The seizure of South Korean tanker in the Persian Gulf by the Iranian authorities brings out many questions and dispositions about Iran’s relationship with the East Asian countries. Acts such as these acquire greater significance and urgency given the recent power transition in Washington. Unlike its predecessor, the Biden Administration is expected to pursue a more conciliatory position with Iran, including easing out strict sanctions regime, imposed under President Trump’s ‘Maximum Pressure’ policy.
Part of the reason why South Korean tanker’s seizure has gained such significance and traction is due to subsequent increased demands by Tehran to unfreeze the US $9.2 billion worth of Iranian assets. South Korean Deputy Foreign Minister Choi Jong-Kun-led an official delegation to Tehran to persuade his counterparts for releasing the tanker, even though Tehran has denied the request. Under such circumstances, this article appraises the current status of Tehran-Seoul tensions, while examining the wider implications that the upcoming Biden presidency will have on Iran’s relationship with South Korea.
The two countries have enjoyed good trade relations that reached US$ 12 billion in 2017. Iran imported certain items, including auto-parts, electronics and telecommunications from South Korea, while Seoul imported oil from Tehran. The bilateral trade was good but never far from troubles.
As the Iranian nuclear program became public and the international community galvanised around dismantling Iran’s nuclear program, the bilateral relations (in terms of trade especially) took a hit. However, when the momentous Joint Comprehensive Plan of Action (JCPOA) called the Iranian Nuclear Deal was signed in 2015, it opened the way for more trade and investment into the isolated Iranian economy.
The trade began to pick-up in the post-JCPOA period. However, when the Trump administration unilaterally withdrew from the JCPOA, the sanctions lifted in 2015 were re-imposed, and trade and commerce with Iran again started to dip. The ‘Maximum Pressure’ policy coupled with the CAATSA intensified the regulation and enforcement of the sanctions. At the time, South Korea stopped the flow of money into the Iranian banks while purchasing oil from Tehran. This stalemate ultimately led to Iranian funds worth 10 trillion won (US$9.2 billion) being frozen in South Korea, under the US sanctions. Around $7 billion worth of Iranian oil money lies with two South Korean banks—Industrial Bank of Korea and Woori Bank.
It was against this background that Iran’s Revolutionary Guards Navy boarded and captured the South Korean vessel. Iranian FM spokesperson Saeed Khatibzadeh stated as per the “initial reports from local authorities, the matter is purely technical, and the ship was taken ashore under a judicial order for conducting investigations due to its pollution of the sea.”
The demand for the retrieval of assets has grown stronger within Iran, as the economy is hard-pressed under the sanctions, and Iran is struggling to muster funds for the vaccine. By now, the country has witnessed 57,150 deaths and 1,354,520 registered cases. Voices coming from Iran includes both from the conservative and reformists factions supporting the seizure. Since Iran goes to Presidential elections in less than five months, all the factions and parties are trying to impress the public their efforts to ease Iran’s economic burden and procure the vaccine.
Even conservatives parliamentarian Hojjatoleslam Seyyed Largani suggested that if Seoul fails to unfreeze the assets, Iran can make a barter deal in exchange for basic and essential commodities.
Biden Presidency: New Hopes?
Undoubtedly, there are expectations from Biden presidency over Iran, in particular the JCPOA. As the Vice-President under the Obama Administration was a supporter and a facilitator of the nuclear negotiations with Iran. However, since Obama and Trump have left the White House, the understanding and sentiments about the JCPOA have undergone a sea-change for all parties concerned.
Since 2019, Iran voluntarily started scaling back its commitment from the agreement, expecting a parlay or certain concessions from the European counterparts. But, with no avail from the E3—who were under similar quandary as Seoul—Iran continued to curtail its commitments. Later, on January 12, 2020, President Rouhani declared that Iran would no longer abide by any commitments it had made to the JCPOA in the aftermath of the Iranian General Qassem Soleimani’s assassination. Even though Iran has allowed the International Atomic Energy Agency (IAEA) inspectors to visit the nuclear sites, concerns are growing, as reports about nuclear enrichment at 20 per cent in the Fordow nuclear facility, a grave violation of the agreement.
Now, the Biden administration has to muddle through the diplomatic quagmire left by his predecessor to reach an amicable solution for the deal and all the stakeholders therein. The return to the JCPOA would mean rescaling of sanctions as countries like South Korea and Japan can continue their trade with the Islamic Republic. But the return to JCPOA will neither be easy nor immediate. Although both sides have hinted to work together to reach a settlement in which the return to JCPOA would be the best-case scenario, there are severe impediments. Iran’s regional animosity with Saudi Arabia, the UAE and Israel will make it difficult to settle, as these countries, who were directly affected by Iranian activities in the region were not part of JCPOA negotiations.
Therefore, if the Biden Administration wants to return to the agreement, it would have to take on-board either these countries or their concerns that manifest into the including Iran’s ballistic missile program and its regional activities as a part of the JCPOA+. Until that is settled, the tensions in Tehran and Seoul relations will continue and may worsen. Prior to Biden’s swearing-in, Iran intends to leverage its moves regarding nuclear enrichment and seizure of tankers as an attempt to strike a hard bargain, although whether such bluff will work with the Biden Administration remains dubious.
Moving ahead, pressure from the European counterparts on the Biden Administration can ease certain sanctions on Iran. As the East Asian countries, including South Korea, depend upon the oil from the region (including Iran) would also be interested in beseech the Biden Administration to ease the sanctions to restore their pre-existing trade relations with Tehran. To put it incisively, South Korea and the EU partners will most likely push the Biden Administration to ease certain sanctions over the Islamic Republic, so that such incidents can be avoided, while some commerce with Tehran can be restarted.
*Prabhat Jawla is a Master’s in International Relations from South Asian University and is currently working as a research intern in the West Asia Centre at Manohar Parrikar Institute for Defence Studies and Analyses. Twitter: @aprabhatjawla