U.S. Influence Continues to Wane in South America

Iran is stepping out. Unafraid of Western Powers, Iran is strengthening ties with South America to shore up trading partners and secure vital natural resources.

Iranian President Ebrahim Raisi recently enjoyed a tour of Venezuela, Nicaragua, and Cuba – the first visit by an Iranian president to the region in over seven years. Our followers know all about the history of Nicaragua and its President, Daniel Ortega. If you missed it, check out our podcast Volcanoes, Gold, Corruption, and Greed to learn why the U.S. has targeted Nicaragua for over 100 years.

Global Free-For-All Errups to Secure Natural Resources

As the war rages in Eastern Europe and global bifurcation accelerates, nations like Iran and China are becoming emboldened. U.S. weakness is on full display, and new alliances are forming. In Zafar Mehdi’s Iran in America’s Backyard: Raisi’s defiant Latin America tour article, he espouses Iran’s top motives:

“Speaking to reporters in Tehran upon his return from the five-day trip, Raisi described Latin America as a “strategic region” with an abundance of natural resources and educated people who he said have bravely resisted “arrogant powers” and the “unjust world order” for years.”

Tehran’s trip abroad emboldens not only Iran but the countries it visits. Investors should expect more strategic deals between countries in South America, China, and Russia over the coming years. China has already become South America’s most important export market. According to FDI Intelligence’s China’s growing footprint in Latin America, by Sophie Wintgens,

“Latin America’s bilateral trade in goods with China grew dramatically in this period, from $14.6bn in 2001 to $315bn in 2020 — a 21.5-fold increase since Beijing joined the World Trade Organization.

During the same period, trade in goods between the U.S. and Latin America almost doubled from $364.3bn to $758.2bn, as trade in goods between E.U. countries and Latin America doubled from $98bn to $197.4bn.

This increase has allowed China to become the most crucial export market for South America and the second-largest trading partner (in goods) for Latin America as a whole, after the U.S., far ahead of the E.U.”

As China Becomes Dominant Player in South America, Allies Step In

These are tectonic shifts in the global trading landscape. Our readers may recall that China surpassed the U.S. as Africa’s largest trading partner in 2022, at over $200 billion annually. China’s influence in these regions cannot be overstated. And this influence is giving Chinese allies like Russia and Iran a pass to come and go as they please. To ink deals with whomever they please. Remember that China has dramatically strengthened its economic ties with Iran over the past decade. While Latin America was commonly referred to as ‘America’s backyard,’ that is clearly changing.

Furthermore, the Iran in America’s Backyard: Raisi’s defiant Latin America tour article continues,

“Speaking to reporters in Tehran upon his return from the five-day trip, Raisi described Latin America as a “strategic region” with an abundance of natural resources and educated people who he said have bravely resisted “arrogant powers” and the “unjust world order” for years. He also signed 35 cooperation agreements and memoranda of understanding between Iran and the three Latin American countries in the fields of energy, industry, mining, and others.”

Like every other country, Iran is attempting to secure natural resources to secure its vital supply chains. Despite almost all commodities being down year-over-year, governments know that raw materials hold the key to real growth. If the pandemic taught us anything, it is that domestic supply chains are king. That’s why the U.S. is building its own microprocessing plants and why lithium miners are scrambling to bring on production facilities across Canada. Finally, as the U.S. looks inward to attempt to solve its many domestic problems, nations like Iran and China will continue to expand their influence abroad. Securing strategic assets will be even more competitive as new players enter the South American landscape.