Thanks to US bullying of South African banks behind the scenes, our trade with Iran has been negligible, despite the signing of the Iran nuclear deal in 2015. We have hardly shown our faith in Iran despite the fact the UN nuclear watch dog has said it is implementing all its obligations.
There is something very wrong with our trading system that we end up being complicit in the collective punishment of Iran, when it has done its part in earning international trust under the prescribed framework.
The reality is that South Africa’s political and diplomatic relations with Iran are excellent, and our government departments have done everything in their power to promote a robust bilateral trading relationship, but the problem lies with our banks.
Our banks also need the backing of the South African Reserve Bank to do business with Iran. South Africa’s four major banks are not only conservative but extremely cautious, far more than banks in Europe or Asia.
Even though there was nothing stopping them from transferring money to facilitate trade with Iran over the past three years, they have cowed to subtle American pressure not to process any transactions with Iran.
The fact that the US has secretly been warning banks, financial institutions and insurance companies not to do business with Iran is a direct violation of Article 26 and 29 of the nuclear agreement.
With this week’s announcement by President Donald Trump that the US will pull out of the nuclear agreement altogether, the pressure on banks not to facilitate financial transactions with Iran will be immense. Trump has already warned that the US will again impose the harshest sanctions against Iran, and on any companies which continue to support Iran.
If South African trade with Iran had been reduced to Persian carpets and pistachios as a result of the unwillingness of our banks to process transactions, we may now find the price of those items in South Africa becoming even more expensive.
What a shame. There was a time just 14 years ago when we were doing roaring trade with Iran, importing Iranian crude oil to the tune of US$2billion annually. Even 12 years ago our bilateral trade was 10 times the amount it is today. But US foreign policy and pressure succeeded in doing exactly what it intended - it reduced our trade with a country the US perceives as a foe to virtually nothing.
The question is whether we are prepared to live with the status quo, or do something about it to live up to the ideals of an independent foreign policy.
Ironically, the Europeans and Asians have been filling the vacuum.
France, Italy, Germany, South Korea, China, Japan and India have been engaging in substantive trade with Iran since 2015. China has been doing US$60bn (R735bn) of trade with Iran annually.
We need to interrogate how banks in those countries have been transferring money, as it is clear that they have each found appropriate channels.
There is no doubt concern within the banking sectors in those countries about Trump’s threat to penalise banks that facilitate trade with Iran, but it seems governments in those countries may take matters into their own hands.
The European countries have repeatedly insisted they will never leave the Joint Comprehensive Plan of Action (Iran nuclear deal), and a meeting of deputy foreign ministers is being scheduled in Europe to find a mechanism through which they can continue trading with Iran.
There has also been noise about Britain considering a banking system not linked to the dollar - this would be a seismic shift. The Europeans may choose to trade with Iran in euros.
Germany is particularly irked by the damage to its economy over sanctions against Russia, which had been a US demand. It is unlikely to capitulate this time in the case of Iran.
German Chancellor Angela Merkel pulled no punches in Washington recently when she articulated her strong support for the Iran nuclear deal. France’s Macron echoed these sentiments when he visited the US capital, and Britain’s Theresa May has called the Iran nuclear deal “vital”.
For all these countries Iran is an attractive investment opportunity that they are unlikely to pass up just because the Trump administration lays down the law. There is also the memory of just how painstaking the negotiations for the nuclear deal were.
Russia and China have deepening ties with Iran, and are even more likely to develop alternative mechanisms to get around the US banking threats. It will be interesting to see whether at the upcoming Brics Summit in South Africa if there is discussion on trading with Iran using another currency.
* Shannon Ebrahim is group foreign editor