"South Korea-Iran Discuss Vaccine Purchase Using 7 Trillion Won Frozen Funds Tied to US Sanctions... US Treasury Approval Completed"

$7 Billion of Iran's Crude Oil Export Payments Frozen in South Korea... Iran Requests Korea to Deposit into 'COVAX Facility'
US Treasury Recognizes Sanctions Exception for Humanitarian Exchange... Iran Delays Decision Over Re-Freezing Concerns in Currency Exchange Process

Diplomatic Ministry Countermeasure Meeting Regarding Detention of Korean Ship by Iran
[Image Source=Yonhap News]

[Asia Economy Reporter Lim Cheol-young] Iran is consulting with the South Korean government on a plan to use $7 billion (approximately 7.6 trillion KRW) in crude oil export payments frozen in South Korea due to U.S. sanctions as funds to purchase COVID-19 vaccines. This plan has been recognized as a humanitarian transaction and has received approval from the U.S. Department of the Treasury, but it is reported that a final decision has not been made due to concerns from the Iranian side regarding the fund disbursement process.

On the 5th, a Ministry of Foreign Affairs official explained, "Iran tried to secure COVID-19 vaccines through the COVAX facility and there have been extensive consultations between the U.S. Treasury and South Korea about paying for these vaccines using Korean won funds. We received special approval from the U.S. Treasury and were preparing to make the payment."

The COVAX facility is a project led by the World Health Organization (WHO) aimed at joint procurement and distribution of vaccines. Participating countries can receive vaccines once they pay the fees. Over 190 countries, including South Korea, are participating.

The Iranian side has requested the South Korean government to deposit the crude oil export payments frozen in South Korean banks into the COVAX facility. The relevant banks have prepared a method to transfer the funds and communicated this to Iran, but there has been no response from the Iranian side. To pay the COVAX facility, the funds must go through currency exchange procedures at a U.S. bank, but Iran is reportedly concerned about this process.

The Ministry of Foreign Affairs official said, "Iran has not made a decision due to concerns that the U.S. government might take some action regarding these funds during the remittance process."

Additionally, Iranian authorities strongly deny analyses linking the detention of South Korean vessels with the frozen won payments. The Ministry of Foreign Affairs is maintaining contact with Iranian authorities through diplomatic channels such as the Iranian Embassy in South Korea and the South Korean Embassy in Iran.

The official explained, "We asked if there was an intention to link the vessel detention with the won payments for negotiation purposes, but Iran responded that this was not the case." The South Korean government continues to request the prompt release of South Korean-flagged vessels and crew members and plans to immediately dispatch a working-level delegation for negotiations.

Meanwhile, First Vice Foreign Minister Choi Jong-geon will visit Iran on the 10th for a 2-night, 3-day trip amid the current vessel detention situation. The Ministry of Foreign Affairs has been planning this visit to discuss the issue of Iranian funds frozen in South Korea.

Spokesperson Choi Young-sam said at a regular briefing that "there will be broad consultations on mutual interests between the two countries," and "there will also be an exchange of views regarding the recent vessel detention issue."

[Image source=Yonhap News]

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