South Korea to hold talks with U.S. and Iran over sanctions

By Jeremy Laurence

SEOUL (BestGrowthStock) – South Korea will soon start separate talks with the United States and Iran as it comes under pressure to join U.S.-led sanctions to force Tehran to drop its nuclear ambitions, a government official said on Friday.

Resource-poor South Korea faces a conundrum over to whether to back close ally Washington and impose toughened sanctions against Tehran, or heed Iran’s warning that new sanctions could risk business deals and endanger a major source of oil.

A senior government official, who asked not to be identified, said Seoul would launch talks with the United States and Iran soon.

“In our discussions with the U.S., we will raise issues of the difficulties our companies will face (if new sanctions are imposed) … and will try to minimize the damage to our economy,” he said.

Iran is the fourth-largest source of crude for South Korea, accounting for about 10 percent of its supplies. Any disruption of shipments would have a big impact on Asia’s fourth-largest economy, which relies on imports for all its energy resources.

Billions of dollars are also at stake in Iranian contracts for South Korea’s construction firms and shipbuilders.

The Iranian ambassador to Seoul has told local media that South Korea risks losing substantial economic benefits in Iran if it follows the U.S. lead.

THREE IRANIAN FIRMS TARGETED

Local media have identified three Iranian businesses operating in South Korea — Bank Mellat, the Iranian Petrochemical Company and CISCO Shipping Company — as targets of sanctions.

Bank Mellat is considered at the heart of the U.S. demand, as the bank has been accused of facilitating hundreds of millions of dollars in transactions for Iranian nuclear, missile and defense entities, Yonhap news agency reported.

South Korea is reviewing how to sanction the bank for suspected violation of a local law on foreign exchange trading, it added. Washington wants Seoul to shut down the bank’s local branch.

The United States declared Iran the biggest state sponsor of terrorism this month, ratcheting up pressure on its long-time foe even as President Barack Obama signaled he remained open to talking to Tehran about its nuclear program.

South Korea, growing faster than expected in the second quarter and outpacing regional peers as it recovers from the global financial crisis, is now focusing on boosting business conditions for small and medium sized firms. Many of them look to Iran as a crucial export market.

Iran is a $4 billion market for South Korea’s automobiles, home appliances and other consumer goods, and as many as 2,000 South Korean manufacturers have business links with the country.

Since June, the U.N. Security Council, the United States and the European Union have tightened sanctions on Iran over its refusal to enter into international talks on its nuclear program, which Washington fears is a cover to build an atomic bomb, but which Tehran says is for the generation of electricity.

At the same time, South Korea is locked in a protracted attempt to get North Korea to abandon its nuclear arms program, for which it needs Washington to add pressure on Pyongyang with sanctions implemented through the international financial network.

(Additional reporting by Lee Shin-hyung; Editing by Jonathan Hopfner and Sanjeev Miglani)

South Korea to hold talks with U.S. and Iran over sanctions