Tag Team - Brazil and Iran for US

I hardly make comments on geopolitical matters. But I think it would be interesting to share a report by Stratfor on the relationship between Iran and Brazil and what it means for energy, trade, and US sanctions.

Brazilian President Luiz Lula Da Silva has been getting cozy with Iran of late. Da Silva came to Iran’s defense asserting that ‘peace in the world doesn’t mean isolating someone’. He also defended his decision to follow through with a scheduled visit to Iran on May 15 in spite of Iran’s continued flouting of international calls to curb uranium-enrichment activity. Now Lula is putting Brazil within firing range of one of Washington’s biggest foreign policy imperatives.

Tehran is more than happy to receive such positive attention from Brasilia. Brazil holds a non-permanent seat on the UN Security Council and UN sanctions against Iran require the support of at least 9 of the 15 member councils.

Despite the overabundance of mediators in the Middle East and Brazil’s glaring lack of leverage in the region, Lula remains fixated on the Iran portfolio. Within Brazil, many are puzzled and uncomfortable while countries like Russia and China are taking care to diplomatically distance themselves every time the regime flouts the West’s demand to show some level of cooperation on the enrichment issue.

So far, Washington and others find comfort in the fact that Brazil and Iran currently do not have much to boast beyond the diplomatic fanfare. Although Brazil is Iran’s largest trading partner in Latin America, the total annual trade between the two remains small at roughly $1.3 billion and since Brazil is already sulf-sufficient in oil, the country simply does not have a big appetite for Iranian energy exports.

Question now is that how far Lula go? Iran is facing escalating sanction pressure over its nuclear program and Brazil can be a good help in terms of banking and nuclear energy. One of many ways Iran has tried to circumvent this threat is by setting up money-laundering operations abroad to keep Iranian assets safe and trade flowing. When Ahmadinejad visited Brazil in May 2009, Iranian EDBI and Brazilian banking officials drafted a MOU that was on the surface a mere agreement to facilitate trade between the two countries but that could mean a lot of things, including the establishment of Iranian banks in Brazil to evade the US sanctions dragnet.

There is the ever-controversial nuclear issue. There is a report that Brazil’s Office of Institutional Security, which answers to the president, has begun consultations to establish what points can be included in a possible nuclear deal with Iran that could be signed during Lula visit to Iran in May. Brazil is reportedly working on a new uranium-refining technique called magnetic levitation, which is being developed by the navy at the Aramar lab in Sao Paulo.

There is a possibility that Brazil is not only working toward self-sufficiency in nuclear power, but also may be positioning itself to become a supplier of nuclear fuel for the global market.