In Other News: Venezuela Receives Iranian Fuel, Armenian-Azerbaijani Tensions Escalate & More – October 2, 2020

October 2, 2020

Venezuela is receiving fuel from Iran as it deals with growing social unrest due to gas and food shortages. Three Iranian tankers carrying approximately 815,000 barrels of fuel arrived this week in Venezuela to help the country deal with the acute gasoline shortage in recent weeks. Press reports out of Venezuela indicate that gas station closures have been met with street protests by average Venezuelans frustrated by the fuel shortages. The fuel crisis is hitting the country hard and choking off economic activity, including the distribution of food, medicine, and basic supplies. Reportedly, Venezuelan President Nicolás Maduro has paid Iran for the fuel in gold blocks which were flown to Tehran so as to avert seizure by U.S. authorities. Enforcing U.S. sanctions on Iran and Venezuela, U.S. authorities seized approximately 1.1 million barrels of Iranian gasoline headed for Venezuela in August. This week’s shipment of Iranian fuel to Venezuela will be the second flotilla to arrive without seizure since May. Still, the gold-for-fuel trade between Venezuela and Iran will not solve Venezuela’s oil sector crisis. Venezuela’s oil refineries have largely halted operations due to the lack of investment and maintenance as well as U.S. sanctions on the sector imposed in early 2019. Reportedly, the Cardon refinery is the only one that is currently operational, producing about 20,000 barrels a day. Once Venezuela runs through what amounts to a short-term, emergency fuel injection from Iran, it is likely that the gas lines and social unrest will return.

Armenia has accused Turkey of shooting down one of its jets amid the most recent escalation of a long-simmering Armenian-Azerbaijani conflict over Nagorno-Karabakh, a patch of disputed territory sandwiched between the two. While limited outbreaks of violence have been a feature of Caucasus geopolitics for decades, the most recent flare-up, which began on Sunday and has already killed dozens, has reached a scale not seen since a cease-fire brokered by Russia in 1994. Armenia also claims that Turkey has deployed Syrian mercenaries to the conflict on Azerbaijan’s behalf. Turkey has denied Armenia’s allegations, which have not been independently confirmed. However, after decades of limiting its involvement in the conflict to rhetoric, Turkey recently conducted military exercises with Azerbaijan in July and earlier this week called on Armenia to end its occupation of Nagorno-Karabakh. Furthermore, its amped-up support of Azerbaijan comes amid a pattern of expanding Turkish engagement in conflicts in countries that were once part of the Ottoman Empire, either via proxy (such as deploying Syrian mercenaries in Libya) or directly (like its incursions into Iraq and Syria to target suspected PKK positions). Another concerning facet of this engagement is Turkey, though its involvement in civil wars in Libya and Syria, has positioned itself in opposition to Russia, with the two powers supporting opposing sides in the conflicts. Russia maintains influence in both Azerbaijan and Armenia, arms both sides, and is unlikely to look favorably on Turkish intervention in former Soviet republics. Looking beyond the risk of Turkey crossing a red line in Russia’s backyard, Turkish adventurism in its former empire – an empire that overlaps with areas that also once fell under Soviet control – could help turn contained, localized conflicts into larger regional power struggles. As Turkey continues to expand its military presence abroad, it is unclear what the limits are to its leaders’ ambitions.

Indian announcements on defense purchases and additional deployments to the Himalayas are spurring speculation that it may be preparing for the possibility – even if remote – of an armed conflict with China at the two countries’ contested border. India released details of arms procurement plans this week that include 72,000 assault rifles from Sig Sauer – reported to be for troops at the Chinese and Pakistani borders – and anti-airfield weaponry. Meanwhile, Indian news outlets reported the deployment of more Russian-made tanks and combat vehicles to eastern Ladakh, the location of the Line of Actual control, the de facto border between India and China. Separately, India has announced policy changes designed to accelerate both the purchase and domestic manufacture of arms and other military equipment. In a bid to reduce red tape in defense procurement, India will no longer require foreign suppliers of weapons, aircraft, and other military hardware to invest in India, and also scrapped a mandate that the Indian military buy – rather than lease – foreign military equipment. Delhi has also set new production targets for domestic defense manufacturing that envisage doubling production and increasing defense exports four-fold by 2025. The military buildup has both security and economic components. Increasing domestic defense production can both boost economic activity and reduce spending on imports (India was the world’s second-largest arms importer in 2015-2019 after Saudi Arabia). However, as tensions continue to build at the Actual Line of Control with neither side showing signs of backing down, India, whose military is no match for China’s, may also be preparing for the worst. That said, we reiterate that neither side wants a full-blown outbreak of violence.