The increasing economic sanctions on Iran may not have halted their nuclear weapons program but the effort has cut Iranian oil income by more than half, and this has forced some useful (to the rest of the world) side effects. Chief among these has been the lack of Iranian-supported terrorist activity in South America. This is all because Iran has less oil income to spend on foreign mischief. This has led to the less real threat from Iran down there over the last decade.
Oil accounts for 80 percent of Iranian exports (the source of foreign currency to buy foreign goods) and half the government budget. While these large income cuts have only shown up in the last year (as more severe sanctions were applied), for a decade now Iran has been bracing itself for this sort of thing. That meant reducing the money spent on overseas mischief. Thus Venezuela, which very openly allied itself with Iran over the last decade, never received the large investments Iran pledged to make, much less economic aid to help the struggling socialist government there overcome its problems with unemployment, inflation, and consumer goods shortages. Iran still maintains a large embassy in Venezuela and cooperates in things like intelligence and diplomatic support for its fellow enemy of the United States. But no money, and that has limited how much support Iran could give to local Islamic terrorism activities.
This failure of Iran to invest in Latin American terrorism was much appreciated in the Americas. After September 11, 2001, the U.S. identified an increasing number of individuals and groups in South America that were providing support (financial, media, recruiting) for Islamic terror groups. This was all made worse (from the American point of view) because South American governments often refuse to prosecute these individuals, at least not for terrorism. The terrorist supporters could be prosecuted for more common criminal behavior. But South American governments like to point out that there have been very few Islamic terror attacks in their territory. That was also true for many European countries, for a long time, for the same reason, an unofficial truce with Islamic terrorists. The deal is simple. In return for no attacks within a particular country, Islamic terrorists would be given asylum or otherwise allowed to set up shop as long as it was done quietly. Thus most South American countries don’t recognize the outlaw status of organizations considered international terrorists in most of the world. The local governments will prosecute someone who is a notorious (easily identified and “very convictable”) Islamic terrorist, which is why Osama bin Laden didn’t head for South America. But a lot of lesser known Islamic terrorism supporters are hard at work down there. The few times, in the last two decades, that this truce was violated the reaction was very costly to Islamic radicals, and countries like Iran, that sponsored them. This just reinforced the determination of the terrorists to observe the truce and not spoil a good thing. This was another reason why Iran felt okay with not spending a lot more money in South America. The prospects of a big payoff was not there.
For years the U.S. has been monitoring South America for signs of Islamic terrorism. Most of the action found was non-terrorist criminality. Moslem criminal gangs in the region have provided some support services for al Qaeda and Hezbollah (an Iran-backed Lebanese terrorist group), but otherwise there is not a lot of support for Islamic radicalism in South America. Moslems are a very small minority down there, and they don’t want to trigger an anti-Islamic attitude because of al Qaeda terrorism in the region.
It was long feared that a new base area for Islamic radicals was developing in Venezuela. There, leftist (and recently deceased) president Hugo Chavez not only established close diplomatic relations with Iran (and Cuba, North Korea, and radical groups throughout the region) over a decade ago but allowed Iran to set up terrorist operations in South America. Regular commercial flights from Iran to Venezuela (via Syria, to accommodate Hezbollah) carried people, cash, and whatever else Iran wanted to move. No questions asked, no visas required. But this link never had a lot of money invested in it.
Several U.S. counter-terrorism organizations have been monitoring what Iran is up to, and in the last few years indications have been that not much is happening. The U.S. has made some moves to make life difficult for Iran down there. For example, the U.S. Treasury Department's Office of Foreign Assets Control blocked attempts by Iran and Hezbollah to get around banking restrictions placed on their terrorist activities by opening bank branches in Venezuela. Hezbollah used its new base in Venezuela to support its fund raising, and purely criminal activities, in South America. Iran talked about supporting attacks against South American Jews, plus any other mischief it could pull off, without being blamed. That proved more expensive, and risky, than anticipated, and these plans were quietly dropped.
Hezbollah has long been involved in the drug business in South America. That gives these Iran backed Islamic terrorists access to the smuggling routes that Mexican gangs use to smuggle drugs and people into the United States. Hezbollah has long been involved in narcotics and people smuggling in South America's tri-border (Paraguay, Argentina, and Brazil) region. For over a century this area has been a hotbed of illicit activity, and too many politicians and police commanders are on the take from gangsters to change this.
Thus, South America, in theory, makes an excellent refuge and base for Islamic terrorists. Particularly worrisome was the cooperation between leftist rebel movements there and Islamic terrorist groups. But the leftist rebels in South America have been on the skids for over a decade and in no position to help terrorists. Islamic radicals are known to be working in the Arab-descended communities in many Latin American countries, aided by the porous frontiers, such as in the notorious "three borders" region where Paraguay, Brazil, and Argentina meet. The Islamic radicals have been able to raise some money from Latin American Arabs, often through bogus "charities." But the extent to which they have been able to recruit active supporters is harder to gauge and has apparently been unsuccessful. In some countries, such as Bolivia and Paraguay, recruiting efforts have been reported to the police, who took action. One factor hampering the Islamic radicals down there was that many of the Arab immigrants to Latin America were Christians, and those who were Moslems often became secularized in an environment where they found very few co-religionists.