SA & Iran: An oily kind of friendship
- Khadija Patel
- 15 Mar 2012 09:06 (South Africa)
South Africa’s relations with Iran date back to the days of the Shah when friends who were prepared to break sanctions against the pre-1994 government were few. Now the roles have changed and Iran needs friends. It has oil – lots of it – and that seems to be “the children” that are keeping “the marriage” together. But can it last, asks KHADIJA PATEL.
South Africa and Iran maintain a good relationship and have done so for many years. Relations extend into many fields and Iran is still South Africa's major supplier of crude oil. Senior South African government officials take the view that this special relationship with Iran allows for a frank exchange of views on all issues, including questions related to nuclear disarmament and non-proliferation, as well as pesky issues of human rights. Like all “special” cross-border relationships, South Africa’s relationship with Iran is a symbiotic one – a win-win situation in cruder terms. South Africa gets oil and Iran makes a friend, deftly undermining international sanctions and concerted efforts to isolate Tehran.
As we now wait with bated breath, to find out if Israel will indeed attack Iran and if the US will approve military action against Iran’s nuclear facilities, Iran is the global leper. And yet South Africa, which knows what that feels like, can ill afford to spurn Iran.
With the latest round of sanctions against Iran, the West has put the squeeze on its oil industry, constricting the flow of payments and complicating trade relations. South Africa’s relationship with Iran is becoming especially complicated. Iranian media last week reported minister of energy Dipuo Peters travelled to Tehran to explore ways to circumvent the western sanctions on oil trade with the Islamic republic. When contacted by Daily Maverick, the minister’s spokesperson Zodwa Batyashe refused to comment on the report, deflecting enquiries to the department of international relations and co-operation (Dirco) instead.
This latest deflection to Dirco by a government ministry is similar to the department of home affairs referring all enquiries about the progress of the Dalai Lama’s visa application to Dirco last year. At the time, home affairs spokesman Ronnie Mamoepa said the "magnitude" of the application had forced his department to call on Dirco to answer questions. Of course, answering questions of an apparent Chinese hegemony over South African immigration policy did dictate Dirco get involved at some point, it was the “political and diplomatic implications" of the visa application that made the Dalai Lama saga a Dirco matter. As a pattern of behaviour then, the reluctance of the department of energy to pronounce on its own efforts to circumvent the effects of sanctions on South Africa’s oil supply is fundamentally a political and diplomatic matter.
Yet just hours after her spokesperson refused to clarify exactly what the department of energy had been up to in Iran, Peters herself spoke to Reuters on the sidelines of the International Energy Forum in Kuwait. She said South Africa was not under any pressure from the US to halt imports of Iranian oil. “I would be lying if I said that the United States is putting pressure on us to cut Iran imports... but we are considering different avenues now,” she said. “We have given ourselves till the end of May to come up with alternatives, and we are engaging in talks with everyone, including Iran.” Dirco spokesperson Clayson Monyela confirmed that South Africa was not under any duress to halt oil imports from Iran but the repercussions of the latest sanctions had forced the Department of Energy to re-thing the country's oil supply.
Statisticians believe South Africa is among Iran’s largest trading partners, accounting for a healthy $20-billion annual trade. Exactly how much of our oil is sourced from Iran is not clear, informed guesswork put the amount anywhere between 25% and 40% of total oil imports. Sasol, the world’s largest producer of fuel from coal, is especially dependant on Iranian oil imports – 20% of its crude oil imports, which amount to 12,000 barrels a day, is sourced from Iran at its Natref refinery.
South African businesses have also thrived in Iran. Telecommunications giant MTN has so far resisted pressure to divest from Iran, insisting it would continue doing business there unless South Africa itself imposed sanctions on Iran. Some 10% of the MTN group’s total revenue is generated in Iran, but MTN has been careful to couch its decision to continue operating there as more than purely a business decision. MTN executives have said the company provided essential services to the Iranian people and its presence significantly increased the Iranian people’s access to mobile communications.
The latest round of sanctions against Iran has already severely hampered Iranian business conditions for MTN. The company is reported to be facing difficulties in making payments because it is no longer able to use partner banks in Dubai to move money out of Iran. "It is a challenge because of the sanctions against the central bank and a number of financial institutions," Sifiso Dabengwa, the MTN chief executive, told Reuters. "Anyone who is actually dealing in euros and US dollars basically can't do business with Iranian banks… What we can do is that if someone needs funds internally and has funds outside, we can do those kind of exchanges."
The US remains hopeful that President Jacob Zuma’s administration will be more open to its position on Iran than that of former president Thabo Mbeki, but South Africa’s relationship will not be easily revoked.
As the West regards Iran’s nuclear programme with suspicion, South Africa has strong support for Iran’s right to enrichment, albeit while opposing nuclear proliferation. Speaking at a meeting of the International Atomic Energy Agency board of governors in Vienna, Austria, last week, ambassador Xolisa Mabhongo called on Iran to comply with the relevant decisions of the IAEA and with its obligations under the relevant UN Security Council resolutions. Mabhongo reiterated South Africa’s stance, respecting Iran’s right to explore the possibilities of nuclear energy. “We should not tire in seeking, in a cooperative manner, the long-term solution which restores international confidence in the exclusively peaceful nature of Iran’s nuclear programme, while respecting Iran’s right to peaceful use of nuclear energy, consistent with the Nuclear Non-Proliferation Treaty,” he said.
In recent weeks South Africa has repeated its invitation to Iran for assistance should Tehran decide to follow the South African lead and give up nuclear weapons. South Africa has historically been reluctant to jump on the anti-Iran bandwagon because it believes the IAEA reports do not provide sufficient proof to accuse Iran of nuclear wrongdoing.
Last month, minister of international relations and co-operation Maite Nkoana-Mashabane told reporters the way forward for Iran was for the international community to ensure weapons inspectors were able to do their jobs, campaign for the peaceful use of nuclear power and "not just target Iran as a country".
The new dispensation in South Africa first established diplomatic relations with the Islamic Republic of Iran in 1994, but the Iranian relationship with the ANC dates back to the struggle. And while Ahmedinejad’s many rants against the West may not sit well with the South African government, Iran has historically articulated a vision of the international system that resonates with a South African government wary of Western hegemony. Iran’s dealings with South Africa, however, outstrip the ANC’s rule.
During World War II, Reza Shah Pahlavi, ruler of Iran during the 1920s, was sent into exile on Mauritius, but later moved to South Africa where he died in 1944. He was exiled by the British, who accused him of German sympathies. His son and successor, Muhammad Reza Pahlavi, who faced a Soviet threat to his rule following World War II, viewed South Africa as a key ally against the spread of communism and, like Israel, an important market for Iranian oil.
Michael Bishku, professor of history at Augusta State University in Augusta, Georgia, writing in the Middle East Policy Journal notes that the rivalry between Iran and Arab oil-producing countries, like the current rivalry between Saudi Arabia and Iran is not new. Even before the Islamic revolution, there was no love lost between Iran and its Arab rivals. “The shah still had not forgiven them for what he considered their taking ‘advantage of the stoppage of Iran’s oil production during the nationalization crisis [1951-53] to increase their own exports’,” Bishku says. “His government operated on the premise that ‘oil is business, not politics’. What is more, the National Iranian Oil Company (Nioc) had had a 17.5% share in the National Petroleum Refiners of South Africa (Natref) refinery in Sasolburg, Free State – a joint venture with Sasol – since it was established in 1971. That state-of-the-art facility could refine heavy (high sulfur) crude, and Nioc was to provide 70% of the refinery’s supply for 20 years. After the revolution, Nioc’s shares were taken over by Sasol.”
South Africa enjoyed cordial relations with the shah, sharing expertise and developing a relationship in science and technology, defence, medicine, energy and mining. In the meanwhile, although Iran signed the Nuclear Non-Proliferation Treaty (NPT) in 1968 and ratified it two years later, Tehran had vested nuclear interests in South Africa. The Iranian government signed a $700-million contract to purchase uranium yellowcake from South Africa. During the late 1970s and until February 1979, as the Shah was deposed and Ayatollah Khomeini returned from exile to establish the Islamic Republic, South Africa imported 90% of its oil from Iran.
The Islamic Revolution brought an end to Iranian diplomatic relations with the apartheid government, but the oil supply to South Africa continued. South Africa had proven itself as a lucrative market for Iranian oil. Bishku says South African imports of Iranian oil in the 1980s were done either directly or through middlemen and were worth about $2-billion a year.
Iran is unique in having supported the anti-apartheid struggle, but at the same time supplied the apartheid government with crude oil, both before the Islamic revolution and after. Our reliance on Iranian oil is not new. Imports of Iranian oil survived apartheid, the struggle against it and the rise of a democratic order, but it remains to be seen whether this latest round of sanctions against Iran will finally curtail the South African dependence on Iranian oil.
There is little doubt that South African dependence on Iranian oil has gone some way to influencing South African policy on Iran. But if South Africa does indeed shift a greater chunk of oil imports to Venezuela to avoid incurring the consequences of Western sanctions on Iran, South Africa may well shift its policy on Iran as well. Although South Africa has built up quite a taste for Iranian oil, a business relationship may not be enough to generate political support from developing nations. Iran may well lose a key ally in the coming months. DM
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- The day Keyser Soze, er, Kgalema Motlanthe, lost his halo in Daily Maverick.
- As ballot delivers massive blow to Ahmadinejad, Iran's nuclear future unclear in Daily Maverick.
- Repercussions from Iran sanctions spread far beyond borders in The National.
Photo: (Uncomfortable?) bedfellows – Ahmedinejad and Zuma.
Please note: The original version of this article had stated South Africa was under pressure from the US to halt oil imports from Iran. That was incorrect. It was a misreading of Minister Peters' statement.We regret the error and entreat any parties angered by the original to lay down their weapons. We are a peace loving people.