Seoul strives to minimize adverse economic impact by securing stable oil supply from Middle East
South Korea will have in-depth consultations with the U.S. this week over the scope of its participation in toughened Washington-led sanctions against Iran and how to minimize its impact on the local economy.
Robert Einhorn, U.S. special adviser for nonproliferation and arms control, will come here on Monday for a three-day visit to explain the sanctions and secure the Asian ally’s support for them.
Senior officials from Seoul’s Foreign, Finance and Economy Ministries will meet the U.S. delegation, which also includes Daniel Glaser, the U.S. Treasury’s assistant secretary for terrorist financing.
South Korea, which has a deepening “strategic alliance” with the U.S., has felt growing pressure to join the sanctions over Iran’s nuclear programs, while it strives to maintain crucial trade relations with the world’s third largest crude oil exporter.
As it has long endeavored to seek international cooperation in North Korea’s denuclearization, Seoul is forced to support the U.S. moves to sanction Iran, which claims that its nuclear development is for “peaceful, civilian purposes.”
Seoul plans to join the sanctions under the National Defense Authorization Act by reducing its oil imports from Iran. But the world’s fifth-largest oil importer is seeking to prevent the complete suspension of the imports.
On Dec. 31, President Barack Obama signed the act that includes the so-called Kirk-Menendez amendment designed to cut off international transactions with Iran’s central bank. Six months after it took effect on Jan. 1, its implementation is to begin.
Seoul believes it can utilize a provision in the NDAA, under which Washington can defer or suspend its application of the act to a particular country, which has “significantly” reduced oil imports from Iran.
One option mentioned within the government is to reduce oil imports from Iran to 8.3 percent of total oil imports ― the level recorded in 2010 ― and further cut back on them as it finds alternative ways to reduce reliance on Iranian oil.
From January to November last year, Seoul imported 81.6 million barrels of crude oil from Iran, which accounted for some 9.6 percent of the total oil imports. The annual two-way volume has topped $15 billion.
Seoul plans to mobilize a variety of diplomatic channels including a ministerial-level meeting to consult with the U.S. over the issue. It also plans to send a government delegation consisting of officials from related ministries to Washington to further discuss the issue.
The Seoul government is also poised to encourage local firms to make voluntary efforts to seek alternative oil import routes and reduce their reliance on Iranian oil.
Prime Minister Kim Hwang-sik is now on a tour of two Middle East nations ― Oman and the United Arab Emirates ― as part of the government efforts for “energy diplomacy.”
Such moves by local firms as well as the government are crucial as tension around the Straits of Hormuz, a strategically vital channel between the Gulf of Oman and the Persian Gulf, has sharply increased in recent months.
Iran recently conducted military drills, raising tension around the straits, while the U.S. has signed a massive defense deal with Saudi Arabia, which includes the sale of 84 Boeing F-15 SA fighter jets.
Through the straits, a daily average of 17 million barrels of oil is transported. Some 82 percent of South Korea’s oil imports also pass through the area.
Despite the possibility of Iran blocking the straits, many observers said that Iran can hardly take such extreme measures as it could invite strong resistance from other oil-producing nations using the sea transport route.
By Song Sang-ho (email@example.com