Leaking a Bond: South Africa’s Relations with Iran

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A commentary by

Michal Onderco
(SPS MW Fellow 2014-2015)*

One of the big stories of the week is a massive leak of secret intelligence, produced mostly by South Africa’s State Security Agency, to Al Jazeera and The Guardian. While the content of the news varies, the juiciest stories are related to South Africa’s place in the attempts to limit Iran’s nuclear programme. Although close observers will be “shocked, shocked” by the news, the story provides an interesting insight into the place which South Africa occupied in the standoff over Iran’s nuclear programme.

South Africa’s ties with the Islamic republic date back to the pre-revolutionary era, when the Shah’s Iran and South Africa’s  apartheid regime developed close cooperation. Iran’s revolutionary regime’s rhethoric  was critical of the apartheid regime, and it supported the ANC, but secret dealings between the regime and the apartheid regime ensured continuing access to oil (the work of Paul Aarts and Tom Quaastiniet remains unsurpassed in describing the apartheid regime’s access to oil on the world market).

Oil was the most crucial natural resource for South Africa, and Iran has continued to play a crucial role in its supply. At the time of the apartheid regime’s collapse, South Africa’s dependence for oil on Iran reached 90%; South Africa’s energy business has been so closely tied with Iran’s crude oil that the largest refineries in South Africa could not process any but Iran’s crude. But the dependence on Iran’s oil has decreased steadily. In the 2010s, South Africa intermittently stopped importing Iran’s crude oil, under pressure from the United States and the European Union.

SASOL, South Africa’s energy giant, also held a stake in the Arya Sasol polymer company in Iran, which it found more of a nuisance than an asset over time (not least because of the Western pressure on SASOL, a NYSE-listed company). In 2013, SASOL sold its stake after taking 300 million USD in write-downs. MTN, a South African telecommunications giant, under the leadership of Cyril Ramaphosa (former leader of transition negotiations with the apartheid regime and currently South Africa’s Deputy President) developed a hugely successful business in Iran, Irancell (owned in 49% by MTN). In 2012, approximately 10% of MTN’s revenue was generated in Iran, and the company generated a profit margin there of 44% (the profits of approximately 1 billion USD being trapped in Iran because of international restrictions on banking with Iran). However, MTN’s business in Iran created controversy: the company’s CFO was fired, allegedly after attempts to circumvent US and EU sanctions to expatriate profits from Iran. In addition, MTN’s Turkish competitor attempted to sue MTN for corruption related to the award of the licence (MTN executives confirmed lavish trips and diamond cufflinks for Iranian officials involved in awarding the license), but the cases continue to be thrown out from different courts for lack of jurisdiction.

If economically this cooperation has been rocky, politically, Iran and its nuclear programme have presented South Africa with a huge dilemma. On the one hand, South Africa has been a staunch opponent of the proliferation of nuclear weapons, and has built its international reputation at least in part on its nonproliferation credentials. On the other hand, Iran has been seen by the leadership of South Africa’s leading African National Congress as a friendly power, one that supported the ANC’s anti-apartheid struggle. Given the ANC’s anti-Western foreign policy narrative, developed in the second half of the 1990s and the early 2000s, Iran and South Africa shared the anti-imperialist foreign policy drive. South Africa’s political class has been more than willing to lend an ear to Iran’s arguments – it has consistently argued to end the involvement of the UN Security Council with the dossier, to roll back sanctions, and to recognize the Islamic Republic’s right to peaceful use of nuclear energy.

In 2004, South Africa’s President Mbeki, at the presentation of the credentials of Iran’s ambassador, vowed to fight – together with Iran – against the interference of powerful countries in the business of less powerful countries. Later, South Africa occupied the position of “one of Iran’s doughtiest supporters at the UN”, according to The Economist. The country abstained from resolutions critical of Iran in the meetings of the International Atomic Energy Agency’s Board of Governors in 2005 and 2006, times when the IAEA, for the first time, was to decide whether Iran violated the terms of its legal commitments and whether to refer it to the UN Security Council. While South Africa voted in favour of the UN Security Council resolutions sanctioning Iran, the reasons for these votes are yet to be established. In the negotiations leading to the vote, South Africa was a strong opponent of sanctions. South Africa suggested the removal of a bank and a number of companies related to the Iranian Revolutionary Guards from the list of sanctioned entities, and when rejected, South Africa’s Ambassador reportedly shouted at his interlocutors in the UN “Why do you guys want to treat this resolution as if it’s written by God or has the wisdom of God in it?”. The situation was repeated in 2008, when, in the face of another round of sanctions, South Africa’s Ambassador to the IAEA Abdul Minty argued that “all the outstanding issues [have been] clarified”, only to vote in favour of sanctions again. Reasons for such counterintuitive votes are not straightforward: foreign observers speak of considerable arm-twisting by the US and its Western allies; whereas South African diplomats speak, off-the-record, of the duplicity of Iran’s behaviour and its unfulfilled promises to produce new evidence of compliance.

In addition, South Africa’s highly developed defence industry attracted attempts by Iran (among others) to acquire advanced technological equipment. In 2008, South Africa’s export control body blocked the export of G-aviator suits to Iran (G-aviator suits are special outfits used by fighter-jet pilots). In addition, South Africa’s Department of Trade apparently furnished letters of support for the export of Bell attack helicopters (and spare parts) as well as Airbus A300 airplanes to Iran, in violation of UN Security Council resolutions, though these sales have reportedly not been finalized. In 2009, a Cape Town front company exported fast boats to Iran (along with hull designs), which could have been converted for military purposes. While Iran was not the only country to which South Africa exported weapons (and not even the only UN SC sanctioned one), these attempts demonstrate the openness of the South African market to Iran’s needs.

To execute these actions, Iran did not necessarily need the cooperation of South African politicians. Instead, Iran’s actions have been helped  by the failings of South Africa’s security services. Earlier this month, a prominent local newspaper reported (again) that the Eastern Cape area is becoming a popular hub for terrorist financing. Analysts agree that “South Africa is seen to have high levels of lawlessness [among] officials and limited investigative intelligence capabilities”, which explains what makes the country attractive.  Local analysts talk of South Africa as a “central node in the global terror network”, while the country is slow to adapt to the nature of the threat. This all suggests that South Africa’s security services are not able to monitor illicit flows of goods, people and money, in and from the country.

As much as the leaks that came from Al Jazeera and The Guardian reveal the extent to which South Africa is the locus of espionage activity, they also show little new to observers. Iran and its leaders broadly attempted to circumvent international sanctions, something that is hardly surprising. They chose South Africa, a country with a highly advanced defense industry, great connections to the global economy, a crippled security apparatus, and a political class with an open ear, all in one place. There is nothing unusual about the revelations that have come out so far.

While a little excitement comes from a peek into the murky world where uncertainty rules and deception is the currency of the day, the leaks show that the espionage world is no different from the “official world”. States compete, come together (when their interests dictate so), become frustrated with one another, but continue to engage with them nevertheless. Shocking, really shocking.


(*) The MWPBlog is a platform for MW Fellows to address scholarly topics and comment on current affairs. The thoughts expressed in the posts represent solely the views of the posting Fellows and not of the Max Weber Programme