South African companies, including MTN, are bracing themselves for a new wave of sanctions after the United States pulled out of the Iran nuclear deal.
“It is with deep concern that the South African Government has noted the decision of the United States Government to withdraw from the Iran nuclear deal,” the department of International Relations and Cooperation said in a statement on Wednesday evening.
The statement comes after President Donald Trump used executive action on Tuesday to pull out of the deal, officially called the Joint Comprehensive Plan of Action (JCPOA). After Trump found flaws within the deal, he carried through with this order to “prevent Iran from acquiring a nuclear weapon”.
European leaders have raced to reassure Iran of their commitment to the deal with an emergency meeting with Tehran expected to take place in London on Monday.
Dirco called on other signatories to the deal to continue to honour the agreement.
“In this regard, the decision of the United States should not prevent the remaining parties from honouring their commitments, nor should it impact negatively on the relevant structures and mechanisms created by the JCPOA.”
President Cyril Ramaphosa said that “the progress made over many years of negotiation should not be lost” and that the plan had helped to reduce anxiety over Iran’s nuclear programme. It still has an important role to play in “promoting peace and stability”.
Restoring sanctions means that the US will ban trade and imports from Iran. The sanctions will give businesses and individuals either 90 or 180 days to “wind-down” depending on their business ventures with Trump threatening sanctions against countries and companies that do business with Tehran.
European and Asian companies have vested interests in Iran amounting to billions of dollars with European leaders expected to offer these companies protection from US sanctions.
Trade between South Africa and Iran may be adversely affected. According to an article published in the Gordon Institute of Business Science journal Acumen Magazine in March 2018, trade between Iran and South Africa is worth $43.2-million and would continue to grow. Chairman of the South African Iran Trade Desk, Hameed Amouhadi, said in a 2017 interview that the “potential for trade” between Iran and South Africa” is “huge,” stating that trade between the two countries would have amounted to $8-billion by 2025.
One South African company that will take a hit from Trump’s decision is the mobile telecommunications company, MTN group. The company announced that the sanctions “may limit the ability of MTN group to repatriate cash, both dividends and loans, from MTN Irancell.”
The company will continue to monitor the situation stating that it “remains committed to [their] investment in Irancell and to repatriating the balance of legacy cash in Iran whilst remaining compliant with appropriate legislation.”
Responses to the US’s actions has been mixed. French President Emmanuel Macron spoke on behalf of the European Union, saying on Twitter, “France, Germany, and the UK regret the U.S. decision to leave the JCPOA.”
China, Russia, Australia, Japan and Turkey also released statements that regret Trump’s decision, according to Al Jazeera.
France, Germany, and the UK regret the U.S. decision to leave the JCPOA. The nuclear non-proliferation regime is at stake.
— Emmanuel Macron (@EmmanuelMacron) May 8, 2018
Israel, Saudi Arabia, the United Arab Emirates and Bahrain lauded Trump’s decision to pull out of the sanctions. The Saudi Arabian foreign ministry said in a statement, “The kingdom supports and welcomes the steps announced by the US president toward withdrawing from the nuclear deal.”
On Wednesday, Iran’s supreme leader Ayatollah Ali Khamenei said the country would abandon the deal unless European endorsers, including France, Germany and the United Kingdom, “guaranteed that trade relations continue,” according to AFP.
Khamenei expressed his mistrust for the other countries who are in the deal now that the US has pulled out saying, “Their words have no value. Today they say one thing and tomorrow another. They have no shame.”
Trump has long warned of his intention to reinstitute sanctions against the Iran and a highly questionable presentation from Israeli Prime Minister Benjamin Netanyahu, which failed to present “evidence” of Iran flouting the conditions of the agreement, was seen as a precursor to US administration’s move.
The deal was signed in Vienna in July 2015 and its signatories included the United States, China, France, Germany, the Russian Federation, the United Kingdom and Iran. The deal was made to ensure that Iran’s nuclear programme [would] be exclusively peaceful and that “under no circumstances will Iran ever seek, develop or acquire any nuclear weapons”. Under the deal, Iran was able to use nuclear energy for “peaceful purposes” if it agreed to be monitored.