South African Petroleum lifeline under threat – Will ANC compromise economic interest as US pressure mounts?

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Amidst reports that pro-Israeli lobbies in the United States have secured an assurance from the Obama administration to relentlessly pursue countries seen to be wavering in their compliance with rigorous sanctions on Iran, South Africa has been singled out for punishment.

Though largely under-reported in the local media, pressure is building on the ANC-led government to immediately suspend its economic ties with Iran or risk being barred from US economy.

While there were initial signs of panic with different government departments giving contradictory statements on this highly contentious US demand to shut off the country’s petroleum lifeline from the Islamic Republic, very little is currently known about South Africa’s ultimate decision as the deadline grows closer.

However, a recent statement issued by the South African Petroleum Industry Association [PIA] gives a clue of frantic behind-the-scenes talks. Claiming that it sought to expedite requests to the United States for a postponement and temporary exemption from the sanctions, it also clearly alludes to political pressure.

PIA Executive Director Avhapfani Tshifularo is reported to have said: “This is not a business decision for us. It involves a political decision about political pressure”.

Following the initial flurry of uncertainty as to whether the SA government had succumbed to demands made by clandestine visits by senior US Treasury Department officials, it now appears that a formal decision by the Zuma Cabinet has yet to be made.

What may have irked Israeli lobbyists in America is that South Africa’s crude oil imports from Iran have increased to $434.8 million in March from $364 million in February. Instead of a reduction, imports from the Islamic Republic represent 32% of the country’s total crude oil supplies, suggesting that the ANC-led government is reluctant to have America dictate its economic policy.

While these figures project a country unwilling to disrupt its trade with a stable reliable source such as Iran, it is aware of the enormous power possessed by Israeli-lobbies that in effect have manipulated US domestic and foreign policies. It certainly would be aware that the push for war on Iran is high on the agenda of these lobbies and that a unilaterally imposed sanctions by the US therefore cannot be treated lightly.

While this conundrum confronts decision makers in Pretoria, it is equally intriguing that the European Union has called on South Africa for funding to bolster the banking systems of some EU member states on the brink of collapse.

Commenting on this, the convener of UCT’s Applied Economics for Smart Decision Making course Pierre Heistein, said that there is something inherently perverse about this situation.

He explains that looking for $400 billion to prevent the collapse of a few EU member economies causing the others to fold like a pack of cards, the International Monetary Fund [IMF] has turned to Brics for aid after the US and Canada refused to contribute.

It appears that Brics economies of Brazil, Russia, India, China and South Africa have between them agreed to provide funding to the tune of $72bn, though exact individual amounts will only be released next month, according to Heistein.

He speculates that South Africa’s proportionate share of the Brics amount could amount to R16bn. Though not a “crippling sum of money” it could increase spending on economic infrastructure by as much as 10 percent or lift health and education by 5 percent.

“But does it make sense that a country as poor as South Africa should be contributing funds to traditionally wealthy European states? Consider that in order for South African farmers to export to Spain they have to compete with annual farming subsidies amounting to more than E7 billion [R72.7bn] and now Spain is calling for South Africa’s financial aid”, is the all important question posed by Heistein.

This question alongside others including whether President Zuma and his cabinet will succumb to Washington’s blackmail ought to feature in the national discourse related to socio-economic challenges.

Global disparities as they exist in both political and economic spheres make it imperative for emerging economies to jealously guard their capacity to grow. This means that they must shun foreign interference especially if such meddling undermines job creation and service delivery.

While the IMF’s stretched hand may provide South Africa to enhance its leverage within this seat of power, it may be short-lived if American pressure becomes more ruthless to force it to abandon Iran.

Unfortunately the current malaise in which the ANC finds itself –” both as a formidable political formation and as the de facto government, may not allow it to snub either the US or the IMF.

After all such firmness of principle requires a strong moral underpinning.

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