Asia - Pacific

South Korea agrees to unfreeze Iranian funds

Iran-South Korea relations soured over freezing Iranian assets in South Korean banks

Syed Zafar Mehdi   | 22.02.2021
South Korea agrees to unfreeze Iranian funds


After weeks of intense negotiations, Iran and South Korea reached an agreement Monday to unfreeze Iranian assets in Korean banks.

Governor of Iran’s Central Bank Abdolnasser Hemmat met in Tehran with South Korean Ambassador Ryu Jeong-Hyun to discuss the modalities of transferring and spending parts of Iran’s frozen assets.

According to a statement issued by the Central Bank, the two sides reached an initial agreement on transferring the frozen assets to specific destinations, as determined by Tehran.

The South Korean envoy, for his part, said Seoul was ready to cooperate with Tehran in facilitating the release of Iranian funds from South Korean banks, the statement said.

Hemmati, however, said that Iran would seek "damages" from Seoul caused by the "non-cooperation" of Korean banks in getting the assets freed.

"Although Iran welcomes the change in the approach of countries and increase in cooperation, the legal pursuits of this bank (CBI) to claim damages due to non-cooperation of Korean banks in recent years will remain strong," he said.

Hemmati added that Korean banks have been dissuaded from cooperating with Tehran on the issue owing to the US pressure campaign against Iran.

Iran has around $9.2 billion frozen assets in South Korea, according to South Korean media.

Relations between Tehran and Seoul have soured over the years with the issue of frozen assets leading to a bitter diplomatic row.

In January, tensions escalated after Iran seized a South Korean- flagged vessel in the Persian Gulf over alleged environmental pollution. Following the incident, a high-level delegation from South Korea visited Iran to demand the release of the vessel.

During the delegation's visit, Iran's Foreign Minister Javad Zarif described Iran’s frozen assets by South Korea as the "biggest obstacle" to their bilateral relations.

Negotiations to unfreeze the assets gained momentum after the release of the vessel sailors by Iran earlier this month. The vessel, however, remains in Iran's custody.

Monday’s agreement comes amidst hectic efforts to revive dialogue between Washington and Tehran on Iran’s nuclear program.

Iran reportedly plans to import COVID-19 vaccines from South Korea with parts of the funds stacked in that country.

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