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Thursday 24 January 2019
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Iran and U.S, with Namibia winning

As you may be aware the United States commander in chief Mr. Donald Trump withdrew from the 2015 signed Iranian nuclear deal on the 8th of May, a deal which is officially called the Joint Comprehensive Plan of Action, or JCPOA. By withdrawing from this agreement it essentially means that all prior U.S. sanctions on Iran would be re-imposed. This will not take place over night, but the ripple effects are already being seen.
The nuclear deal announcement, following highly publicized yet seemingly futile visits to Washington by president Macron of France and Chancellor Merkel of Germany further undermine relations with Europe which are already strained by disputes over climate, trade and defence spending. The envisioned North Korea meeting is another topic for another day all together.

Why this deal is good for Namibia but bad for business
This decision has far reaching implications for international trades, multi-billion dollar deals and the global oil market.
As we recall when tools were dropped following the strict sanctions imposed on North Korea, we had a half finished military headquarter in the capital Windhoek. The North Korean Mansuade Overseas Project Group who were busy with construction halted immediately once the UN resolution was made crystal clear – continue doing business with this North Korean company and sanctions will be imposed on Namibia. It goes without saying that we swiftly redeployed other companies to take over the construction.
To focus in on Iran, one may recall the travel ban which the Trump lead administration imposed on 5 countries in early 2017, one of those countries which were largely targeted was Iran. This continued with official comments from Trump which have discouraged foreign companies from trading with and investing in Iran.
These comments, also seen as threats, have deterred any form of investment into the country and have also largely contributed to the devaluation of the Iranian currency. The most notable trade deal which has been put on hold following the comments from Trump is the $18 billion Boeing agreement sale, which according to Boeing itself is now officially dead.
Very interestingly, since December 2017 Iran’s currency has depreciated by one-third. With unemployment concurrently running at an all-time high there is indeed a sense of panic among Iranians and there is a bleak vision as to what the future may hold.
This sustained increasing uncertainty can be seen in the international crude oil markets where the price per crude barrel surpassed $70 on Monday the 14th of this month. Why this is noteworthy is that this is the first time since 2014 we observe these highs.
Iran is the third largest producer in the Organisation of Petroleum Exporting Countries, commonly known as OPEC, and these fears of renewed U.S sanctions will equate to countries purchasing less to no Iranian oil, or face stiff penalties and further trade sanctions.
There are also major European companies like Total, Airbus and Renault who are all nervously observing the way forward as they stand to lose access to the U.S market should they choose to continue doing business with Iran.
These companies among others have extensive interests in the U.S and any sanctions would impact operations and revenue streams greatly. This being said, no real European Union and World Trade treaties will aid in protecting these companies as continuing to do business with Iran will essentially close the door to their largest purchasing power being the U.S.

Where does Namibia fit in?
With oil production accounting for 45% of Angola’s GDP and approximately 95% of all exports it is no secret that this is the true livelihood of our cross border neighbours. Namibia on the other hand rely heavily on the agriculture, fishing and mining sectors, but do not forget the role of tourism.
It is my opinion that tourism will become one of our greatest contributors to GDP in the foreseeable future. China, European nations and our good friends from Angola will continue to spur our countries growth with their buying power.
Angola, with the increase in crude oil prices expected to continue, we welcome you back with open arms.




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