South Korean Ambassador Yun Kang-hyeo presents Coronavirus masks to staff of Atieh Hospital, Tehran, Iran
UPDATE, JAN 13:
South Korea will pay compensation to Iran’s Dayyani Group over a 2015 dispute, more than three months after the Supreme Leader told Iranians not to buy South Korean appliances.
Dayyani, the family running the Iranian consumer electronics group Entekhab, sued the South Korean Government over failure to return a $50 million deposit in a failed bid to purchase a majority stake in bankrupt Daewoo Electronics.
In 2018, the World Bank’s International Centre for Settlement of Investment Disputes ordered Seoul to pay 73 billion won ($61.4 million) in compensation to the Dayyani family.
The South Korean Foreign Ministry said that the compensation was arranged after the US issued a “specific license” waiving American sanctions on Iran.
UPDATE, NOV 3:
Iran’s officials have loudly criticized South Korea’s donation of 2,000 Coronavirus masks to a private hospital in Tehran.
Seoul was hoping to highlight a humanitarian gesture, with Ambassador Yun Kang-hyeo meeting with the staff of Atieh Hospital.
But Iran’s leadership snapped at the donation, amid the ongoing freeze of $7 billion in Iranian assets in South Korean financial institutions. Foreign Ministry spokesman Saeed Khatibzadeh said the provision of masks was “a joke”: “No nation will tolerate another nation [stealing] from it.”
Iranians on social media echoed the criticism of an “insult,” and the “belittling” of the Islamic Republic as it faces US-led sanctions.
Seeking leverage over the frozen assets, the Revolutionary Guards seized a South Korean oil tanker in January for three months, and the Supreme Leader has demanded a halt to import of South Korean products.
Javan, a newspaper affiliated with the Revolutionary Guards, said South Korea and its “stinking ambassador” should be punished for “the humiliation”: “His expulsion from the country [alone] cannot be a response to this insolence.”
The outlet criticized Atieh Hospital’s staff and chided the Foreign Ministry: “This was not a joke for anyone to laugh at.”
The South Korean embassy responded with a list of humanitarian assistance in recent months, including 1 million doses of the AstraZeneca vaccine in October, 1 million face masks in July, and $27 million to help Afghan refugees. The embassy said more aid will be announced “soon”.
Iran has officially announced more than 127,000 Coronavirus deaths and almost 6 million confirmed cases. The country is coming out of a summer surge which saw record numbers of daily fatalities and infections.
ORIGINAL ENTRY, OCT 2: Iran’s Supreme Leader has proclaimed that authorities must stop the import of South Korean refrigerators.
Ayatollah Khamenei commanded that “imports should be banned” because they were “breaking the backs of domestic home appliance companies”. They prompted an order by President Ebrahim Raisi to the Industry, Mines, and Trade Minister.
Buy Iran’s Fridges
South Korea has angered the Iranian regime by refusing to unfreeze about $7 billion in Iranian assets amid comprehensive US sanctions. In January, the Revolutionary Guards seized a South Korean tanker in an apparent attempt at pressure on Pyongyang.
The tanker was released in April as the Vienna nuclear talks considered US re-entry into the 2015 nuclear deal and the easing of sanctions. In July the South Korean Finance Ministry said that Iran would repatriate $1 billion, although the transfer has not been confirmed yet.
However, the Supreme Leader’s motive appears to be connected not as much with the nuclear issue as with the concerns of Iran’s appliance manufacturers. He has said, “The import of goods that are already sufficiently produced domestically should be prohibited in law. And what we produce in this country should not be imported.”
There has been an informal ban on South Korean products since 2018, with Samsung and LG phones, branded goods, and accessories confiscated from shops. However, the possibility of the $1 billion repatriation raised the prospect that the imports would resume.
So on September 6, a letter from Khamenei’s office chief Mohammad Mohammadi Golpaygani referred to “two South Korean companies” and cited the desire of Iranian manufacturers to block the resumption of imports. Two days later, Raisi conveyed Khamenei’s instructions to the Industries and Economy Ministers.
The spokesman for Iran’s Home Appliance Manufacturers Association, Hamid Reza Ghaznavi, reinforced the Supreme Leader’s step by promoting rumors of partial removal of US sanctions, with South Korea and Japan reaping trade benefits.
On Tuesday, Khamenei’s instructions were made public. On Thursday, Iran Foreign Minister Hossein Amir-Abdollahian spoke with South Korean counterpart Chung Eui-yong about the frozen Iranian assets.
The value of Iran’s home appliances market is estimated at $4.5 billion to $6 billion dollars.
Iran home appliance production up 10%: https://www.tehrantimes.com/news/466392/Home-appliance-manufacturing-up-nearly-10-in-H1
Iranian manufacturers will still need to import certain parts from Korea and Japan.
“I am asking for any update on the situation *after* early 2018, when Entekhab renewed its attempt to acquire Daewoo.”
Legal action against South Korea were continued after 2018 by the family that owns the Entekhab group.
https://en.yna.co.kr/view/AEN20200903004400320
http://www.koreaherald.com/view.php?ud=20191221000026
The courts found the Koreans at fault: https://www.lexology.com/library/detail.aspx?g=4bb8f298-655d-4dea-ab43-131c21395305
“In June 2018, the arbitral tribunal did not accept Korea’s objections and found Korea to be in violation of the investment treaty. Subsequently, Korea applied to the English High Court to set aside the arbitral award on the grounds that the arbitral tribunal lacked substantive jurisdiction. However, the court dismissed Korea’s application in 2019.”
Iran has been very patient in the face of Korean intransigence.
Thank you for the information. However, contrary to the implication that this is a specific case of “Korean intransigence” v. Iran, the issue is of South Korea’s system of investor-state dispute settlement.
https://globalarbitrationreview.com/review/the-asia-pacific-arbitration-review/2021/article/korea
You forget one thing: South Korea has repeatedly created obstacles to Iranian private sector giant, Entekhab, acquiring Daewoo electronics: https://www.bourseandbazaar.com/articles/2018/1/23/iranian-appliance-maker-entekhab-to-acquire-dongbu-daewoo-in-a-story-of-unfinished-business
The Koreans fear Entekhab wants to do this to corner the Iranian market and expand sales into Asia. It is a case of the government protectionism from a country that generated its wealth through aggressive exports and free trade.
Iranian workers themselves have called for restrictions on the import of home appliances: https://ifpnews.com/iran-workers-call-for-a-ban-on-foreign-made-home-appliances
To suggest that this is Khamenei’s personal diktat – which has nothing to do with industry concerns and economics – is disingenuous.
Given that your link is from Jan. 2018 and says nothing about obstacles to Entekhab’s acquisition of Daewoo, can you offer recent information that does indicate obstacles?
Of course, Khamenei’s issuance of a decree does not mean that it has no support, particularly from workers in Iranian domestic industries that may benefit from an import ban.
In 2010, Entekhab tried to buy out failing Korean company, Daewoo electronics:, but the deal fell through (in part) because of U.S sanctions and also resistance from the Korean government (which tightly controls the “Chaebol”): https://www.news24.com/fin24/fired-entekhab-workers-protest-20130127
“In November 2010, the privately run Entekhab Industrial Group signed a contract sealing its acquisition of Daewoo for $518m (€397m), the manufacturer maintains….Entekhab’s deal to acquire Daewoo Electronics came unstuck in September 2010 when Seoul, reportedly under pressure from Washington, slapped sanctions on the Islamic republic over its controversial nuclear programme….Entekhab, located in the central province of Isfahan, produces domestic appliances including refrigerators, washing machines and televisions under the brand names Snowa and Haier….Under the punitive measures, South Korea has suspended the operations of Iran’s Bank Mellat.”
The Koreans have to take responsibility for blocking a purely commercial deal under pressure from Washington.
However, there is a fear that the ban could lead to higher appliance prices for Iranian consumers unless domestic producers respond to the consequent shortage of supply. Iran has started relaxing import restrictions on motor vehicles to bring down prices:
I am asking for any update on the situation *after* early 2018, when Entekhab renewed its attempt to acquire Daewoo.