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Iran tensions

South Korea and Iran remain split over tanker seizure issue

Seoul caught between pressures from Washington and Tehran

A South Korean-flagged tanker that was seized by Iran is seen in the Persian Gulf off the Iranian coast on Jan. 4.   © Reuters

DUBAI/SEOUL -- Iran has announced that it will release crew members of a South Korean tanker it seized in the Strait of Hormuz on Jan. 4. But the announcement is not being seen as a sign of settling the issue and the underlying problems behind it.

The Iranian Ministry of Foreign Affairs said Tuesday that it will allow the tanker's 19 sailors to leave the country. The captain of the ship, however, will remain detained in Iran.

The South Korean-flagged vessel, which was carrying 7,200 tons of ethanol, was seized on charges of causing pollution in the Persian Gulf. Legal procedures against the ship and its captain are continuing.

Confrontation between the two countries over $7 billion in Iranian assets frozen in South Korea is seen as the real reason for the seizure. While South Korea has frozen the funds as a result of sanctions slapped on Iran by former U.S. President Donald Trump, Tehran intends to lean on the international community by pressuring Seoul, analysts said.

U.S. President Joe Biden announced major policy changes following his inauguration on Jan. 20, such as the promotion of decarbonization and a halt to construction of the U.S.-Mexico border wall. But Iran is growing frustrated by the absence of specific moves in Washington toward amending its Iran policy. Sanctions reimposed by the Trump administration after withdrawing the U.S. from Iran's nuclear deal with major countries have kept eating into the Iranian economy.

South Korea is caught between the U.S. and Iran.

To continue trade with Iran under the U.S. sanctions, South Korea has created a settlement mechanism to use its currency, the won, for imports of crude oil from Iran and exports of industrial products to the West Asian country through accounts opened by the Iranian central bank at two commercial banks in South Korea.

Tehran is calling on Seoul to move the frozen funds out of South Korea. But the South Korean government is unable to comply with the request without the nod from the U.S. "Although working-level negotiations with the U.S. over the issue are underway, some time will be needed to move them forward, as the Biden administration is now organizing itself," a South Korean government official said.

As humanitarian support is possible under the U.S. sanctions, South Korea has proposed a plan to use the frozen funds for Iran's procurement of COVID-19 vaccines through COVAX, an international program promoted by such organs as the World Health Organization. But Iran has reportedly rejected the proposal for fear that the U.S. would seize the funds, which are denominated in won, when they are converted into dollars to buy the vaccines.

To realize an early release of the captain and tanker, South Korea is considering various other means of using the frozen funds, such as transferring part of them to an account in Switzerland for enabling Iran to purchase medicines in Europe or to disburse Iran's unpaid contribution to the U.N.

Qatar, which maintains amicable relations with both Iran and South Korea, offered to serve as a bridge between them to settle the dispute. Qatar possibly wants to help ease tensions between the U.S. and Iran now that its soured relations with neighbors such as Saudi Arabia are starting to thaw. But Iran has turned down the offer because of hard-line conservatives' opposition to a third country's mediation.

With the Iranian economy hit hard by the U.S. sanctions and the coronavirus pandemic, the influence of President Hassan Rouhani and other moderate leaders in Iran is weakening. Hard-line conservatives hope to take advantage of their gaining momentum to win the presidential election to be held in June, ending Rouhani's time in office.

The tug of war between Iran and South Korea may drag on, as the two countries are caught in situations making it difficult to compromise with each other.

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