US President Donald Trump’s decision to re-impose sanctions on Iran may limit the ability of MTN Group to repatriate cash, both in the form of dividends and loans, from its investment there, it warned on Wednesday.
On Tuesday evening South African time, Trump announced he will withdraw from the landmark 2015 accord to curb Iran’s nuclear programme and reinstate financial sanctions on the Islamic Republic, opening an uncertain new chapter for the Middle East.
Iran is a key market for MTN, where it owns a 49% stake in the fast-growing mobile operator Irancell.
In 2018, the JSE-listed telecommunications group has repatriated about €88m from MTN Irancell, including €61m relating to the full 2017 dividend as well as a further €27m of historical dividends. The remaining balance due to MTN is about €200m, it said in a statement to shareholders.
“MTN Group remains committed to our investment in Irancell and to repatriating the balance of legacy cash in Iran while remaining compliant with appropriate legislation,” it said.
Trump’s decision, widely anticipated by allies and analysts before his announcement on Tuesday at the White House, was intended to force Iran to renegotiate an agreement the country’s leaders have said they will not revisit. Trump’s political opponents warned he could lead the US into another Middle East war.
“The fact is this was a horrible one-sided deal that should have never ever been made,” Trump said. “We cannot prevent an Iranian nuclear bomb under the decaying and rotten structure of the current agreement. The Iran deal is defective at its core.”
West Texas Intermediate crude briefly pared losses as Trump announced his decision. The price for June deliveries of the commodity fell US$1.32 to $69.41 a barrel at 2.28pm in New York.
French President Emmanuel Macron, who personally lobbied Trump to remain in the deal during a state visit to Washington last month, said on Twitter that “France, Germany, and the UK regret the US decision to leave the JCPOA”, using an acronym for the agreement.
“The nuclear non-proliferation regime is at stake,” he said.
‘Nuclear arms race’
Trump has long criticised the Iran deal, negotiated under his predecessor Barack Obama, as the “worst” ever. He has complained that it doesn’t address threats from the country’s ballistic missile programme or its involvement in fomenting regional conflicts, and that provisions of the deal that expire in the next decade would allow Iran to resume nuclear work.
“If I allowed this deal to stand, there would soon be a nuclear arms race in the Middle East,” Trump said. “Everyone would want their weapons ready by the time Iran had theirs.”
He said that because of limits on international inspectors, they are “not able to prevent, detect or punish cheating” by Iran and “don’t have the unqualified right to inspect many important locations” including military bases.
Trump said in a tweet on Monday that he would announce his decision ahead of a 12 May deadline set by US law to continue waiving US sanctions lifted by the accord. The US will be instituting the “highest level” of sanctions against Iran, Trump said.
The US treasury department said in a statement that sanctions would be reinstated after “wind-down periods” of 90 or 180 days. Nuclear-related sanctions that had been waived under the deal would take full effect after 4 November, the department said.
Oil prices have climbed in recent weeks as uncertainty over the future of the agreement rose. A resumption of US sanctions would threaten Iran’s ability to attract foreign investment, keeping the country’s output flat or lower through to 2025, according to a research note published Monday by Barclays.
It is unclear what may unfold following the US withdrawal. American and European diplomats have sought to negotiate side agreements aimed at addressing Trump’s concerns about the deal, and the delay in reinstating sanctions may allow those talks to continue — a prospect that Iran’s ally Russia, a party to the accord, raised ahead of Trump’s announcement.
Russia’s ambassador to the International Atomic Energy Agency, Mikhail Ulyanov, said the Iran deal wouldn’t end immediately as a result of Trump’s action and “we will have a certain amount of time for diplomatic efforts”, according to the Interfax news service.
Iranian President Hassan Rouhani suggested his country would continue to abide by the agreement, but that it was now between Iran and the five other signatories — not the US.
Diplomats engaged in the talks on side deals had signalled that they were close to a breakthrough, but key allies have been sceptical that Trump would remain part of the current pact, which curbs Tehran’s nuclear programme in exchange for relaxing Western financial sanctions. Macron and German Chancellor Angela Merkel both signalled after meeting with Trump last month that he seemed intent on quitting the agreement.
Ali Shamkhani, secretary general of Iran’s Supreme National Security Council, was reported to say Tuesday that “if the US initiates confrontation with Iran, we won’t stay passive”.
If the nuclear agreement “gets destroyed due to the US assault, for sure it won’t be to their benefit,” he said, adding that the “biggest loss will be for the Europeans”.
EU trade with Iran has nearly tripled since 2015.
Following the visits by Merkel and Macron, UK foreign minister Boris Johnson was in Washington this week to make a last-ditch argument to persuade Trump to remain in the accord, arguing that it is flawed but can be improved by the side agreements.
‘Mess’
Johnson met this week with vice President Mike Pence, national security adviser John Bolton, secretary of state Mike Pompeo and other administration and congressional officials.
Trump foreshadowed his decision on Monday, complaining on Twitter about the Iran agreement and deriding former secretary of state John Kerry for meeting with Iranian foreign minister Javad Zarif two weeks ago at the United Nations to discuss salvaging the deal. “He was the one that created this MESS in the first place!” Trump said of Kerry.
Under legislation passed by the US congress, Trump has until Saturday to decide whether to keep waiving sanctions on banks of foreign countries that haven’t reduced Iranian oil imports, according to an analysis by the Congressional Research Service. Under that law, those sanctions have to be waived every 120 days.
Trump last agreed to waive the sanctions in January, but his frustration with the agreement has only grown since then. Declining to waive the restrictions again means an assessment of whether foreign countries are violating the sanctions would be due on 8 November, according to the CRS study.
Israeli Prime Minister Benjamin Netanyahu said on Sunday that the 2015 accord is fatally flawed and must be “fully fixed or nixed” to stop Iranian aggression sooner rather than later. Rouhani warned earlier that the US would face “historic” regret if it pulled out.
Netanyahu delivered a televised presentation last week on secret Iranian files his country’s intelligence services obtained that he said prove that Tehran sought to build a nuclear weapon in the past despite its government’s denials. Trump watched the presentation, and White House press secretary Sarah Huckabee Sanders issued a statement declaring that the Israeli intelligence proved “Iran has a robust, clandestine nuclear weapons programme”.
The White House later corrected the statement online to say Iran “had” a nuclear programme, blaming a clerical error. Netanyahu did not claim that Iran currently has a nuclear programme.
Members of Trump’s own party are split. Representative Mac Thornberry, chairman of the house armed services committee, said on Sunday he “would counsel against” Trump quitting the accord. Representative Ed Royce, who heads the house foreign affairs committee, agreed, saying in a statement on Tuesday: “I fear a withdrawal would actually set back these efforts” to stop Iran’s nuclear activities.
But house majority leader Kevin McCarthy has said he’s “very comfortable” that the president is standing up to Iran. — Bloomberg reporters, with additional reporting from TechCentral
