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By Brian Sokutu

Senior Print Journalist

South Africa on tenterhooks over Iran – expert

Expert says that in event of war with israel, energy costs are likely to rise, affecting inflation and rates

With the world on tenterhooks over escalating Israel-Iran tensions, experts have warned that should a war break out between the two countries, South Africa, which is navigating a storm of domestic and global uncertainties, could be unable to escape the economic implications of the fallout.

Following what has been seen as one of the largest missile and drone attacks on Israel, US President Joe Biden has announced fresh sanctions targeting leaders and entities connected to the Islamic Revolutionary Guard Corps, Iran’s defence ministry and the government’s missile and drone programme.

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Biden has also warned of more economic sanctions against Iran to be imposed by G7 countries. Amid rising tensions, Iran reportedly fired air defence batteries to shoot down three drones over Isfahan, following a retaliatory strike on Israel.

This is after an earlier attack by Israel against Iran’s diplomatic premises in Syria. Commenting on the Middle East situation, Prof Raymond Parsons, of North-West University Business School, cautioned that further escalation would pose “serious risks to the world economic outlook”.

‘SA will not escape’

“As a small open economy, SA will not entirely escape some of the fallout. In its latest assessment, the International Monetary Fund has again emphasised that although it sees a slightly higher growth outlook for the world economy this year, it trimmed its forecast for SA’s 2024 growth to 0.9%,

from its previous 1%. “Given the more uncertain world we now live in, SA must focus mainly on the internal policies over which it has control – to strengthen its economy. The stronger SA’s domestic economy, the better it can handle any external shocks that may occur.

“This means implementing domestic policies and measures that visibly build economic resilience, create the necessary financial buffers and keep domestic policy uncertainty to a minimum,” said Parsons.

University of South Africa emeritus professor of international relations André Thomashausen said SA’s strong economic ties with Iran – citing mobile network company MTN holding a dominant market position – could be affected.

“The severe international economic and banking sanctions against Iran will increase South Africa’s risk to itself – isolation.

“Such isolation would come at a heavy price, as neither Iran nor the other Brics members are in a position, or willing, to compensate and support South Africa in any meaningful way.

READ MORE: Israel bombs Gaza as Middle East tense after Iranian attack

“Globally, the Iranian missile attack on Israel has damaged the moderate international sympathy that Iran had come to enjoy over the past years.

“Not even Russia – the only country to forge close trading relations with Iran over the past two years – accepted Iran’s proposition that the attack could have been justified as a measure of self-defence against the destruction of Iran’s consulate in Syria.

“Anybody with minimal comprehension knows that you cannot defend yourself against an attack 13 days after it has ceased. “Responding to a single explosion with over 350 ballistic and cruise missiles and heavily armed military attack drones is something not to be done.

“Governments also accept the firm rule of international law that the diplomatic immunity of consulates and embassies does not prevent carrying out antiterrorism measures,” added Thomashausen.

‘They must learn to coexist’

He ruled out the likelihood of the conflict escalating “beyond the current war between Hamas and Israel”.

“The prevailing internal view in Iran is that Palestinians and Israelis must finally accept to coexist and that they will simply never succeed in eliminating the other.”

Said Dr Frederich Kirsten, economics lecturer at University of Johannesburg: “In an event of an Israel-Iran full-scale war breaking out, there will certainly be significant implications for South Africa related to the energy crisis, because of the heavy supply of oil from the Middle East region.

“This will influence the energy prices in SA which will have a negative impact on inflation – probably leading to the SA Reserve Bank not cutting interest rates, affecting consumers and producers in the country.

“A further Israel-Iran escalation could also lead to supply constraints, which might influence the country’s exports and imports.”

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