South Korean banks wary of US sanctions are holding tight to billions of dollars in Iranian money, apparently unwilling or unable to budge before Joe Biden assumes office as the next president of the United States on Wednesday.
The banks won’t release more than $7 billion of Iranian oil money stuck in won-denominated deposits in South Korea, not even to a special humanitarian trade channel partly overseen by the US, said the governor of the Central Bank of Iran, Abdolnaser Hemmati, who met a South Korean delegation in Tehran last week.
They’re showing “full cooperation” with the Trump administration’s “maximum pressure” campaign to isolate Iran from the global banking system through sanctions, Hemmati said Monday in response to questions sent by Bloomberg. He denied that the seizure of a South Korean-flagged tanker by Iran’s Islamic Revolutionary Guard Corps last month was related to the dispute over the funds.
The fate of the locked assets has taken on added urgency with Biden’s inauguration. The incoming president has said he’s open to rejoining the 2015 Iran nuclear deal if Tehran returns to full compliance with the accord Trump quit in 2018.
Iran’s financial sector and the central bank are sanctioned by the US isolating Tehran from the global banking system, including for humanitarian trade.
The funds in Korea can be transferred to the European-backed special trade vehicle known as INSTEX or a joint Swiss-US mechanism if Korean banks would be willing to release the money, Hemmati argued. But that would be a second step, he said.
"Transferring the funds to INSTEX or the Swiss channel are other options, but not now. The first step is that we should see a political will of the Korean banks to release the funds and cooperate with Iranian banks. We have not yet witnessed such a willingness.”
Neither INSTEX nor the Swiss mechanism has facilitated much trade because of the omnipresent US bullying and hostility.
INSTEX, or Instrument in Support of Trade Exchange, was designed in January 2019 to evade the Trumpian restrictions and facilitate trade between Iran and the EU.
The Swiss channel or SHTA (Swiss Humanitarian Trade Agreement) became operational a year ago to help import food, medicine and Swiss goods without falling foul of the US sanctions.
"In essence INSTEX has been of little use and is mostly affected by the US sanctions regime. It did not work as had been expected. The Europeans have not had the courage to uphold their economic sovereignty," the CBI boss complained.
South Korea was a major buyer of Iranian oil before the sanctions. After the US restricted the use of dollars for transactions with Iran, the CBI created new accounts with Korean commercial banks to facilitate trade in Korean won.
