Foreign ministry announces sanctions on Iran

Posted on : 2010-09-09 13:55 KST Modified on : 2010-09-09 13:55 KST
The impact on exports and contracts worth an extimated $10 billion remains difficult to predict
  Sept. 8
Sept. 8

By Lee Je-hun, Staff writer

   

The South Korean government announced comprehensive sanctions against Iran on Wednesday in the areas of finance, trade, transportation, and energy. The sanctions are in accordance with United Nations Security Council Resolution No. 1929 on Sanctions Against Iran. This includes the designation of 102 Iranian groups and organizations, including the Revolutionary Guard, Iran Shipping Lines, and Bank Mellat, and 24 individuals as subject to financial sanctions. In the case of the Seoul branch of Bank Mellat, which had been the focus of most attention, the government announced plans to suspend its operations for two months on the basis of violations of the Foreign Exchange Control Act.

The announcement was made by Ministry of Foreign Affairs and Trade (MOFAT) spokesman Kim Young-sun on Wednesday afternoon at a joint press conference with other relevant organizations. The press conference took place at the Annex of the Central Government Complex on Seoul’s Sejongno Road. In attendance were officials from the Ministry of Strategy and Finance (MOSF), MOFAT, Ministry of Knowledge Economy (MKE), and Ministry of Land, Transport, and Maritime Affairs (MLTM), as well as the Financial Services Commission (FSC), Bank of Korea (BOK), and Financial Supervisory Service (FSS).

Kim also said, “Even in the case of financial dealings with Iranian organizations that are not subject to sanctions, the government plans to implement a Bank of Korea prior permission system for sums of 40,000 euros or more and a prior reporting system for sums of 10,000 euros or more.”

Regarding the Seoul branch of Bank Mellat, a senior government official said, “In the future, it won’t be able to engage in transactions of even one dollar without government permission, and if additional violations are discovered, there could be additional punishment.” The official added, “This bank will find it effectively impossible to engage in normal operations in the future.”

However, the government did not accept demands made by the U.S. government during discussions of Iran sanctions with Seoul. The U.S. has been calling for the branch’s closure and the freezing of its assets.

Kim also said the South Korean government plans to allow normal and legal transactions with Iran to “proceed smoothly” to minimize damages to Korean businesses stemming from the comprehensive sanctions against Iran.

“We plan to pursue the establishment within a Korean bank of a won-valued account in the name of Iran’s central bank,” Kim explained.

Regarding the question of disruptions to crude oil supplies from Iran, a government official said, “Since crude oil was not included as subject to a ban in the UNSC resolution either, we do not foresee any major disruptions to its importation.”

Serving as bases for the government’s optimism are the fact that the Iranian government depends on the exportation of crude oil for a considerable part of its finances, and that other nations taking part in the sanctions, including European countries and Japan, have continued with their crude oil transactions.

However, Seoul has been unable to make any definitive pronouncements on the issue of Korean exports to Iran, which amount to $4 billion per year, or construction and plant orders totaling between $1 billion and $2 billion. Observers are concerned that a worst-case scenario in which all exports and imports with Iran are halted could lead to direct and indirect damages of over $10 billion.

In the wake of the government’s announcement of broad-ranging sanctions against Iran, affected businesses have been attentive to the response from Iranian authorities.

In an interview Sunday with Iran‘s state-run IRNA news agency, Iranian Foreign Ministry spokesman Ramin Mehmanparast said, “Countries that join in league with the club of nations applying sanctions against Iran will lose the opportunity to use Iran’s great potential to their advantage.”

   

   

Please direct questions or comments to [englishhani@hani.co.kr]

  

  

  

 

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