An alleged plot by Iran to hire a hit man from a Mexican cartel shed light on Iran's growing presence in Latin America and the difficulties that poses for Washington.

Long before October, when two officers from an elite Iranian military branch, the Quds Force, were indicted for allegedly plotting to assassinate the Saudi Arabian ambassador to the US in a Washington restaurant, Iran has been building a higher profile in the region.

Tehran has cultivated close ties with several leaders who share Iran's anti-American sentiment, including Venezuela's Hugo Chávez and Bolivia's Evo Morales, both of whom have called Iran a "strategic ally." Iranian president Mahmoud Ahmadinejad has visited Venezuela four times and Bolivia three times, as well as President Daniel Ortega of Nicaragua and Luiz Inácio Lula da Silva, the former Brazilian leader.

In Venezuela, Iran says it has signed 70 joint venture deals valued at up to $17 billion in industries like energy, construction and fisheries, and including a factory to assemble cars and tractors under the brand name "Veniran."

Iran has an additional $1 billion in joint-venture deals with Bolivia, and last month, an Iranian parliamentary delegation visited there to advance health and development projects for $280 million. Many of the bigger projects in Venezuela and Bolivia have yet to get off the drawing board. To date, Iran's total investment in Bolivia is less than $10 million, according to Bolivian government sources.

But there are signs of growing military and intelligence cooperation. Iran has almost doubled its number of diplomatic missions in Latin America to 11 in recent years by opening up embassies in Bolivia, Chile, Colombia, Nicaragua and Uruguay, the US State Department said. It also sold drones and other military equipment to Venezuela, according to the Venezuelan Congress.

Obama administration officials and US diplomats say Iran is not a serious rival to US influence in the hemisphere but that the White House is closely watching Tehran for signs it wants to use Latin America as a staging ground for terror attacks. "Our main concern [about Iran in the hemisphere] is terrorist support," a senior diplomatic official said.

US officials say they were sufficiently concerned about Iranian terror links to South America that they briefed Argentine officials in May about the alleged Iranian plot to kill the Saudi ambassador, for fear the Iranians might carry out similar attacks against US, Saudi or Israeli interests in Argentina and other Latin American nations.

Caution should be exercised in how relations are developed with Iran and in knowing what the Iranians are seeking.

- Former U.S. defense secretary Robert Gates

Former defense secretary Robert Gates told a meeting of Latin American defense chiefs in October 2010, "Caution should be exercised in how relations are developed with Iran and in knowing what the Iranians are seeking."

A Pentagon report last year warned about an expanded presence of Al Quds in Latin America. A declassified Pentagon analysis on Iran's military power released to the US Congress in April 2010 says the Quds Force is "well established in the Middle East and North Africa and in recent years have witnessed an increased presence in Latin America, particularly Venezuela."

Read more from the Wall Street Journal.

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