Kang Seung-woo is the Business Desk editor at The Korea Times. Prior to this position, he covered politics, national affairs, finance and sports.
Korea rejects Iran's calls to release frozen funds
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By Kang Seung-woo
Seoul-Tehran frozen funds issue hinges on US-Iran nuclear deal
By Kang Seung-woo
Despite repeated demands from Iran that Korea swiftly unlock funds held in two Korean banks, the Korean government remains adamant that releasing the assets is out of the question as long as U.S. sanctions on Tehran remain unchanged, according to the foreign ministry here.
Korea and Iran are set to celebrate the 60th anniversary of diplomatic relations in October, but their ties have been going south as the Middle Eastern country has been complaining about the Korean government's refusal to unlock $7 billion (9.3 trillion won) of Iran's money held in accounts at Woori Bank and the Industrial Bank of Korea due to U.S. sanctions that were imposed again in 2018 after former President Donald Trump withdrew from a 2015 multinational nuclear pact. Consequently, the banks can face sanctions in the U.S if they conduct transactions with Iran or relevant businesses.
The latest complaint from Iran came from its Ambassador to Korea Saeed Badamchi Shabestari during a recent interview with The Korea Times.
“Unfortunately, Iran-Korea relations were influenced by the Trump administration's unilateral withdrawal from the nuclear deal in 2018,” Shabestari said. “The U.S. withdrew from the negotiations and imposed illegal, inhumane sanctions on Iran, and Korea participating in the sanctions risked its bilateral relations with Iran.”
In response, Korea's Ministry of Foreign Affairs says there is nothing it can do without a nuclear deal being signed between the U.S. and Iran.
“There is no change at all in terms of releasing Iranian funds held here, because the U.S. sanctions prevent the unlocking of the money,” a ministry official said.
“The fastest way for Iran to receive the assets is the U.S. and Iran reaching a nuclear agreement,” the official added.
Korea had been trading with the Middle Eastern country for years through a won-denominated account the Central Bank of Iran opened at the Korean banks. The U.S. government gave the green light to that system following a denuclearization deal signed with Tehran in 2015. But the accounts were frozen in September 2018.
As the deteriorating bilateral ties have negatively affected Iran's economy, while Korean companies have been losing opportunities in the Iranian market, the new Korean government has stepped up efforts to resolve the issue.
In June, Foreign Minister Park Jin held a meeting with the Iranian ambassador and voiced hopes that negotiations on the restoration of the Iranian nuclear agreement will gain momentum and emphasized that Korea will continue to play a necessary role to this end.
Last week, First Vice Foreign Minister Cho Hyun-dong had separate phone conversations with U.S. special envoy for Iran Robert Malley and European Union (EU) mediator Enrique Mora to share their views on the current situation in the negotiations to revive the Joint Comprehensive Plan of Action (JCPOA).
Iran's foreign ministry said in June that it will wait and see what practical actions the Yoon Suk-yeol administration will take with regard to the frozen accounts, adding that the new Korean government has promised to pay the money it owes Iran, but has yet to find an effective solution.
Amid the deadlock, there are signs that a deal to revive the JCPOA could be close.
Earlier this month, the EU proposed the final draft and the U.S. and Iran seem to be serious about reaching a deal, according to foreign media reports.
During his call with Mora, Cho commended the EU for its effort to prepare and circulate the final draft and mediate between the U.S. and Iran, adding that it is time for the U.S. and other parties to conclude the deal.
“Starting August, the negotiation started getting on track as Iran and the U.S. seem flexible about controversial issues,” the ministry official said, adding that the Korean government is optimistic about the deal being concluded.