Korea gets waiver on U.S. Iran sanctions

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Korea gets waiver on U.S. Iran sanctions

South Korea is among eight countries getting temporary waivers from the U.S. government on an embargo on Iranian oil imports after it reimposed sanctions on Tehran on Monday, according to Seoul’s Ministry of Foreign Affairs.

Waivers can be granted for up to 180 days, and it is possible to apply for an extension, according to the Korean Foreign Ministry, after sanctions were restored Monday by Washington following the Donald Trump administration’s pulling out of the 2015 Iran nuclear accord in early May.

The Trump administration in August announced its decision to restore, by Nov. 5, sanctions that were lifted through the Joint Comprehensive Plan of Action in return for restrictions on Iran’s nuclear weapons program. The deal was signed on May 8, 2015, by Iran and China, France, Germany, Russia, Britain and the United States under the Barack Obama administration.

The sanctions that came into effect Monday targeted Iran’s energy sector and transactions by foreign financial institutions with the Central Bank of Iran (CBI).

Other countries that received waivers include key U.S. partners like India and Japan, according to foreign media outlets.

The sanctions will target Iran’s energy, shipping and banking sectors, a part of the Trump administration’s strategy of maximum pressure on Iran to cut off funding for its nuclear and ballistic missiles program.

Seoul has been seeking exemptions from Washington for imports of Iranian condensates, an ultra-light form of crude oil, and on payments to escrow accounts.

In a statement Monday, Seoul’s Foreign Ministry said that crude oil imports from Iran can be continued for the time being through the waiver granted by the United States, enabling a stable supply of condensates “necessary” for Korea’s petrochemical industry. Furthermore, the current transaction system between Korea and Iran can continue to be used for trade and will not violate sanctions.

Through this won-based transaction system, local banks such as the Industrial Bank of Korea (IBK) and Woori Bank held accounts for the Central Bank of Iran to enable Korean companies to transfer payments to Iran since 2010. The government can control and monitor the funds going to Iran through this system.

The two countries have been in consultations over the past half year on Washington’s renewal of Iran sanctions and how to minimize the impact on Korean businesses.

Over the past several months, Seoul held eight meetings of related government agencies and held 11 sessions with related companies in order to minimize the impact of the reimposing of Iran sanctions on local businesses, according to the Foreign Ministry.

It is also a means to avoid so-called secondary sanctions intended to apply pressure on third countries to prevent them from trading with Iran.
South Korean Foreign Minister Kang Kyung-wha in a phone conversation with U.S. Secretary of State Mike Pompeo on Oct. 29 asked for Washington “to exercise flexibility” and exempt Seoul from the sanctions “in order to minimize damage to Korean enterprises.” Pompeo replied that the United States would be “mindful” of South Korea’s position.

Under such circumstances, the waiver, said the Korean Foreign Ministry Monday, is Washington exercising “maximum flexibility” and consideration toward its ally, Seoul.

It added, “The Korean government as a responsible member of the international community will take part in the U.S. and global efforts toward resolving the Iran nuclear issue and stability and peace in the Middle East region, and in the process, also continue to closely consult with related countries to minimize the effect on or economy.”

On the eve of the sanctions imposition, Pompeo in an interview with Fox News on Sunday defended the temporary waivers granted to eight countries to continue to buy Iranian crude oil.

He said that a “handful” of countries have “already made significant reductions in their crude oil exports” and needed “a little bit more time to get to zero” and that Washington is “going to provide that to them.”

But he underscored that Trump’s “policy of maximum pressure will be fully in place.”

Pompeo said that he is “very confident” that the crude oil embargo and financial sanctions on over 600 designations of individuals and companies in Iran “will have the intended effect to alter the Iranian regime’s behavior.”

U.S. Treasury Secretary Steven Mnuchin wrote in an opinion piece published by the Financial Times Sunday that “Monday marks the heaviest economic pressure ever applied by the U.S. against the Iranian regime.”

He said that the Treasury’s blacklist will include “hundreds of targets previously removed from sanctions lists” and more than 300 new entities.

Mnuchin added that exceptions include humanitarian aid, while adding Washington will strictly enforce Iran sanctions, and wrote, “We will not tolerate banks, companies or other entities that seek to circumvent our actions. We will view them as complicit in funding Iran’s malign ambitions.”

BY SARAH KIM [kim.sarah@joongang.co.kr]
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