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Any impact of Iranian sanctions on SA?

  • StevenGruzdWin
The Unites States is set to impose sanctions on countries importing oil from Iran from 2 May, phased in over 60 days. South Africa does not import much oil from Iran, so will this have an impact on us?
by STEVEN GRUZD | May 23, 2019

A year ago, the US pulled out of the Iran Nuclear Deal (the Joint Comprehensive Plan of Action). This deal softened sanctions on Iran in return for Iranian compliance in halting its nuclear weapons programme.

The US has since beefed up sanctions again, applying what the US state department called “maximum pressure” on the Iranians. The US seeks to cut Iranian oil exports to zero, and has rescinded waivers that eight states had to continue importing Iranian oil. South Africa is not on that list.

The US state department has said “entities that engage in sanctionable activity involving Iran risk severe consequences”, including losing access to the US markets and financial system.

So, will this put Pretoria in Washington’s sanctions sights? The experts think not.

While Iran was a clandestine supplier of oil to the apartheid regime, and the oil trade strengthened after 1994, South Africa, in fact, imports very little oil from Iran today.

“Under pressure from the US, South Africa reacted and stopped buying oil from Iran some years ago,” said Dr Azar Jammine, the director and chief economist at Econometrix.

Almost all of South Africa’s crude oil comes from Saudia Arabia (about 42%), Nigeria (about 34%), and Angola (13%). At one point, more than 35% emanated from Iran.

Jammine said tensions with Iran were “one reason for the recent sharp oil-price rise… which is obviously negative for the South African economy”. However, he said direct fallout from any US sanctions would be negligible as the country weaned itself off Iranian oil in the early 2010s.

Willemien Viljoen, a researcher at the Trade Law Centre, confirmed that imports from Iran have declined over the past few years, and that fuel does not appear significantly in international trade statistics. “South Africa is not close to being a big trade partner of Iran, in either exports or imports,” she said.

The details of the threatened US sanctions are not clear, so it’s difficult to speculate accurately about their possible effects on South Africa.

Brooks Spector, a former US diplomat and associate editor of the Daily Maverick, said, “South Africa does not appear on the list of countries heavily dependent on imports from Iran – it’s not even on the pie chart. And it’s notoriously difficult to figure out where oil comes from once it enters the world oil stream. It often gets ‘reflagged’ as coming from somewhere else.

“There is a rough global oil-market equilibrium, with higher supply from the Saudis, the US, and Russia offsetting shortfalls from Iran. It will probably be possible for South Africa to import the necessary amounts of oil without worrying about imports from Iran.”

John Stremlau, professor of international relations, said, “an ill wind blows no good for anyone. These moves must be seen against Trump’s promises to ‘Make America Great Again’ by promoting America-first nationalism, getting more out of trade deals, and reducing involvement in costly foreign wars.

“Trump has so many other problems, he may be getting cold feet on sanctions,” Stremlau said commenting on the lack of details about it in the public domain. Stremlau is more worried about the US being egged onto a disastrous war with Iran by Israel, Saudi Arabia, and the United Arab Emirates.

Tension between the US and Iran have skyrocketed over the past few weeks. The US dispatched aircraft carriers to the Persian Gulf in response to what it called “credible threats” from Iran and its proxy forces in Iraq, Lebanon, and Syria.

This provoked a war of words with belligerent threats from both sides. Iran has again begun enriching uranium that could eventually be used in nuclear weapons.

The state department said Iran used oil exports “to support terrorist proxies, fuel its missile development, and engage in other destabilising behaviour”. It said it had “denied the regime direct access to more than $10 billion (R144.4 billion) in oil revenue since May [2018]”.

Nevertheless, Pretoria’s close relations with Tehran do not sit well with Washington. South African positions in the United Nations, which are consistently at odds with the US, have also not endeared the country to the Trump White House. It may still need to tread carefully in balancing its ties with Iran and the US.

The South African departments of international relations and cooperation and trade and industry had not responded to calls for comment at the time of going to press.

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