Iran Expands Economic Ties with Venezuela Amid Challenges

TEHRAN (Iran News) Mehrpourian highlighted that Iranian private companies have struggled to make significant economic inroads in Venezuela. A key factor is the political landscape, where Venezuela’s private sector is often associated with the opposition. However, the Venezuelan government is working to alter this perception and encourage more private-sector engagement.

Despite the challenges, Iranian knowledge-based companies have significant potential in Venezuela. Opportunities exist in IT infrastructure, telecommunications, oil and petrochemicals, and refinery modernization. Additionally, Venezuelans have shown a strong interest in Iranian medical services, particularly in laboratory diagnostics.

Mehrpourian stated that agreements and memorandums of understanding have been signed, ensuring legal frameworks for collaboration. However, the real test lies in execution. Some Iranian private firms have begun independent marketing efforts in Venezuela, targeting exports in fiber optics, mining, and petrochemicals. Yet, financial returns remain modest due to Venezuela’s weak economy and low purchasing power.

Trade between Iran and Venezuela faces economic hurdles. Iran does not import Venezuelan goods, as the overall standard of living in Iran is higher. Venezuela mainly relies on raw material exports, such as coffee, cocoa, and timber, with Russia and the UAE being key buyers. While Venezuela once had substantial gold reserves, these have diminished. The remaining reserves are of lower purity, reducing their value. Due to liquidity issues, the Venezuelan government often pays foreign contractors in gold rather than cash.

Venezuela, with a population of approximately 29 million, has seen an exodus of its wealthy citizens, further weakening its economy. While the country is rich in untapped mineral resources, fertile agricultural land, and water resources, the local population lacks the infrastructure and inclination for large-scale production. Consequently, Iranian investors see potential in the country, but logistical challenges, including high trade costs due to geographical distance, hinder profitability. Proximity to the U.S. and Spain allows American and European products to dominate the Venezuelan market, reducing the competitiveness of Iranian goods.

Iranian investors have explored offshore farming in Venezuela and have secured land for agricultural production. However, implementation remains in the early stages due to inadequate water supply and infrastructure development. No significant agricultural output has yet been realized.

One of the most visible aspects of Iran-Venezuela trade relations is the presence of Iranian automobiles. Since the administration of former Iranian President Mahmoud Ahmadinejad, Iran Khodro and SAIPA have operated assembly plants in Venezuela. These companies continue to function on a CKD (Completely Knocked Down) basis, assembling Iranian car parts locally.

While economic engagement between the two nations is growing, structural and logistical challenges persist, limiting the full potential of trade expansion. Iranian businesses remain cautiously optimistic about future prospects, contingent on overcoming economic and infrastructural barriers.