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(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.Data picture
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
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