The Central Bank of Iran demanded Monday South Korea release billions of its foreign exchange assets blocked in that country.
South Korea’s First Vice Foreign Minister Choi Jong-kun arrived in Tehran on Sunday for talks related to the release of a Korean oil tanker seized by Iranian authorities last week and the fate of money blocked by the Seoul government.
Choi and the accompanying delegation met senior government and banking officials, including Abdolnasser Hemmati, the CBI governor.
Hemmati criticized Korea's inappropriate attitude towards Iran’s assets blocked for more than two years. "This is unacceptable…Iran would not be indifferent if the delays continue," he was quoted as saying by the CBI website.
Iranian assets locked in South Korea are estimated between $7-9 billion. Hemmati complained that Korean banks are holding the assets due to US pressures.
South Korea is a staunch political, economic and military ally of the United States. More than 28,000 American troops are based in the East Asian country. US military presence in South Korea goes back to 1957.
"This is a big mistake. Seoul blocking Iran's money in compliance with the wishes of a third country is unacceptable. We hope your government will pursue this issue independently without considering what the outgoing US administration wants," he told the visitors.
The senior banker noted that Tehran has used its assets blocked in the other countries despite the US sanctions, adding that Iran's frozen assets have become a thorny issue in bilateral relations.
He pointed to talks with the Koreans a year and a half ago when they had pledged to cooperate but failed to keep their word. "We could not even use our money to buy medicine and other goods.”
Iran has said it may resort to international courts if the issue is not resolved bilaterally.
Lacking Political Will
Deputy Foreign Minister Abbas Araghchi met Choi on Sunday and said the Korean government "lacks political will" in not freeing Iran’s assets.
Rejecting the US blockade, Araghchi said: "We believe this is more due to a lack of [Seoul’s] political will and less about restrictions imposed by the United States," under the belligerent US president, Donald Trump who was ousted in the Nov. 3 elections.
The diplomat stressed that unlocking the assets is "a first priority" in maintaining mutually respectful bilateral ties.
For his part, Choi said his visit is a sign that South Korea attaches importance to the Iranian assets issue. His government intends to restore trust in bilateral relations in 2021 by resolving the problems existing between the two countries, he added.
Last Tuesday, the Islamic Revolution Guards Corps (IRGC) seized South Korean Hankuk Chemi vessel in the Persian Gulf for violation of environmental protocols in the sea.
Hemmati has often complained that Iran was struggling to transfer $200 million held in Korean banks to pay for Covid-19 vaccines through Covax.
Covax is global initiative operating under WHO which brings together governments and manufacturers to ensure the vaccines reach those in greatest need. The initiative strives for fair and equitable distribution of vaccine doses. Iran announced in October that it had joined the Covax initiative.
Trump imposed crippling economic sanctions in 2018 after abandoning Iran’s 2015 nuclear deal with six major powers. Under that deal, Iran had agreed to curb its nuclear work in exchange for the lifting of sanctions.
South Korea was a major buyer of Iranian oil before the sanctions. Home to a massive refining industry, the country is the world’s fifth-largest oil importer. Before the latest US-led sanctions, Iran accounted for almost 15% of Korea’s oil imports.
After the US restricted the use of dollars for transactions with Iran, the CBI created new accounts with South Korean commercial banks to facilitate trade in Korean won.
The two countries had used the accounts based on the Korean currency to continue Korea's imports of oil from and its exports of goods to Iran. Those accounts were also frozen after the Trump administration tightened sanctions on Iranian oil exports in 2019.
