In an effort to expand markets for Brazil’s industrial sector, President Rousseff has worked to strengthen Brazil’s economic relations with Iran, recently freed from economic sanctions. A Brazilian delegation has agreed to sell 50 Brazilian aircraft to Iran, along with Brazilian manufactured taxis, trucks, and buses to help rebuild the Iranian transportation sector damaged by economic sanctions. Rousseff will also personally visit Tehran in 2016 and welcome Iranian President Rouhani to Brazil in 2016 or 2017.
Exporting to Iran would bring in much-needed business to Embraer, the Brazilian aircraft manufacturer that competes with Canadian Bombardier for the title of third-largest airplane maker in the world. It will also counteract the decline felt by the Brazilian automobile industry over the past several years that caused Brazil to fall from its spot as the world’s seventh-largest automaker in 2013 to ninth-largest in 2015. In return, Brazil looks to import Iranian oil, biotechnology, and nanotechnology.
The agreement marks the culmination of negotiations begun in October, when the Brazilian Foreign Minister visited Tehran, and it continues the strong ties the two nations have shared since 2009. In that year, Brazilian President Lula da Silva and Iranian President Mahmoud Ahmadinejad conducted state visits and coordinated trade, increasing bilateral exchange dramatically from just $500 million in 2002 to $2.18 billion in 2012. UN-mandated sanctions in response to Iran’s nuclear program, however, cut trade to $1.44 billion in 2014. Several other nations have reached out to the newly opened Iran, including China, whose President Xi paid a visit to Tehran in January.
The growth in trade comes at an opportune moment, after Standard & Poor’s downgraded Brazil’s credit rating from BB+ to BB in February in addition to the expectation that Brazil’s economy will contract by 3% over the coming year.