Hardline Iranian Media Repeat Demand To Pressure South Korea

Korean banks have refused to pay around $7 billion owed to Iran due to their fears of punitive United States action against them under US ‘maximum pressure’ sanctions in place since Washington in 2018 left the 2015 Iran nuclear deal.

South Korea's deputy foreign minister, Yeo Seung-bae, summoned the ambassador Saeed Badamchi Shabestari Monday. Kayhan’s editor Hossein Shariatmadari had written: "We can and must close the Strait of Hormuz to South Korean cargo ships and oil tankers and all ships that carry South Korean commodities … and not allow them to navigate through the Hormuz Strait as long as they have not paid their $7 billion debt to our country.”

Kayhan is financed by Supreme Leader Ali Khamenei’s office and its editor is appointed by Khamenei.

The Yonhap news agency reported that Shabestari had explained that Kayhan did not speak for the Iranian government. South Korea has said it would like to see the money transferred but given US sanctions it needs Washington’s agreement.

Tehran’s foreign affairs spokesman said Monday that arrangements over repatriating Iran’s funds were “none of Washington’s business.” In January 2021, Iran detained a Korean tanker and in April 2021 banned imports of some Korean home appliances – apparently as a means to bring pressure on Seoul.

Commenting on US State Department Spokesman Ned Price’s recent remarks over Iranian frozen funds at his weekly press briefing Monday, foreign ministry spokesman Saeed Khatibzadeh said a "delegation" had visited Tehran last week during which "certain agreements" were made. "This neither has anything to do with the US, nor we would allow the US to interfere in its details," he said defiantly.

Price said Thursday that all reports about Washington having agreed with the release of Iranian funds frozen by third countries were false.

The Iranian foreign ministry spokesman also indicated that Tehran was not going to offer any guarantees not to take revenge on American officials responsible for the Killing of the Revolutionary Guards (IRGC) commander, Ghasem Soleimani, in Baghdad on January 3, 2020, in return for Washington's delisting of the IRGC. "Bringing these individuals to justice is a fundamental principle in Iran's foreign policy," he said.

Negotiations in Vienna over reviving the 2015 nuclear agreement known as JCPOA came to a halt last month over a reported Iranian demand to remove its Revolutionary Guard from the US foreign terrorist designation. Media reports have mentioned that a US counter proposal asked Iran to renounce threats it made against former American officials for Soleimani’s killing.

Iranian officials and media said recently that Iran is set to recover $7 billion of its frozen assets "soon" independent of any outcome to the Vienna nuclear talks.

Khatibzadeh also categorically denied any relationship between unfreezing Iran's frozen assets and a possible Iran-US prisoner swap. "We separate humanitarian issues from debts," he claimed.

Iran has not revealed any details about the alleged diplomatic visit to free the blocked funds.

Iran’s Foreign Minister Hossein Amir-Abdollahian, however, on April 13 said that a foreign visit did take place the previous day and an agreement was made regarding Iranian money blocked in a "foreign bank". He made the announcement in a joint press conference with visiting Iraqi foreign minister Fuad Hussein, but his statement about the agreement did not refer to Baghdad.

Iraq is highly dependent on Iranian gas and electricity which it has continued to purchase thanks to Washington's regularly issued sanctions waivers. Baghdad, however, has not paid Iran for its energy imports due to US third-party sanctions that prohibit other countries to conduct financial transactions with Iran.

Payments for Iran’s gas and electricity imports by Iraq go to a special account in the state-owned Trade Bank of Iraq. Iran can only use the money for humanitarian commodities.

The amount of money frozen in Iraq banks was over $6 billion in September, and given that the amount has grown since then, it is quite possible that the $7 billion officials are promising to get released is money in Iraqi banks rather than South Korea which is also holding $7 billion of frozen Iranian assets.

Khatibzadeh on Monday also said that the 2015 nuclear deal has not been working for Iran for years. "Iran's economic benefits have been neglected for years. We are a responsible country, and we adhere to a commitment once we sign it," he said, adding that Tehran has its Plan B and C, regardless of the Vienna talks.

"Sanctions removal is a key issue in ministry of foreign affairs, but neutralizing sanctions has always been on the agenda too. Iran is continuing to neutralize sanctions according to its B and C plans," he said.

Speaking in the social audio app Clubhouse, the political activist added that removing the IRGC from the list of Foreign Terrorist Organizations (FTO) is not in Iran's interest.

Negotiations to restore Iran’s 2015 nuclear deal came to a halt in March as Tehran reportedly demanded that the IRGC be removed from the terrorist list.

Hashemi, who is the daughter of former president Akbar Hashemi Rafsanjani and a pro-reform politician, said "The IRGC fires missiles and announces that it was our job”.

Calling IRGC's actions detrimental for the country, she added, “The only way for the IRGC to return to the barracks is to keep them on the sanctions list”.

What the Iranian society gets from IRGC is negative consequences and this must be stopped at some point, she noted.

Hashemi is known for her critical remarks about the Islamic Republic, its leaders, and policies. Her father, who for decades was the second most powerful man in the Islamic Republic, helped bring Supreme Leader Ali Khamenei to power in 1989 and allowed the IRGC to become an economic player in the country.

US opponents of removing the IRGC from the FTO – including lawmakers from both sides of the aisle, as well as current and former American officials and military leaders -- have urged President Joe Biden not to take such a move.

In a report on Sunday IRNA claimed that an unnamed official of the Central Bank of Iran (CBI) confirmed the existence of an agreement and even said that a “regional delegation” visited Iran to facilitate its implementation.

Iran has billion of dollars frozen in various foreign countries because of United States sanctions on its banking sector and the threat of retaliation against third parties conducting financial transactions with Iran.

One of these countries is South Korea, where two banks hold an estimated $7 billion accrued from Iranian oil purchases prior to full US sanctions imposition in May 2019 on Tehran’s oil exports.

Iran has been putting pressure on Seoul to free the funds and last January it seized a South Korean tanker in the Persian Gulf and held it for weeks.

A top Seoul diplomat visited Vienna in January where talks were taking place to revive the 2015 nuclear deal known as JCPOA. The diplomat met various delegations involved in the talks, raising expectations that a deal was in the offing to free the funds in case of a nuclear agreement.

On April 11, IRNA claimed that frozen funds will be released soon, saying that a “high-level regional” official was to visit Tehran to finalize the details. In an odd turn of events, Iran’s foreign ministry immediately denied that any such visit was in the cards.

The US State Department spokesman Ned Price on Thursday denied the existence of any agreement to free blocked funds.

Sunday’s IRNA report has several odd points. One was a reference to Ned Price’s denial “yesterday”, meaning Saturday. It appeared that either IRNA mixed up the dates or perhaps its text was written on Friday, the day after Price’s statement.

The other strange point is that the report quoted the “manager of international affairs” of the central bank as its source, without naming him.

A search revealed that four days ago Hossein Yaghoubi Miab was appointed as the head of CBI’s international department. He was sanctioned in November 2018 by the US Treasury Department for being part of an illicit network facilitating Iranian-Russian oil shipments to Syria.

IRNA quoted the central bank official, presumably Yaghoubi Miab, as saying that a considerable part of the frozen funds from “a country” will be freed and a delegation has already visited Iran. Asked about how much the funds in question are, the official only said it is much more than what was recently freed by the United Kingdom

In March, the UK paid Iran more than $500 million for the release of two dual nationals held hostage by the Islamic Republic for years.

Periodic claims by Iranian officials about frozen funds being released might be intended to support the battered national currency, rial. As nuclear talks came to a halt in March, the rial has been falling against major currencies once again.

On Sunday, the US dollar rose against the rial to 280,000. Just a few weeks ago the rial was trading at around 255,000 to the dollar.

The CBI official told IRNA that Iran is exporting more oil and receiving more hard currency, a claim often made by officials in recent months. But the impact of more revenues from oil sales is not visible in the local market, with consumer prices rising fast and criticism intensifying even among hardliner supporters of the government.

"We can and must close the Strait of Hormuz to South Korean cargo ships and oil tankers and all ships that carry South Korean commodities … and not allow them to navigate through the Hormuz Strait as long as they have not paid their $7 billion debt to our country," Hossein Shariatmadari, the chief editor of Kayhan, wrote in an editorial note entitled "Let's Begin Imposing Sanctions From South Korea".

Since former US President Donald Trump's introduction of ‘maximum pressure’ sanctions in 2018 after withdrawing from the 2015 nuclear deal, Joint Comprehensive Plan of Action (JCPOA), the US has threatened punitive action against any third-party buying Iran’s oil or dealing with its financial sector. The funds held in South Korea by two banks are Iran’s proceeds from oil exports before the Trump sanctions.

Shariatmadari argued that countries such as South Korea use US secondary sanctions as an excuse to freeze Iranian assets, but Tehran also has effective tools to counteract US sanctions.

"We can show that their actions are not without cost and could even entail heavier costs than if they violate US sanctions [on Iran]," the firebrand editor of Kayhan, an appointee of Supreme Leader Ali Khamenei, wrote.

Shariatmadari, a well-known opponent of the JCPOA and relations with the West, also claimed Iran is entitled to close the Hormuz Strait to oil tankers and cargo ships including those carrying weapons based on the 1956 Geneva Convention on the Law of the Sea and 1982 Jamaica Treaty, if they cause harm to Iran's security. South Korea is to be punished, therefore, for harming Iran through enforcing US sanctions, he argued.

On April 6, the government mouthpiece, Iran newspaper, quoted an unnamed official as saying that a large sum of Iran's frozen assets would be released in a deal separate from the nuclear talks which have come to a halt since mid-March due to sticking issues including Iran's demand that the US remove the Revolutionary Guards (IRGC) from its list of Foreign Terrorist Organizations (FTO).

American journalist Laura Rozen wrote on Friday that the Biden administration has apparently decided not to send a counter proposal to Tehran to close the final outstanding issues. "Iran would either get a deal with the IRGC remaining on the FTO list, or no deal,” she quoted Ali Vaez, director of the Iran program at the International Crisis Group, as saying.

Farhikhtegan newspaper in Tehran said in an article titled “Releasing Iran’s Frozen Assets Through Non-Nuclear Means” on April 7 that Iran had been negotiating in parallel with the nuclear talks in Vienna to access its frozen assets and quoted an unnamed "informed source" as saying that Iran would free three American-Iranians held in Iran in exchange for the $7 billion Seoul owes to Tehran.

Tehran and Seoul have been in a diplomatic standoff since February 2020 over the frozen money. Iran’s chief negotiator Ali Bagheri-Kani who met the Korean diplomat in Vienna on January 5 demanded the unconditional release of the funds, but Washington said it would waive third-party banking sanctions for Seoul only with “everything” agreed in the nuclear talks and a final deal.

In January 2021 Iran detained a Korean tanker and in April the same year, Khamenei banned the import of home appliances made by the two leading Korean manufacturers. Iranian media said this was a "diplomatic message" to Seoul.