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Tehran seeks interest on frozen funds
By Nam Hyun-woo
The governments of Korea and Iran announced that around $6 billion in Iranian funds frozen in Korea have been transferred to Qatar, but this has not fully normalized ties between Seoul and Tehran, as the latter seeks additional compensation in the form of interest incurred during the period of withholding.
"The illegal move of the U.S. to abuse the international banking system and put pressure on other countries to limit Iran's access to its assets does not in any way mean that the governments where these assets are kept have no responsibility in this regard," Iran's foreign ministry said in a statement released on Tuesday (local time).
"And those governments must be held to account for their unjustified move to comply with the illegal demands of the U.S. government, the financial losses inflicted on Iran as a result of the long-term freezing of Iranian assets."
The government referred to in the statement appears to be that of South Korea. The funds had been frozen at the Bank of Korea, the Industrial Bank of Korea and Woori Bank since 2019 to comply with U.S.-led sanctions on Iran. Seoul released the funds following a prisoner swap deal between Washington and Tehran last month. The funds were deposited to the accounts of the six Iranian banks in two Qatari banks, Iran's central bank chief Mohammad Reza Farzin confirmed, according to Iran's Tasnim News Agency, Monday.
According to the news agency, Farzin pointed to Iran's losses from the devaluation of the South Korean won and said that Iran is pursuing its complaint against Korea in this regard and will continue until the desired result is achieved. The news agency assumes the compensatory amount to be approximately $700 million.
This appears to include what Tehran claims is "unfair interest income" that the Korean banks have earned on the frozen funds.
According to Iran's Islamic Republic News Agency, Farzin noted last month that the frozen funds "received no interest." However, an unnamed Iranian government official told Yonhap News Agency that "these financial institutions have earned unfair interest income with illegal sanctions by the U.S."
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| Freed U.S. nationals greet family members at Davison Army Airfield at Fort Belvoir, Virginia, Sept. 19, after being released in a prisoner swap deal between the U.S. and Iran. The two countries swapped five prisoners and Tehran gained access to $6 billion in funds previously frozen in Korean banks. AFP-Yonhap |
Korea says this is an unreasonable claim.
Seoul's foreign ministry spokesperson Lim Soo-suk said, Tuesday, "All details related to the frozen funds' transfer were addressed upon the agreements between related countries."
Though the ministry refused to confirm whether Iran is pursuing an interest payout, an official at the ministry said the relevant countries have reached detailed agreements and that "mentioning extra compensation is not in line with the agreements."
When The Korea Times contacted the Iranian Embassy on Tuesday and Wednesday about the matter, its official said the issue is still under review.
Korean banks also find themselves in an awkward situation. According to a Korean government official, the banks paid approximately annual interest of 1.6 percent for the frozen funds.
Though Korean government officials said that the funds' release is a good sign for relations between the two countries, many view that a full restoration is still elusive as long as U.S. sanctions on trade with Iran remain in place. Tehran's mention of legal action could become a further setback.
"Through the funds' release, the biggest issue between Korea and Iran has been addressed, and this will provide momentum for improvements in bilateral relations," a foreign ministry official said. "However, the U.S. sanctions against Iran continue, meaning Korean firms' trade or investment toward Iran is not an option, except for humanitarian goods."
