Iran-Korea dispute escalates over billions of oil frozen by US sanctions
The dispute between Iran and South Korea escalates, with Tehran threatening legal action unless Seoul releases more than $ 7 billion in funds for oil shipments frozen due to US sanctions.
The Islamic Republic was South Korea’s third-largest trading partner in the Middle East before the United States unilaterally withdrew from the 2015 nuclear deal between Tehran and world powers and reimposed crippling sanctions.
Iran was a major oil supplier to the resource-poor South Korea, and in turn imported industrial equipment, household appliances and vehicle parts from Seoul.
“We have $ 7.8 billion of our money stranded in South Korean banks,” said Iranian lawmaker Alireza Salimi, involved in the case.
South Korea took delivery of Iranian oil “but did not pay for it,” he told AFP.
“He is not a reliable business partner and he should pay interest on money he improperly holds,” he accused.
A foreign ministry official in Seoul told AFP that “it is difficult to confirm” the exact amount of the money involved.
South Korea stopped buying Iranian oil after former US President Donald Trump walked away from the nuclear deal in 2018, reimposing tough sanctions and threatening to punish anyone who buys Iranian crude.
That year, Iran-South Korea trade halved from 2017, when it stood at $ 12 billion, according to the Iranian embassy in Seoul.
Trade volume fell to just $ 111 million in mid-July 2020, according to embassy figures.
In January, Iranian Revolutionary Guards seized a South Korean-flagged tanker, the Hankuk Chemi, and detained it and its captain for three months, apparently for alleged environmental violations.
The seizure was widely viewed in South Korea as an attempt to force Seoul’s hand on the frozen funds, although Tehran has repeatedly denied there was a link.
– ‘Unacceptable’ –
Last week, Iranian Foreign Minister Hossein Amir-Abdollahian warned that his country would sue South Korea if it continued to refuse to honor its debt.
“The American pressure (on Seoul) is a fact but we cannot continue (…) to turn a blind eye to this issue,” he said.
If Seoul fails to release the funds, the government will allow Iran’s central bank to take legal action against two South Korean lenders holding the money, he said.
Amir-Abdollahian said he spoke with his South Korean counterpart Chung Eui-yong on the issue late last month.
“I told him that it was unacceptable for our people to wait three years” for the funds, he said.
Iranian media have quoted the South Korean minister as saying he will do his best to resolve the issue, but Tehran is still not convinced.
The foreign ministry official in Seoul rejected the idea of a South Korean “debt”, calling the amount a “frozen fund” instead.
The money “cannot be delivered to Iran due to US sanctions, which prevent financial transactions with Tehran,” the official told AFP.
“We transferred the cost of crude oil imports to a Korean won account in the name of the Iranian central bank. And when a South Korean company exports to Iran, it receives payments from that account in Korean won.” , added the manager.
South Korea has also been “in close consultation with related parties and banks” to pay Iran’s arrears of around $ 16 million to the United Nations, using the frozen fund, the official said, and the payout process is complete.
– Made in Iran –
Lawmaker Salimi said the United States had allowed South Korea to provide Iran with goods instead of returning the funds.
But the South Korean Foreign Ministry official said “at the moment only humanitarian transactions, such as drugs, are possible with frozen funds.”
At the end of last month, Iranian President Ebrahim Raisi banned the import of household appliances from South Korea, on the instruction of Supreme Leader Ayatollah Ali Khamenei, who said the imports could harm the economy. local production.
But South Korean devices are still in high demand, despite the ban.
The head of the Iranian home appliance industry union said the Iranian home appliance market is worth $ 6 billion a year, 40% of which is smuggled goods imported from abroad.
Maryam, a bride-to-be who shops in Tehran’s Amin-Hozour Street, a hub for household appliances, said she preferred to buy foreign products because “the quality is better and the prices are not that different. of what is produced locally “.
But Amine Feizi, a machine operator, said he bought a refrigerator, washing machine and TV, all made in the Islamic Republic.
“I prefer products made in Iran because foreign products are more expensive and because I want to support domestic production,” Feizi said.
“Since our country has been under sanctions, the quality of products made in Iran has improved.
ap-sk / hkb / lg / it / fz