Seoul sanctions Moscow's central bank

Economy

Published: 07 Mar. 2022, 18:21 Updated: 07 Mar. 2022, 22:49

Seoul sanctions Moscow's central bank

Sejong Arts Center lit up with the colors of the Ukraine's national flag on Monday in support. [YONHAP]

The Korean government Monday sanctioned the Russian central bank for invading Ukraine along with Russia’s National Wealth Fund and the Russian Direct Investment Fund.

Additionally, it added another Russian bank to seven banks sanctioned on March 1.

Rossiya was added to a list that included Russia’s biggest commercial bank, Sberbank, the state-owned VEB, Promsvyazbank, VTB, Otknite, Sovcom and Novikom.

Korea's actions followed a week after western countries including the U.S., U.K., EU and Canada sanctioned Russia’s central bank.
The U.S. Treasury said the goal was to prevent the central bank from propping up the rapidly depreciating Russian currency.

The Korean government has been increasing its actions against Russia since the beginning of this month.

On Sunday, Seoul halted exports of strategic items to Belarus for “enabling” the invasion. It halted strategic item exports to Russia a week ago.

“On February 28, the Korean government strongly condemned Russia's armed invasion of Ukraine and decided to take export control measures on Russia for a peaceful resolution of the situation,” the Foreign Ministry said in a statement released Sunday. “In this regard, the Korean government decided today (March 6) to implement export control measures against Belarus.”
Belarus takes up roughly 0.01 percent of Korea’s trade.

The Finance Ministry denied any pressure from the U.S.

“While we have considered the impact that the measures would have on Korean companies that have businesses with Russia, our focus currently is joining the world as part of an international society that wants peace,” a Finance Ministry official stressed.

The Korean government, however, has not banned energy imports from Russia unlike the U.S. and other western countries.
In 2021, Korea imported 53.8 million tons of crude oil from Russia, 5.6 percent of all crude oil imports.

While Russia accounts for less than 3 percent of Korea’s overall imports, most of those are energy. Crude oil accounts for 25 percent of all Russian imports followed by naphtha (25.3 percent), bituminous coal (12.7 percent) and natural gas (9.9 percent).

The government announced support for Korean companies that may be affected by the sanctions on Russia.

It will be offering up to 1 billion won ($814,000) in low interest loans to small companies whose exports to either Russia or Ukraine exceed 30 percent of their total.

A condition for the low-interest loans is for the company’s revenue to shrink at least 10 percent.

According to the Ministry of SMEs and Startups, it has received 44 complaints from companies that have been doing business with Russia or Ukraine.

Most are about frozen payments on exported goods since the Society for Worldwide Interbank Financial Telecommunication (SWIFT) sanctions were enacted.

There are also complaints of Russian companies cancelling orders or halting raw material deliveries.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]