The Tehran-Seoul Scandal: A New Development or a Rerun of the old?

During President Yoon Suk-yeol’s visit to the United Arab Emirates, a “diplomatic misunderstanding” (the wording of the ROK Foreign Ministry) occurred, which, according to Yoon’s political opponents, destroyed the sisterly relations between Tehran and Seoul.

Since the days of Lee Myung-bak, South Korean special forces have been stationed in the UAE to train local troops. In a speech to the fighters on January 15, 2023 Yoon said, among other things: “The UAE is our brother country… The security of a brother country is our security. The enemy of the UAE, the most dangerous country (in another translation, the greatest threat), is Iran, and our enemy is North Korea… We are in a very similar situation.”

Of course, Tehran demanded an explanation: the Iranian Foreign Ministry called on the Korean government to explain these words of the President, calling them “interference in relations between Iran and the UAE, two neighboring countries and allies.” A spokesman for Iran’s Foreign Ministry also said that the South Korean official’s remarks showed that he was totally unaware of Iran’s historical and friendly relations with Persian Gulf countries, including the UAE, and the positive changes taking place in this regard.

In response, the presidential administration and the Ministry of Foreign Affairs of the Republic of Korea said on January 17 that Yoon Suk-yeol’s remarks had nothing to do with the current bilateral relations between Korea and Iran. The head of state’s remarks only served to encourage ROK soldiers who contribute to maintaining peace and security in the UAE.

The next day, Democratic Party chief Lee Jae-myung railed against the president, likening the incident to a diplomatic disaster: “With one-sided and biased diplomacy based on the notion that a friend’s enemy is my enemy, you cannot properly protect people and national interests.” Moreover, the president’s inappropriate and ill-considered remarks have provoked Iran, which could negatively affect Korean citizens in the country as well as South Korean ships passing through the Strait of Hormuz. The center-right Korea Times publication also noted that “Yoon should think at least three times before making diplomatic remarks”.

On January 19, Iran’s Foreign Ministry summoned South Korean Ambassador Yoon Kang-hyun, and voiced protest. Deputy Minister Reza Najafi emphasized Iran’s friendly relations with most Persian Gulf states and said Yoon’s remarks amounted to interfering in those relations and undermining peace and security in the region. Najafi stressed, “If effective measures are not taken to settle the dispute, we may reconsider our bilateral relations”.

On the same day, South Korea’s First Deputy Foreign Minister Cho Hyun-dong summoned Iranian Ambassador Saeed Badamchi Shabestari and explained Seoul’s position once again: The president’s remarks were words of support for our soldiers serving in the UAE and had nothing to do with South Korea’s relations with Iran and Iran’s international relations.

However, Iranian Foreign Ministry spokesman Nasser Kanaani stated on January 23 that while Tehran recognized Seoul’s efforts, it was dissatisfied with the level of cooperation provided. The Democratic Party then reiterated on January 24 that President Yoon Suk-yeol was the greatest threat to South Korean diplomacy and security.

As you can see, the incident is not over yet, but the author would like to draw attention to the thesis that Yoon’s speech dealt a tremendous blow to relations between the two countries. Of course, the president should be more precise, and this is not the first time that Yoon Suk-yeol has made a slip of the tongue that needs to be clarified. However, the claim that there have been no problems between the two countries so far is, to say the least, far from the truth. Relations can be described as strained, and the reason for this strain dates back to Moon Jae-in’s reign.

Diplomatic relations between the two countries were established in 1962, and during Park Chung-hee’s administration, many South Korean workers earned money in Iran. Tehran-ro in southern Seoul is the only street in Korea named after a foreign city. The Iranian capital also renamed one of its boulevards Seoul Street in 1977.

Since 2018, more than $7 billion owed to Iran by the ROK has been frozen at the Industrial Bank of Korea and Uri Bank on US orders. The accounts were denominated in won to evade US sanctions on Iran, and Iran used the Korean accounts to pay for imports of non-sanctioned goods from Korea and other humanitarian goods exempt from sanctions. The US government gave the green light to this scheme after the denuclearization agreement had been signed with Tehran in 2015.

The Islamic republic was South Korea’s third-largest trading partner in the Middle East before the United States unilaterally withdrew from the 2015 nuclear deal between Tehran and world powers and added Iran’s central bank to its sanctions list. Iran was a major oil supplier to resource-poor South Korea, importing industrial equipment, home appliances and auto parts in return.

Despite repeated requests by Tehran to release the frozen assets, Seoul maintains its stance that Iran cannot recover its funds in Korean banks until US sanctions against Iran are lifted. Although Korea is not a party to the Joint Comprehensive Plan of Action (JCPOA), it supports the reinstatement of the 2015 nuclear agreement between China, France, Germany, Russia, the United Kingdom, and Iran.

All of the diplomatic news stories encountered by the author in 2020-2021 were related in one way or another to the issue of frozen assets, including the story about the seizure of the South Korean ship MT Hankuk Chemi by the Islamic Revolutionary Guard Corps in January 2021. In South Korea, the incident was seen as an attempt to force Seoul to hand over the frozen funds, although Tehran has repeatedly denied any connection.

On July 14, 2021, the Yonhap news agency, citing an unnamed source, reported that Iran had repaid a number of South Korean exporters with funds frozen in South Korean banks: 40 South Korean companies have received $70 million in overdue payments for goods exported to Iran.

Howbeit, on the same day, July 14, the Iranian Foreign Ministry stated that South Korea had taken no significant steps to release Tehran’s financial assets held in ROK banks, despite Seoul and Washington’s expressed willingness to cooperate in this matter.

On July 20, Iranian President Hassan Rouhani urged the Republic of Korea to seek a solution to the frozen assets issue during the ceremony of receiving credentials from Yun Kang-hyeon. Rouhani expressed hope that the issue would be resolved soon, as it has harmed bilateral relations and Iranian trust in the ROK. Despite Seoul’s assurances, the problem remains unresolved and Iran is having trouble buying medical and pharmaceutical equipment and vaccines against COVID-19.

On August 4, 2021 First Deputy Foreign Minister of the Republic of Korea Choe Jong-gon and his Iranian counterpart Abbas Araghchi met in Tehran, where the South Korean diplomat had arrived to attend President Raisi’s inauguration. During the conversation, Choe Jong-gon said Seoul was making “extraordinary” efforts to resolve the issue.

Nevertheless, being fed with promises was not satisfactory for Tehran, and Hossein Amir-Abdollahian warned that his country would sue South Korea if it continued to refuse to do its duty.

On November 29, 2021 amid ongoing diplomatic disputes over assets, South Korea welcomed the resumption of talks to revive the 2015 nuclear agreement with Iran. However, on January 4, 2022 a US State Department official stated that sanctions against Iran would remain in place until Tehran returned to full compliance with the nuclear agreement.

Thus, at the time of the change of power in ROK, relations between the two countries were at an impasse, and Said Badamchi Shabestari bluntly stated that “Korea’s involvement in the sanctions jeopardizes its bilateral relations with Iran” and “Korea’s image in Iran deteriorates.” Nevertheless, the ambassador hoped for a new beginning in relations under a new president, especially since there had been no dramatic increase in anti-Iranian rhetoric in the media despite Iran’s membership in the “axis of evil.”

In June 2022, Foreign Minister Park Jin met with the Iranian ambassador and expressed hope that negotiations to restore the Iran nuclear agreement would gain momentum.

On October 3, Iranian Foreign Ministry spokesman Nasser Kanaani reported progress in negotiations on the property issue. According to him, the sides were able to make positive progress in finding a solution to the problem. However, following the October 29, 2022 tragedy, Iranian Foreign Ministry Spokesman Nasser Kanaani said that five Iranians had died in the tragic accident and that the South Korean government should have taken security measures during the Halloween celebrations. Moreover, Kanaani criticized Seoul for expressing concern over Iranian protests against the mandatory wearing of hijabs, adding that “Korea, which has maintained good relations with us in the past, has recently shown irresponsible behavior in matters such as frozen assets”.

The Korean Foreign Ministry rejected the Iranian representative’s criticism, stating that what he said reflected his own personal views as opposed to the Iranian government’s official position.

And, of course, Yoon’s statement in this context is a pretext, not a reason-it is no coincidence that all Iranian statements mentioned the $7 billion freeze and Iran’s Foreign Ministry spokesman stated on January 19 that the inability of the ROK to take effective action to resolve these issues would cause Tehran to reconsider its attitude toward relations with the ROK.

What next? The author doubts that Tehran will succeed because Seoul lacks independence on this issue, which means that similar excesses will occur from time to time. Just in case, the Korean Shipowners Association (KSA) has issued a warning to ships in the Persian Gulf and the Strait of Hormuz, as South Korea transports more than 70% of its imported crude oil through the Strait of Hormuz. But it is already clear that although the current president of the ROK should have a better idea that anything that can be misunderstood will be misunderstood by the opposition’s efforts, it is not him but Moon Jae-in or his mentors in the US who are to blame for the crisis.

Konstantin Asmolov, PhD in History, leading research fellow at the Center for Korean Studies of the Institute of China and Modern Asia, the Russian Academy of Sciences, exclusively for the online magazine “New Eastern Outlook.


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