News ID: 270017
Published: 0206 GMT June 10, 2020

Iran urges South Korea to release billions withheld by banks

Iran urges South Korea to release billions withheld by banks

Iran called on South Korea to release billions of dollars of oil-export revenue, arguing that Seoul is buckling to pressure from the United States and illegally withholding the Islamic Republic’s funds.

Abdolnaser Hemmati, the governor of the Central Bank of Iran (CBI), told Bloomberg in an interview published Wednesday that the actions of banks in South Korea were preventing Iran from using the money to buy foods and medicines, trade that is exempt from US sanctions.

“It is appalling to see that Korean banks have conveniently neglected their obligations, common international financial agreements, and decided to play politics and follow illegal and unilateral US sanctions,” Hemmati said in a written response to questions.

Iran could launch legal action to gain access to the funds, he said, without naming the lenders in question. Hemmati also didn’t elaborate on the course of action that Iran may take.

After sanctions were lifted under the 2015 nuclear deal, Iran the following year managed to unlock over $6.4 billion of oil payments trapped in Indian accounts, using European banks as a clearing agent. The CBI has also filed lawsuits in Europe against financial companies that have withheld its money on the basis of court orders issued in the US.

Iran announced earlier this month that it had received medicines valued at $500,000 from South Korea after two years of negotiations.

At the time, Iran’s Foreign Ministry said the deal was approved by Washington. It also said South Korea was about $7 billion in arrears for oil exported before the US last year reimposed sanctions on Iran’s crude sales.

According to the Foreign Ministry in Seoul, the drugs shipped were for the treatment of genetic diseases. This month, South Korea plans to ship COVID-19 test kits worth $2 million, it said.

“We have been consulting with the US, Iran, and the banks holding the frozen funds, seeking to make progress on this issue,” said Koh Kyung-sok, a Foreign Ministry official.

“So far, we’ve been able to utilize some of the funds to expand humanitarian trade with Iran, and will continue to seek ways to increase such exchanges,” he said by phone.

Iran announced an outbreak of the coronavirus in late February and phased in restrictions to control the disease. The economic shock prompted authorities to seek International Monetary Fund assistance for the first time since 1960.

Hemmati declined to say whether he had received an update from the IMF on the loan application. He said Iran is “weathering” the impact of the virus and even expects to see “moderate” economic growth by the end of the year.

Returning to South Korea, he said the two countries have been working on a special trade vehicle, similar to that established with the European Union, which would allow Iran to complete humanitarian transactions using the money locked in Korean banks.

The US, which abandoned the 2015 nuclear deal two years ago, has sought to “stonewall” the plan, according to Hemmati. 

The EU mechanism – known as INSTEX – provides European companies with a trading vehicle to sell goods and services to Iran without using dollars, routing transactions through US banks, or moving money across the Iranian border. But its impact has been limited due to companies’ fears over the reach of American sanctions.

“Should Korean banks not adhere to their international agreements with us, we reserve our rights to take legal actions under international laws,” Hemmati said.



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