Listen here.Transcript.Alec Hogg:It's Wednesday, the 22nd of July. Good day and welcome to the BizNews Edge, I'm Alec Hogg.Today's headline conversation takes us thousands of kilometres from South Africa to a narrow 33-kilometre-wide stretch of water between Iran and Oman. Because what's happening on the Strait of Hormuz is now landing directly on South African petrol pumps, and on the desks of policymakers in Pretoria. I'll be sharing insights from Iranian-born and raised economist, academic and entrepreneur, Dr Iraj Abedian, on why this standoff matters so much, what it means for South Africa's BRICS entanglement with Iran, and where it leaves companies like MTN, who've got real money on the line.Remember, Dr Abedian will be delivering a keynote presentation at the BizNews Conference from the 11th to the 14th of August. Come and join us, there are still a few tickets left. You can check those out by going to biznews.com, all the details are there with the image at the top of the page.But first, let's catch up on the stories that matter to you most today. A nasty inflation surprise from Stats SA, a boardroom battle for control at Africa's biggest pension fund (yes, the PIC is back in the news), and sad news about a giant of South African political writing, R.W. Johnson, who has passed on. We'll close off on the corporate side with some transformational fintech news out of Pepkor.Let's get into it. Starting with the number that hits every household in our country, and it's not pretty reading for the Reserve Bank, which goes into its Monetary Policy Committee meeting today and will tell us about interest rates tomorrow. Stats SA's June print has headline inflation jumping from 4.5% to 5%. That's the fastest pace in two years.But the real story isn't the headline figure for June, it's what's driving it: your petrol tank. Fuel prices are up a massive 34% year on year. Diesel is up 51%, petrol 32%. Who wants to be driving a diesel car nowadays? Well, that's the Strait of Hormuz story landing directly in your wallet and mine, and we'll unpack every reason why in a little while with Dr Abedian.There is a silver lining on the inflation figures today though: food inflation keeps falling. Staples like rice and maize meal are actually cheaper now than they were a year ago. Traders, however, have locked in a quarter-point rate hike, 0.25%, from the Reserve Bank tomorrow, following the one they gave us two months ago. So brace for pricier fuel and pricier debt, all in the same week.Next, the boardroom battle at Africa's biggest money manager. Bloomberg was told by Deputy Finance Minister Dr David Masondo that he'll fight to keep his job as chairman of the Public Investment Corporation, despite Finance Minister Enoch Godongwana, his boss, having called a shareholder meeting for next Monday to potentially remove him. It follows Masondo's suspension of PIC chief executive Dr Patrick Dlamini, over a whistleblower report saying Dlamini didn't have the authority to commission an investigation into a dodgy deal involving PIC staff and Lanseria Airport. That's a saga that's already cost six board resignations in a single week. It's worth remembering that the Mpati Commission, which looked into the PIC years ago, warned that having the deputy minister as automatic chairman exposes the R3.5 trillion fund to exactly the kind of political interference we're seeing right now.Some sad news to share: R.W. Johnson, Bill to those who knew him, passed away yesterday. This was confirmed to us by his wife, Professor Irina Filatova. Bill was one of the sharpest, most stubborn voices in South African political writing, an Oxford fellow for 26 years, who came home in 1995. He lost a leg in 2009, and that never slowed him down. He delivered a keynote at BNC7 in Hermanus just over a year ago, and that had our tribe on the edge of their seats. Who would have thought that two of the stars of that conference, Neil de Beer and Bill Johnson, would both not be with us after such a short time. Bill and I didn't always agree, we fell out badly over a column recently, but a full Boardroom Talk tribute is now up on biznews.com, which shows you that he never lost our affections. Rest well, Bill Johnson. The country will miss you.And big corporate news this morning: Pepkor has just announced a genuinely transformational deal, up on SENS. It's combining Pepkor's Flash subsidiary with fintech player Shop2Shop, to build a merchant and payments platform that will process over R200 billion a year in the informal economy: spaza shops, townships, traders, all going digital. Pepkor is paying R1.5 billion in cash, plus folding in Flash, valued at R10.5 billion. Together, the combined business will be valued at over R21 billion, with Pepkor holding a controlling 57% stake. A stock market listing has been flagged for the future, something that will be very interesting to analyse. It's a smart bet on the township economy, and a signal that Pepkor wants to be seen as a fintech story, not just a discount retailer. Pepkor founder Christo Wiese will also be at BNC#9. You can't afford to miss it. Go to biznews.com, click on the image at the top, get all the details, and join us in the Drakensberg. We'd love to have you there.Now for today's main event. Yesterday I sat down with economist Dr Iraj Abedian to make sense of what's going on in the Middle East, and the standoff the Strait of Hormuz has turned into: why it matters, what it means for the Gulf, and what it means for us right here in South Africa.---Alec Hogg: There seems to be a standoff now on the Strait of Hormuz. Tell us what the Strait of Hormuz is, please, and then why it's so important, and why it should be affecting the oil price, and indeed Donald Trump's state of mind.Iraj Abedian: Thank you very much for the opportunity, Alec, good to see you again. At the moment the status is literally a tug of war, but not over what the war started for, over the Strait of Hormuz itself. The strait is significant for a number of reasons. First, it's a very narrow strait between Iran and Oman: a passage of about 33 kilometres wide, of which less than half is fit for ocean liners and big tankers. It's a narrow, critical waterway through which about 30 to 35% of the daily supply of global oil passes. Sometimes it's less, sometimes more, but that is literally the lifeblood of countries like the UAE, Saudi Arabia, Kuwait, Bahrain and Iraq, and most significantly Iran, because over 95% of Iran's exports and anywhere from 95 to 98% of its imports come through the Strait of Hormuz. Iran has been trying to diversify to another port, but as we speak, that remains a critical choke point for the entire region.The historic significance is that Kuwait, the UAE, Bahrain, Oman and Qatar were once, upon a time, part and parcel of the Iranian empire, so there's a lot of political, cultural, religious and historic connection among these nations, their lives have always been intertwined, their families too, not unlike South Africa and Zimbabwe, or South Africa and Lesotho. The colonial power that drew up these lines was the UK. These nations were tribes led by different tribal authorities, emirs or kingdoms depending on their preferences, but they've never truly been independent for long; the most recent independence, Bahrain's, dates back less than 60 years.So the significance isn't just about the 30 to 35% of global oil, it's petrochemicals, fertilisers, aviation fuel, and so on. This has been the case since the 1980s, when Iraq invaded Iran and the Strait of Hormuz was blocked at that time. Back then the West, Israel included, was on the side of Iran, and helped enforce a kind of blockade of the strait in favour of Iran and the region, to create a choke point against Saddam Hussein, the dictator of Iraq. Of course, history has turned the other way around now: Iran is now at the point of claiming its historic ownership, or control, of this significant choke point of global trade.Alec Hogg: Take us through that. Many South Africans have emigrated to Dubai, the UAE has been almost like a magnet. Many South African businesses are in Dubai. Then there's Qatar, where Sasol has a big investment in the gas fields, and Kuwait, where there's a lot of relationship between the two countries. And of course, a little further away is Israel. So what does all of this mean for those countries and the region as a whole?Iraj Abedian: It means they have to abandon sole reliance on American superpower protection. America's standing is all but shattered, and this is, in my view, the beginning of the fall of the empire in a literal sense. For the Arab nations and countries like Egypt and Saudi Arabia, they need to think beyond relying on others to protect them, they need their own regional, integrated, collaborative security pact. As we speak, over the past three or four weeks, Pakistan, Egypt, Turkey and Saudi Arabia have been intensely engaged in shaping a new security pact, a Middle Eastern equivalent of NATO, if you like, call it METO. These things take a lot of detailed financial, military and other arrangements, but it's an acknowledgement that America can no longer be trusted, nor is it able to be. The reality of the global power structure is that we're in a different dispensation.Firstly, war is no longer what it used to be. Military domination by any force, be it America, China or Russia, is not a sustainable means of domination. It may sound idealistic, but it's the reality of the evolution of humankind: we're in a different technological space, and the economic interdependence of nations is inevitable and undeniable, you cannot break it. If that's the case, war and destruction can no longer be a productive means of creating stability. Stability has to be based on a new platform that is more collaborative and more cognisant of the inseparable interests of nations, whether they're white or black, West or East, that's irrelevant.In that context, the Middle East now has to carve out a new security pact among the local players, not China, not Russia, not the US or UK. They may pretend they can, the United States has eight military bases across the countries we've mentioned, Kuwait, Saudi Arabia and so on, to what good? Nothing. Dubai has built its brand, as you mentioned, into a global hub of logistics and investment, but people aren't rethinking that Dubai is the most vulnerable of all these nations, or the UAE more broadly. Alec, you may have seen the statistics that Dubai and the UAE broadly received more missiles and drones from Iran than Israel did, the archenemy. That articulates the issue: once upon a time, and still today, Israel feels an existential threat from the Iranian regime, and the Iranian regime feels the same, for its own reasons, about the Israeli regime. They have an existential coexistence problem. But the rest of the region has taken more damage, more missiles.Dubai now has to rethink, and the UAE has to reimagine what it can do in this situation, and so should Qatar and the others. An important part of this is that over the past 30 years, these neighbouring countries, on the back of their oil and petrochemical wealth, embarked on unbelievable economic development strategies. I knew Dubai as a desert town, like a town in the Karoo, that's how I first travelled to South Africa, through a town like that. Today you go to Dubai and you think you're somewhere else entirely. Now a lot of people who've invested in Dubai, including the government itself, have to shift into a different mindset: to coexist with their neighbours, most importantly Iran in the short term, and to reimagine and re-engineer their security and their economic development. For the moment, they're losing expertise and capital, companies are moving, which is very unfortunate.Alec Hogg: So where does that leave South Africa? We have exposure to Iran because our government invited them into BRICS. We also have exposure through one of our biggest companies, MTN, which has a 49% stake in the major cellphone network in that country. Where does this leave South Africa and its exposure?Iraj Abedian: I've said this before, unfortunately, South Africa, at the wrong time and unnecessarily, bet on a partnership that was bound to end up here. Where it lands us is that we've now gone into a camp, whereas we should have been, in our national interest, an independent, impartial nation, neither West nor East, focused on our own developmental needs. It puts us in the bad books of the Americans, for good or bad reason. At the same time, Iran is not, for the next 30 years, going to be in a position to take care of its own needs, never mind being a good partner for anybody else, because of the level of destruction. I said America has lost this war, but that doesn't mean they haven't been militarily successful, they've damaged that nation, destroyed what they could destroy. The reconstruction of Iran won't be a short project, it's going to be at least a 20 to 30 year reconstruction programme.South Africa ended up not on the side of the people, because whether America wins or loses this regime, the fact is that the general population of Iran has suffered under it. They're suffering as we speak, with tens of thousands of political prisoners, daily executions, on top of shortages of food and everything else. How they'll see our alliance, and those who supported this regime, is quite obvious. It's not good, it's not ethical, and it's not compatible with South Africa's values or its economic interests in the medium term.Alec Hogg: That was Dr Iraj Abedian, and it's hard to argue with his read. A fractured Strait of Hormuz means a fundamentally reshaped Middle East, and South Africa, thanks to our BRICS entanglement with Iran (we did, after all, invite them into that club), is more exposed than most emerging markets, whether through fuel prices or through MTN's stake in its Iranian cellular network.Well, that's the BizNews Edge for today. Thank you for watching, thank you for listening, and thank you for being a loyal member of our Business Tribe, because if you're catching this every day, well, you are a loyal member, and that's what keeps us going. For more on all of these stories, head to biznews.com, you'll also find the Boardroom Talk tribute to R.W. Johnson there. I'm Alec Hogg, until tomorrow, cheerio.