Washington will exempt Korea from sanctions against Iran after all, a senior government official here said Wednesday. "To my knowledge, the U.S. will make an announcement as early as this week recognizing Korea's exemption from the sanctions," he said.
Korea is one of around a dozen countries that will be exempt for one reason or another.
The U.S. financial sanctions that start on June 28 are based on the National Defense Authorization Act and involve sanctions against countries that import oil from Iran. U.S. financial institutions are compelled to sever ties with banks from countries that import Iranian oil. In March, the U.S. exempted 11 countries including Japan and Germany from the list of nations that will be affected.
Seoul has had a hard time persuading Washington to exempt it too in talks that started early this year but apparently agreed to reduce imports of Iranian oil by 15 to 22 percent. Last year Korea imported 927 million barrels of oil and Iranian crude accounted for 9.4 percent or 87 million barrels. In the first three months of this year, Korea imported 17.73 million barrels of Iranian oil, down 22.3 percent.
Although Korea is exempt from U.S. sanctions, it still faces problems importing Iranian oil because the EU wants to stop insuring tankers carrying it from July. Domestic shipping companies that import oil from Iran rely on European insurers and may have to halt shipments.
Big tankers capable of transporting 2 million tons of oil require US$1.35 billion worth of insurance coverage, and the only insurers and reinsurers with the financial capacity to handle such amounts are five European companies, including top-ranked Munich Re, and three American ones including Berkshire Hathaway. If European insurers stop offering coverage, it will be impossible to transport Iranian oil by sea. The Korean government plans to continue talks with the EU to keep up insurance coverage but is also preparing emergency measures should negotiations fail.