(News Focus) S. Korea in dilemma amid U.S. pressure over Iran sanctions

By Chang Jae-soon
SEOUL, Aug. 4 (Yonhap) -- South Korea is in a dilemma over U.S. pressure to join
in tough sanctions against Iran over its nuclear program because the move could
hurt local companies operating in Seoul's biggest trading partner in the Middle
East.
Washington's appeal for support comes as South Korea badly needs U.S. cooperation
to rein in North Korea in the wake of the deadly sinking of a warship in March.
Measures to warn Pyongyang against further provocations include fresh sanctions.
The U.S. is rallying for international support for its push to punish Iran for
refusing to halt its uranium enrichment program that Washington suspects could be
used for a possible nuclear weapons program. Iran claims the program is only used
for atomic power.
After June's U.N. sanctions resolution against Iran, Washington also legislated
its own tough sanctions centered on penalizing foreign companies that help Iran's
energy sector and banning U.S. banks from dealing with foreign banks that do
business with blacklisted Iranian institutions.
The U.S. has since been urging other nations to join in pressuring Iran.
Robert Einhorn, a senior State Department official overseeing sanctions on North
Korea and Iran, visited Seoul earlier this week on a trip that had been expected
to focus heavily on how to deal with North Korea. But the Iran issue also ended
up being a key topic for his trip.
"The European Union one week ago today adopted a common position, all 27
countries, a very strong common position to put some pressure on Iran in the
transportation, energy and finance sectors," Einhorn told a news conference in
Seoul.
"We suggested to the South Korean government that they take a look at what the
Europeans have done and look at that as a kind of a very positive example and to
consider whether it can adopt similar kinds of measures. We think that would be
very positive," he said.
Einhorn's three-day trip also included talks Tuesday with officials of South
Korea's finance ministry.
Kim Ik-joo, chief of the international financial bureau at the Ministry of
Strategy and Finance, told reporters after a meeting with Einhorn that the U.S.
envoy mainly detailed the U.S. sanctions against Iran and asked for South Korea's
participation. Kim did not provide further specifics.
But news reports have said that he asked Seoul officials to shut down or freeze
the assets of the South Korean branch of an Iranian bank, Bank Mellat, which has
been used as a key channel for local firms when they wire money to the Middle
East nation.
Bank Mellat is one of the U.S.-blacklisted Iranian financial institutions.
Foreign ministry officials declined to confirm the reports, only saying that
South Korea will comply with the U.N. resolution against Iran because the
resolution is an international law.
Iran is South Korea's largest trading partner in the Middle East, with bilateral
trade volume amounting to nearly US$10 billion last year. Exports to the country,
which totaled some US$4 billion last year, rose more than 50 percent in the
January-May period compared with the same period of last year.
Iran is also a promising market for construction, plant and chemical businesses,
and its capital, Tehran, is considered a foothold for South Korean companies
operating in the Middle East, along with Dubai. Many South Korean conglomerates
have operations in Tehran.
South Korea appears to be concerned that if it joins in sanctions against Iran,
it could have deep repercussions in economic relations with the country. When
Seoul voted in favor of an International Atomic Energy Agency (IAEA) resolution
in 2004, Tehran banned all imports from South Korea that year until March the
following year.
"We've been sincerely carrying out the U.N. resolution. And with regard to the
United States' comprehensive sanctions legislation, we've been studying what
impact it will have on our companies," a foreign ministry official said on
condition of anonymity.
"We support the U.S. purpose of nonproliferation and are working closely with the
United States to ensure that normal transactions with Iran outside the
nonproliferation area will be spared" from sanctions, he said.
Analysts have also voiced concern that Seoul's participation in sanctions against
Iran could have a broader impact on South Korean businesses in the Middle East.
"If we join in sanctions at a time when exports to the Middle East are rising,
local companies will inevitably be dealt a blow," said Lim Hee-jung, an analyst
at Hyundai Research Institute, a leading economic think tank in Seoul. "In
particular, if anti-South Korean sentiments spread, local companies could have
hard time in the entire Middle East."
jschang@yna.co.kr