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Economy

South Korea, Iran plan joint projects worth $37.1bn

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South Korean President Park Geun-hye, left, meets with Iranian President Hassan Rouhani.   © Reuters

SEOUL -- South Korea and Iran are set to pursue joint projects involving energy, railroads and other infrastructure totaling $37.1 billion as part of economic cooperation agreed on between the countries' presidents.

"Seoul will re-establish investments and expand bilateral trade to help Iran quickly rebuild its economy and achieve growth," President Park Geun-hye said at a news conference following a summit with her counterpart in Tehran on Monday.

Iran "hopes that South Korean corporations will take part in the development of energy and other Iranian industries," President Hassan Rouhani said in response.

Park, who wrapped up her trip Tuesday, also met with supreme leader Ayatollah Ali Khamenei.

In a joint statement, the two countries announced plans for annual foreign ministers meetings and cabinet-level gatherings on economic cooperation. They also agreed on expanding trade of energy resources, including petroleum and natural gas. South Korea will support Iran in building roads, ports and other infrastructure as well as developing its medical sector.

The countries look to bolster their economic activities following the lifting of international sanctions on Iran. Bilateral trade totaled $17.4 billion in 2011, but plunged to $6.1 billion in 2015. Rouhani hopes to boost the figure above $30 billion in the next five years, according to the South Korean president's office. Seoul and Tehran also agreed to launch direct flights between the countries.

Park is the first South Korean president to visit Iran since the countries established diplomatic ties in 1962. She was accompanied by South Korea's largest business delegation on record, made up of 236 representatives from business organizations and companies such as Samsung.

Chinese President Xi Jinping already has visited Iran, and Japanese Prime Minister Shinzo Abe is mulling a trip by the end of the year. South Korea hopes to capture the country's demand for infrastructure first to get a leg up on Japan.

The 30 agreed-on joint projects cover rail and road construction, oil and gas, the medical sector and other fields. They have signed a provisional engineering, procurement and construction contract for a 541km rail link between the central Iranian cities of Isfahan and Ahwaz in which Hyundai Rotem likely will take part. They also signed memorandums for South Korean companies to help build six hospitals, including a facility for the Tehran University of Medical Sciences, through assistance from the Export-Import Bank of Korea.

Park also said in the news conference that she asked for Iran's cooperation on the United Nations sanctions against North Korea over its repeated nuclear tests.

Iran opposes any development of nuclear arms in principle, Rouhani said, though he did not explicitly name the North. Though he seems eager to mend ties with the international community, Tehran has been suspected of working with Pyongyang on nuclear and missile development in the past. It's unclear whether Iran's renewed relations with South Korea will lead to greater pressure on the rogue state.

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