Minimizing Shock Waves from US Sanctions on Iran

U.S. sanctions against Iran have become all-encompassing. On Dec. 15, Congress passed legislation that would ban from the U.S. financial system anyone dealing with Iran’s Central Bank. This is a huge extension of existing sanctions initially targeting Iran’s major corporations and private banks. Suspicion of Iranian nuclear development has spread like fire into the economic sector.

Korea’s choices are not easy. As Iran supplies 9.6 percent of Korea’s total oil imports, to suddenly stop this inflow could trigger a possible “Iran shock.” Trade in general is also expected to suffer big setbacks, as Korea’s exports to Iran will undoubtedly be caught in this clash. We cannot just sit back with arms crossed, lest cracks begin to appear in the U.S.-South Korea alliance. Suspicions that Iran is building nuclear capacities are furthermore not unrelated to North Korea. Joint U.S.-South Korea efforts to get North Korea to abandon its nuclear ambitions could also face difficulties.

Diplomacy toward the United States is now more important than ever. The U.S. must be persuaded to allow for crude oil imports. Even if petrochemical imports are tentatively suspended, crude oil must be made an exception. Japan, for example, did not ban crude oil imports when adding economic sanctions against Iran last September. The national interest must be weighed from a wide perspective, while flexible action in the sanction’s give-and-take is urgently needed.

Certain clauses in the legislation contain exceptions to the sanctions on Iran’s Central Bank, granting the U.S. administration discretionary powers. Fortunately, these provisions were probably made in the interest of American allies like Korea and Japan. The law will go into effect in six months. The United States must be made to understand Korea’s stance and the difficulties of the matter. The United States must take Korean circumstances into account within the framework of the “multi-dimensional” U.S.-South Korea strategic alliance discussed between the two countries’ leaders this past October.