by JUAN COLE
The government did close the Seoul branch of Iran’s Bank Milli, sanctioning it and other Iranian firms. Then, the South Koreans turned around and, according to the Financial Times, appointed two banks to handle payments involving trade between the two countries via the (unsanctioned) Tehran Central Bank. In doing so, the government insulated other South Korean banks from possible American sanctions, while finding a way for Iran to continue to purchase South Korean autos and other goods.
Before the latest round of U.N. Security Council sanctions South Korea was doing $10 billion a year in trade with Iran, involving some 2,142 Korean companies. Iran’s half of this trade — it provides nearly 10% of South Korea’s petroleum imports — has been largely unaffected. South Korea’s exports to Iran, on the other hand, have fallen precipitously under the pressure of the sanctions regime. Sanctions that hold Iran harmless but punish a key American ally by hurting its trade and creating a balance of payments problem are obviously foolish.
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