South Korea will soon start separate talks with the US and Iran as it comes under pressure to join US-led sanctions to force Tehran to drop its nuclear ambitions, a government official said yesterday.
Resource-poor South Korea faces a conundrum over to whether to back close ally Washington and impose toughened sanctions against Tehran, or heed Iran’s warning that new sanctions could risk business deals and endanger a major source of oil.
A senior government official, who asked not to be identified, said Seoul would launch talks with the US and Iran soon.
“In our discussions with the US, we will raise issues of the difficulties our companies will face [if new sanctions are imposed] ... and will try to minimize the damage to our economy,” he said.
Iran is the fourth-largest source of crude for South Korea, accounting for about 10 percent of its supplies. Any disruption of shipments would have a big impact on Asia’s No. 4 economy, which relies on imports for all its energy resources.
Billions of dollars are also at stake in Iranian contracts for South Korea’s construction firms and shipbuilders.
The Iranian ambassador to Seoul has told local media that South Korea risks losing substantial economic benefits in Iran if it follows the US lead.
Local media have identified three Iranian businesses operating in South Korea — Bank Mellat, Iranian Petrochemical Co and CISCO Shipping Co — as targets of sanctions.
Bank Mellat is considered at the heart of the US demand, as the bank has been accused of facilitating hundreds of millions of dollars in transactions for Iranian nuclear, missile and defence entities, Yonhap news agency reported.
South Korea is reviewing how to sanction the bank for suspected violation of a local law on foreign exchange trading, it said. Washington wants Seoul to shut down the bank’s local branch.
The US declared Iran the biggest state sponsor of terrorism this month, ratcheting up pressure on its long-time foe even as US President Barack Obama signalled he remained open to talking to Tehran about its nuclear program.
South Korea, growing faster than expected in the second quarter and outpacing regional peers as it recovers from the global financial crisis, is now focusing on boosting business conditions for small and medium-sized firms. Many of them look to Iran as a crucial export market.
Iran is a US$4 billion market for South Korea’s automobiles, home appliances and other consumer goods, and as many as 2,000 South Korean manufacturers have business links with the country.
Since June, the UN Security Council, the US and the EU have tightened sanctions on Iran over its refusal to enter into international talks on its nuclear program.
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