that was ultimately postponed.

The draft agreement was signed by Rodrigo de Azeredo Santos, head of the Trade Promotion Programs Division in Brazil's Ministry of External Relations and Kourosh Parvizian, managing director of the Export Development Bank of Iran (EDBI). Also present during negotiations was Rahim Faramarzi, executive president of Banco Internacional de Desarrollo C.A. Both EDBI and Banco Internacional de Desarrollo C.A. were black listed by the U.S. government on October 22, 2008 because of links to proliferation-related activities.

Specifically, according to the U.S. Department of the Treasury, EDBI provides financial support to Iran's Ministry of Defense Armed Forces Logistics (MODAFL), an arm of Iran's defense ministry black listed by the United States and by the European Union because of involvement in nuclear and missile work. EDBI has also facilitated, financially, missile procurement by Iranian front companies and has handled payments related to the procurement of WMD technology for Iran's Bank Sepah, after this bank was sanctioned by the United Nations. So, EDBI has a history of helping Iran evade sanctions, including those imposed by the United Nations.

The draft agreement aims to facilitate economic cooperation between Iran and Brazil by creating financial mechanisms for re-exporting goods and establishing and using joint companies. These are all well known ways in which Iran could get around sanctions, particularly as sanctions are increasingly targeting Iran's banking sector. Further, Iran's banking sector has been criticized by the Financial Action Task Force, an intergovernmental group that works to prevent criminals from exploiting the global financial system, because of Iran's deficiencies in combating money-laundering and terrorism financing.

One is left wondering why the government of Brazil has decided to enter into an agreement with an Iranian entity linked to proliferation financing and sanctions evasion.

Related links:

• The Brazilian news story from ISTOE [translated]
• More about EDBI from Iran Watch
• The full text of the draft agreement between Iran and Brazil
• U.S. Department of the Treasury press release on EDBI sanctions