Iran Establishing a Base of Operations in Venezuela

This week, five tankers full of Iranian gasoline arrived in Venezuela to aid the struggling regime of President Nicolás Maduro. At an estimated worth of $45 million, the imports will provide about a month’s supply of gasoline under strict rationing. The street value of the gasoline will rise to about $450 million as Maduro’s henchmen securing the pumping stations will increase the prices at will.

The arrival of the shipments from Iran breaks two sets of United States sanctions. The Trump administration forbids any company from purchasing Iranian oil products, and it also bars any company from selling oil products to Venezuela. In this case, with two nations under sanctions trading with each other, there is next to nothing America can do to stop the shipments—outside a naval blockade.

Though Venezuela sits on the largest oil reserves on the planet, years of Communist rule and mismanagement have severely impacted its capacity to refine that oil into usable forms such as petrol or gasoline. The petrol shipments are an attempt to temporarily tide the regime over until Venezuelan refineries are fixed. Here too, Iran is helping.

Last month, over a dozen flights were made from Iran to Venezuela by Mahan Air, Iran’s national carrier that is currently sanctioned by the U.S. for transporting Iranian weapons and operatives abroad. The flights were transporting Iranian technicians and the necessary parts to bring Venezuelan refineries back online. The impact of Iran’s help was immediately felt as Venezuela’s refining capacity increased from 110,000 barrels per day to about 215,000 barrels per day in May.

According to information gained by Caracas Capital Markets, which monitors the energy sector in Venezuela, Maduro’s government appears to have paid for those spare parts with gold from its central bank. “We track central bank reserves every month,” Caracas Capital Markets partner Russ Dallen told the Washington Post. “They suddenly went down from April to May by $700 million.”

U.S. Special Representative for Venezuela Elliot Abrams confirmed the transaction, saying, “Those planes that are coming in from Iran that are bringing things for the oil industry are returning with payments for those things: gold.” All totaled, nine tons of gold, equal to about $500 million, were transported to Iran at the end of April on Mahan Air jets, stated U.S. officials.

In response to Iranian tankers steaming across the Atlantic, the U.S. deployed four warships as well as patrol aircraft to the Caribbean. Iranian Foreign Minister Javad Zarif responded to the U.S. movement by giving a “serious warning” to the United States through the Swiss ambassador in Tehran, not to interfere with the fuel shipment. On May 18, Iran’s Foreign Ministry spokesman, Abbas Mousavi, said that the U.S. “will have to suffer the repercussions that arise out of any unthinking measure it could take against the Iranian vessels.” The U.S. decided not to intervene and allowed the five tankers to pass through the Caribbean, arriving into Venezuelan waters by Friday.