In recent years, among Iranian policymakers and economists, one of the thorny topics associated with their foreign policies toward Asian democracies and the West, in general, has been the issue of releasing Iran’s frozen assets in South Korea. The freezing of Iran’s assets is as important as other, more complex and thorny issues in international politics, such as the Iranian nuclear issue. During this time, the Rouhani administration has worked hard to return Iran’s frozen assets through diplomatic means to increase government revenues and solve the economic problems that Iran’s interior is experiencing due to ongoing Western economic sanctions. However, as US sanctions remain in place, Iran’s efforts to recover its frozen assets have yet to yield significant results.
Two South Korean banks had held $7 billion in Iranian assets before the United States imposed full sanctions on Iran’s crude exports in May 2019. Before and during the current Russian-Ukrainian conflict, Iran has repeatedly suggested that the US release frozen assets and remove the IRGC from its terrorist list as a condition for returning to the Vienna talks. The South Korean position and freezing of Iran’s assets are also linked and enter the context of Iran’s deteriorating relationship with the West and the United States. As a result, the question remains of why South Korea refuses to hand over Iran’s frozen assets arises.
It could be argued that South Korea’s position on freezing $7 billion in Iranian assets is primarily related to the US administration’s position during Donald Trump’s tenure when he imposed strict economic sanctions on Iran after withdrawing from the Iran nuclear deal in 2018. As a result, Seoul’s decision to freeze those assets is an endorsement and application of the West’s general economic sanctions. Despite Seoul’s preference for Iranian crude oil imports, it was not prepared to challenge the Trump administration, which has already supported its position on other issues, such as ensuring South Korean President Moon Jae’s state security from North Korea’s threatening policies, as well as the Trump administration’s support for South Korea. In addition, supporting SOEUL in replacing its lost imports of Iranian crude with more oil supplies from Saudi Arabia and the United Arab Emirates.
In this context, Seoul’s position on its commitment to maintaining this state of freezing Iran’s assets can be explained as a commitment to Washington’s hardline policies and stance toward Tehran, namely to punish it economically for its regional behavior in the region and its threat to the security of the Arab Gulf states, especially with Russia’s position to Iran’s nuclear file in light of the current war in Ukraine.
Also, the reasons for the rejection can be explained as domestic reasons represented by the desire of South Korean leaders to obtain assistance and security guarantees from the United States of America in light of the constant threats from North Korea. Thus, if Seoul hands over assets to Iran unilaterally without returning to Washington, it would significantly challenge the Biden administration’s current desire to maintain strategic balances since it would push Iran to bolster its military power if it receives those funds, which Washington rejects.
Also, the current international situation is represented by the emergence of hardline authoritarian states on the one hand and democratic states on the other. It was evident in the context of the current Russian-Ukrainian war from President Joseph Biden’s last visit to Seoul in May 2022 and then Japan on reaffirming Washington’s allies’ security from both Chinese and North Korean threats. As a result, making a unilateral South Korean decision on whether to freeze Iran’s assets will be difficult, especially with President Yoon Suk Yul winning the election and taking power in March 2022.
Furthermore, Iran-South Korean relations are facing ups and downs since freezing those assets. Iran’s hardline behaviour and imposition of a ban on South Korean imports, specifically electronic devices, after South Korea became Iran’s third largest trading partner provided an opportunity for Chinese companies to export electronic devices as an alternative to South Korean imports.
South Korea’s position on freezing Iran’s assets is connected to the fragile nature of the U.S.-Iran relationship, which was reaffirmed by the recent visit of President Biden, where he outlined the volume of guarantees and security assistance to the country. Thus, a shift in this position will depend on the existence of a comprehensive and serious political settlement to the Iranian nuclear file, which has been marginalized at the moment after the outbreak of the Russian-Ukrainian war.