Monday, December 17, 2018
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Analysis: Iran and South Africa cement ties

altThis January, the Islamic Republic of Iran and South Africa signed a memorandum of understanding to boost defence and military cooperation to promote regional and international stability. While such pacts are mostly symbolic in nature, Iran’s growing ties to South Africa come as no surprise, superseding decades of diplomatic cooperation.

This comes in the wake of one of Iran’s “mini flotillas” being docked, or rather stranded, at a South African port.

Iran’s history with South Africa dates back to the 1970s, when Iran was the most important supplier of crude oil to South Africa, supplying 90% of its requirements by 1978. During the same decade Iran signed a $700 million contract to purchase yellowcake uranium from South Africa, and bought a 17.5% stake in the Natref refinery. Iran also refitted at least two destroyers in Cape Town’s port in the mid-1970s.

The revolution of 1979 which swept the Shah out of power, severed Iran’s ties to the Apartheid government of South Africa, with the former showing solidarity with the resistance, causing a mass oil shortage in South Africa during 1979-1980. As a result South Africa had to deepen its ties with a host of Arab oil exporting nations.

Only in 2000 did Iranian exports to South Africa begin to pick up again. Oil exports began to increase at an exponential rate, climbing from $18.8 million in 1998 to $3.29 billion in 2008 - the same year that Iran became the single largest supplier of crude oil to South Africa. Similarly, South African exports to Iran increased from $6.61 million in 1996 to $220 million in 2006, mostly in minerals and food. UN mandated sanctions heavily damaged the economic relationship between the two countries, although bilateral trade has since rebounded profoundly. In 2012, it was estimated that Iran’s bilateral trade with South Africa surpassed $20 billion. This assisted Iran in dodging the reluctance of the West to import Iran’s oil, a vulnerability that nearly crippled its economy.

The South African-Iranian relationship is not only important for economic reasons but also for shaping the future of South African foreign policy. As Iran emerges from sanctions, South Africa represents an important port of transfer for Iran to access Africa and Iranian investment in the South African refining industry could provide Iran with the ability to distribute refined oil to other parts of Africa. This has been problematic in the past as the majority of oil refineries are controlled by a handful of Western companies hostile to Iranian oil imports. Iran has at times expressed an interest in investing in refineries in South Africa through its state subsidiary, the NIOC (the National Iranian Oil Company); the two would have partial hegemony on oil and petrochemical exports to its neighbours in the Southern part of the continent, an export that is worth billions to the nation as it stands.

It is also no secret that South Africa’s defence industry has struggled to grow. As Iran joins the international community, it will be keen to modernize its aging defence equipment. South Africa could stand to gain hundreds of millions of Rands if Iran orders its Denel Rooivalk helicopter and a host of South African missiles. This of course, has significant policy implications for South Africa’s relations with many Arab nations, who are vehemently trying to curb Iran’s expanding influence.

Evidence suggests however that South Africa has already taken steps to bolster Iran as its representative in the Persian Gulf, inadvertently or not. President Jacob Zuma has condemned the imposition of sanctions against Iran in the past and applauded the recent lifting of many sanctions. It should not be forgotten that South Africa was one of the only nations to actively oppose sanctions against Iran in the Security Council in 2012, and its relations with Israel have been deteriorating during the presidency of Jacob Zuma.

South Africa has in the past abstained from voting on United Nations Security Council resolutions on the Syrian Civil War. Interestingly, South Africa seems to have dodged criticism from Saudi Arabia, who because of sanctions against Iran became the largest supplier of oil to South Africa. Iran recently expressed its willingness to export 100,000 barrels of oil per day, approximately 20% of the nation’s total consumption. Similar offers have been extending to other African nations, in an attempt for Iran to re-gain its foothold on the continent.

Iran does pose a great opportunity to South Africa and Zuma’s government should consider expanding its relationship with Iran but consider the costs and benefits.

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