Iran's Agreement with South Korea for Oil-for-Goods Trade

An Iranian economic official has stated to the IRNA news agency that a mechanism has been established between Tehran and Seoul to barter Iranian oil for South Korean goods. Hossein Tanhaei, head of the Iran-South Korea Joint Chamber of Commerce, said on Saturday, December 1, that under this mechanism, goods will be offered by South Korea to importers, and the payment will be deducted from the revenues generated from oil exports, with importers paying the government of Iran for the imported goods. The barter of goods for oil is a method Iran has adopted to circumvent U.S. sanctions. Mr. Tanhaei, without directly mentioning the sanctions, stated, "If the central banks of the two countries cannot cooperate in financial transactions with each other," the private sector can conduct its economic relations with South Korea through "a joint fund for bartering goods." According to Bloomberg statistics, South Korea was purchasing 285,000 barrels of oil from Iran daily in the first half of this year, but this amount dropped to zero following the re-imposition of U.S. sanctions against Iran. The U.S. government withdrew from the nuclear agreement on May 8 of this year and reinstated all sanctions that had been lifted under the JCPOA in two phases, in August and November of this year. The return of sanctions has had severe effects on the Iranian economy, reducing the country's oil sales by up to one million barrels. The value of Iran's exports to South Korea, primarily oil, reached eight billion dollars last year, while South Korea exported four billion dollars worth of goods to Iran in return. However, this figure decreased in the first ten months of this year, with trade between the two countries amounting to 5.7 billion dollars. South Korean officials have not yet responded to Mr. Tanhaei's statements. Nevertheless, Mr. Tanhaei told IRNA that Iran currently exports crude oil and petrochemical products to South Korea and imports household appliances from that country, "which could diversify. For example, Iran could export food, lead, and zinc to South Korea in exchange for paper and cosmetic and hygiene products." According to IRNA, Tanhaei stated last week at the "Economic Opportunities of Iran and South Korea" seminar that after China and the UAE, South Korea is considered Iran's third-largest economic partner. These economic statements come amid ongoing negotiations between Iran and Europe to achieve a special financial mechanism, which have yet to yield results, and Abbas Araghchi, Deputy Foreign Minister, has stated that the balance of the JCPOA's "give and take" has been lost, and if Iran does not benefit from the JCPOA, "this agreement will not survive."