I have touched on the topic before, but from spending time on the ground in the region in recent months it is clear that Iran is making significant inroads into the Latin America financial services sector and other areas.
In Ecuador, as I have noted before, Iran has set up a way for its central bank to deposit money directly into the Ecuadoran central bank. The stated purpose is to allow $120 million in credit to flow to importers and exporters in both countries to facilitate trade.
The only catch is that there is virtually no trade between the countries. In recent years (2006 and 2007, the latest available) Ecuador reported zero exports to Iran and imports of less than $500,000 each year.
Like the Iranian financial institutions in Venezuela, the economics of the case simply make no sense.
According to the "Protocol of Cooperation" between the Central Bank of Ecuador and the Export Development Bank of Iran (EDBI), which is under Treasury Department sanctions for supporting Hezbollah and the Quds Force, Iran was also willing to take an unusual step.
Point 6 of the agreement, which I have, states that:
EDBI manifests its readiness to establish a branch of Banco Internacional de Desarrollo (BID) in the Republic of Ecuador.
This is interesting because the BID is reportedly a Venezuelan bank, which the EDBI would have no over, including where it opened branches. But as I wrote earlier, the BID is wholly owned (all 40,000 shares) by Bank Saderat, an Iranian bank under U.S. and UN sanction.
It is registered a a wholly-owned Venezuelan bank in order to allow sanctioned Iranian organizations to bank through there as pass through to the global financial market. The Ecuadoran document shows clearly that BID is in fact an Iranian bank, and that Hugo Chávez's denials of that were (shock and dismay) a lie.
According to the OFAC sanction of Bank Saderat:
Bank Saderat has been a significant facilitator of Hizballah's financial activities and has served as a conduit between the Government of Iran and Hizballah, Hamas, the Popular Front for the Liberation of Palestine-General Command, and the Palestinian Islamic Jihad.
The BID is not know to be operational yet in Ecuador. But Iran is attempting to gain access to the Bolivian banking system as well. In all likelihood, given the decades-long relationship between the Iranian revolution and Daniel Ortega in Nicaragua, including banking activities in the past, it has financial operations in Nicaragua.
All this points to a concerted effort to maintain a financial structure in Latin America that will allow Iran to withstand, and withstand with some ease, any future financial sanctions by the United Nations, the EU or the US.
Manhattan District Attorney Robert Morgenthau has been sounding the alarm on Iran's efforts, and said his office has several open investigations into Iranian banks and front companies operating in Latin America. Ecuador is just the latest link in a long chain of events that make braking Iran's nuclear ambitions even harder.
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Douglas Farah is the president of IBI Consultants and a Senior Fellow at the International Assessment and Strategy Center. He is a national security consultant and analyst. In 2004 he worked for nine months with the Consortium for the Study of Intelligence, studying armed groups and intelligence reform. For the two decades before that, he was a foreign correspondent and investigative reporter for the Washington Post and other publications, covering Latin America and West Africa.
