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How Argentina and Brazil Help Iran

11:10 AM, Nov 1, 2012 • By JAIME DAREMBLUM
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Based on last week’s debate, both President Obama and Governor Romney believe that squeezing the Iranians economically is the best way—and perhaps the only way—to end their nuclear-weapons program without resorting to a military strike. Of course, nobody knows if sanctions will actually work. But if the United States is truly serious about crushing Iran’s economy, it must pursue a more aggressive strategy, and it must put more pressure on Iranian trading partners.

Iran

That raises uncomfortable questions for the major importers of Iranian oil, such as China, India, Japan, and South Korea, but also for countries that have benefited from a recent surge in exports to the Islamic Republic, such as Argentina and Brazil.

Last year, Argentina and Brazil were responsible for close to 96 percent of all Latin American trade with Iran, thanks to approximately $1.2 billion worth of Argentine exports and $2.6 billion worth of Brazilian exports. (Both countries witnessed a significant decline in their imports from Iran.) Indeed, despite international efforts to sanction and isolate the Middle Eastern country, Brazil sent more exports to Iran in 2011 than it did in “the previous four years combined,” according to a new analysis by the online publication Latinvex. All told, Brazilian exports to Iran increased by over 326 percent, compared with 2010, while Argentine exports to Iran grew by about 937 percent.

More recently, in the third quarter of 2012, Argentina and Brazil accounted for roughly 93 percent of all Iranian soy-oil imports, according to estimates from the German consultancy Oil World. Most of that soy oil came from Argentina, which supplied 129,000 of the 202,000 tons that Iran imported. Brazil contributed 59,000 tons, and Paraguay contributed another 14,000.

To be sure, Argentina and Brazil are not even close to being Iran’s largest trading partners, and their imports from the Islamic Republic are now miniscule, making each trade relationship massively imbalanced. But if our goal is to suffocate Iran’s economy—and to do it quickly—then the rapid growth of Argentine and Brazilian exports to Iran is a matter of some concern.

While the Iranian economy is experiencing tremendous pain from global sanctions, it has not yet reached the point of collapse. As Reuel Marc Gerecht and Mark Dubowitz wrote last week in the Wall Street Journal, “Iran’s economy has been allowed to remain healthy enough to leave a vanishingly short time for sanctions to do the work that would head off military action.” In a study released on October 15, Congressional Research Service analyst Kenneth Katzman noted that “International Atomic Energy Agency (IAEA) reports have consistently said that Iran’s stockpile of low-enriched uranium—and its capacity to enrich uranium—continues to expand, as do its holdings of 20% enriched uranium.” 

In other words, if sanctions are going succeed, they must be tightened even more—and soon. President Obama likes to boast that America has embraced “crippling” sanctions, but they obviously haven’t been crippling enough, for Tehran’s nuclear program is still moving forward at a dangerously fast pace. The United States must remain vigilant about closing loopholes in its existing sanctions; it must implement new sanctions; and it must pressure other countries to reduce their Iranian trade.

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