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Continuing the Story of the Hijacked Tanker and Frozen Funds

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04.05.2021

In early 2021, we wrote about the Iranian seizure of a South Korean tanker and how this precedent actually demonstrates a number of unresolved problems, most notably the problem of Iranian assets in South Korean banks intended to pay for Iranian crude oil imports and frozen because of US sanctions.

Recall: Iran has repeatedly urged Seoul to address the $7 billion frozen in two South Korean banks as part of US sanctions after the Donald Trump administration pulled out of the landmark nuclear deal with Iran in 2018 and tightened sanctions against the Islamic Republic. On January 4, 2021, the Iranian Islamic Revolutionary Guard Corps seized the South Korean-flagged tanker MT Hankuk Chemi under the pretext of environmental pollution.

On January 10, 2021, a government delegation led by First Deputy Foreign Minister Choi Jong-gon arrived in Tehran. However, the parties were unable to reach any agreements. In fact, Choi called for the release of the tanker and demanded evidence of oil pollution in the waters of the Persian Gulf, which formally caused the tanker to be seized. In response, his interlocutor Abbas Araghchi said that the tanker was in the hands of an Iranian court, and that the development of bilateral relations can make sense only when the issue of frozen funds is resolved.

Araghchi openly stated that “the freezing of Iran’s foreign currency resources in Korea is more due to a lack of political will on the part of the Korean government than to US sanctions,” and called on Choi to work out a mechanism to resolve the issue. However, the Iranian side noted that the crew members were safe and in good shape.

Choi’s talks with Iran’s Central Bank Governor Abdel Nasser Hemmati and Foreign Minister Javad Zarif also proved fruitless. The minister reiterated the thesis that the executive branch does not interfere in matters that fall within the jurisdiction of the judiciary; and the bank recalled that the South Korean government had promised to resolve the issue a year and a half ago, but had done nothing.

Kamal Kharrazi, head of Iran’s Strategic Council on Foreign Relations, was even more blunt: “The two countries had good relations, but now, unfortunately, because the Korean government yielded to US pressure, Iranian assets worth $7 billion have been frozen in Korean banks, and it cannot even withdraw money to buy medicine“.

On January 12, during a briefing, Saeed Khatibzadeh of the Iranian Foreign Ministry expressed dissatisfaction with the measures taken by the ROK to solve the problem: the solution is delayed and Tehran is not satisfied. The Iranian side has indicated its position that the problem of frozen funds should be solved first, and the issue of the arrested tanker will be resolved in accordance with legal procedures.

As a result of Choi’s visit, the parties agreed on nothing but further negotiations, and Choi went to Qatar, where he appealed for assistance in freeing the South Korean tanker and its crew.

In mid-January it emerged that in order to “create a positive mood before negotiations with Iran,” South Korea withdrew its anti-piracy naval unit Cheonghae from the Strait of Hormuz. Iranian Ambassador Saeed Badamchi Shabestari allegedly once expressed displeasure to Seoul over the presence of South Korean troops in the Straits because they were actually part of an international contingent assembled by the United States to contain Iran, even though formally the unit is meant to fight regional piracy. It is a typical trick of South Korean foreign policy when US orders are de facto carried out, but de jure these........

© New Eastern Outlook


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