Brazil at Diplomatic Impasse With Iran Over US Sanctions

Brazil is entangled in a diplomatic spat that could potentially damage a long-standing commercial relationship with Iran, which is the biggest buyer of Brazilian corn.

Seyed Ali Saqqayian, Iran’s ambassador to Brasilia, was quoted Wednesday in Iran’s semi-official Fars news agency saying that Tehran could reconsider imports from Brazil if it continues to refuse to refuel two Iranian vessels stranded there.

The ships have been waiting off the coast of the southern state of Parana since early June. Brazil’s state-run oil giant, Petrobras, has declined to supply fuel because it says the vessels are under U.S. sanctions and it would risk significant fines for doing so.

Brazilian President Jair Bolsonaro, who has sought closer ties with U.S. President Donald Trump, said he stood by the U.S.-backed sanctions on Iran.

“We’re aligned with their policy, so we do what we have to do,” Bolsonaro said over the weekend.

The consequences could be stiff if Brazil does not bow to pressure.

In addition to its imports of Brazilian corn, Iran is fifth largest buyer of beef and soybeans from the South American country. Brazil exported a total of $2.26 billion worth of commodities to Iran in 2018, according to official data.

A bilateral agreement between the countries also includes cooperation on matters such as energy, science and technology.

“Petrobras, which has shares in the U.S. market, doesn’t want to make any faux-pas,” said José Alfredo Graca Lima, a former consul-general of Brazil in New York and Los Angeles.

Eleva Quimica, the Brazilian company seeking to export Brazilian corn aboard the ships, contends that agricultural commodities are protected under a “humanitarian exception.”

The company recently sued Petrobras in Parana and won, but the issue is still being disputed in the courts.

Brazil’s ministry of foreign affairs said it was involved with the case, but did not provide further details.

An official, who spoke on condition of anonymity because they did not have permission to speak to the press, said Eleva Quimica had asked Brazil’s Supreme Court to force Petrobras to provide a list of other fuel providers that could help.