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Iran Mulls Legal Action In Desperate Attempt To Release Frozen Funds In South Korea

Iranian President Hassan Rohani (R) and South Korean President Park Geun-hye attend a press conference in Tehran, May 2, 2016, at the height of their post-nuclear-deal trade relations. FILE PHOTO

Iran says it may take legal action to free billions of dollars of its oil money frozen in South Korea's banks due to U.S. sanctions.

In one of the latest developments in the saga to get some of its frozen assets released, Iran's President Hassan Rouhani has ordered Central Bank Governor Abdolnasser Hemmati to take "firm measures" including legal action against South Korea "to prevent the repetition of this behavior by other countries," official news agency IRNA quoted part of Rouhani's order on June 14.

On Friday June 12, Hossein Tanhaee, the chairman of Iran and South Korea's joint chamber of commerce told Borna news agency in Tehran that Iran's frozen assets in South Korea were between $6.5 billion to $9 billion.

Tanhaee added that not only Korean banks refuse to release Iran's money, some of them have also demanded commission and maintenance fees for Iran's accounts.

He added that during the crisis caused by the coronavirus pandemic, the South Korean government agreed to pay $50 million to Iran to purchase food and medicine but Seoul later broke its promise and refused to pay the sum.

Earlier, Central bank Governor Hemmati had said that Iran might take international legal action against Seoul if Korea refuses to repatriate Iran's oil money.

In an interview with Bloomberg, Hemmati reiterated that South Korea refuses to repatriate the funds for the oil it has imported from Iran even for U.S. purchases of food and medicine, allowed by U.S. sanction rules. He complained that Iran has imported $500,000 worth of medicine from South Korea after two years of negotiations.

Korean officials say they will send another $2 million dollars' worth of medical supplies in June based on an agreement with U.S. government that allows the shipment of humanitarian aid to Iran.

An IRNA commentary published on Sunday June 14 says Rouhani has criticized South Korea for "following the United States anti-humanitarian policies," adding that Seoul's prevention of Iran's access to its oil money is "unacceptable."

Following the 2015 nuclear deal which ended the economic sanctions against Iran, South Korea expanded its trade ties with Tehran and became a major customer for Iran's oil. In return, Iran boosted its import of Korean products after a 2016 agreement between the two countries.

Using racist language about the appearance of Koreans, the commentary featured by IRNA criticized Seoul for not respecting its agreement with Iran but it did not mention the U.S. sanctions that have restricted Iran's transactions with the international banking system.

However, it mentioned that Korean companies that were represented in Iran after the JCPOA, left Tehran as soon as President Donald Trump pulled out of the nuclear agreement with Iran.

The commentary added that after two years, there is still no will in Seoul to repay its debt to Iran. In the meantime, Koreans have said that they have been continuing consultations with U.S. officials about Iranian assets in Korea.

The IRNA commentary says Korean officials have implicitly said that Korea's strategic ties with the United States supporting South Korea against nuclear North Korea prevents them from paying their debts to Iran.

According to IRNA, Iran initially suggested that South Korea can repay its debt by exporting industrial machinery and later asked for medical supplies and medicine in return for the oil money, but Korea has held the money in two Korean banks and its officials say they are waiting for a go ahead from U.S. officials to release the assets.

Tehran calls the Korean medical supplies it has received "minimal". However, neither the IRNA commentary, nor President Rouhani or his Central Bank Governor are sure what they or Korea can do to end the deadlock.

In a clear sign of desperation, the commentary says Seoul has two choices: To continue the current situation or to play a more constructive role. But it does not say how.

In the meantime, during the first quarter of 2020, South Korea has exported $61 million worth of goods to Iran. The figure for the similar period last year was $282 million. During the same period, Iran's exports to South Korea usually exceeding two billion dollars have dropped to less than $4 million.