ROK-IRAN RELATIONS OVERVIEW: PAST, PRESENT AND

S E C R E T SEOUL 001236 SIPDIS E.O. 12958: DECL: 08/05/2019 TAGS: PARM PREL ECON ETRD KS IR SUBJECT: ROK-IRAN RELATIONS OVERVIEW: PAST, PRESENT AND FUTURE REF: A. 09SEOUL000954 ¶B. 08SEOUL02252 ¶C. 08STATE90303 Classified By: CLASSIFIED BY POL M/C JAMES L. WAYMAN. REASONS 1.4 (B,D) ¶1. (S) SUMMARY: Diplomatic and economic relations between the Republic of Korea and the Islamic Republic of Iran date from 1962, but the relationship is not robust, with total ROK investment in Iran still under USD 34 million. The two countries have cooperated on multiple business projects since the 1970's, but political relations are lackluster, with the ROKG's last high level visit to Tehran taking place in 2001. MOFAT Middle East Division said they were told repeatedly by Iranian officials that they are too mindful of "third party influence," unambiguously implying the USG. In addition, Iranian desk officers told us that as ROK companies pull out of Iran because of sanctions," China is quickly moving to fill the void that is left." MOFAT Iran desk officers also provided an update on three on-going MOU negotiations. MOFAT had no information as to whether the Iranians had been able to pay for the ships they ordered last year -- a contract that could not be legally terminated, according to MOFAT. The text of the revised transportation/ infrastructure MOU is at paragraph 12. END SUMMARY. -------------- IRAN-ROK DIPLOMATIC HISTORY -------------- ¶2. (SBU) Diplomatic relations between South Korea and Iran were established in 1962. In a recent meeting, MOFAT's incoming Iran desk officer Choi Joon-young and outgoing officer Lee Sung-hwan noted that even during the Iran-Iraq war, many South Korean companies stayed in Iran and continued to win contracts and make money with the help of the GOI. During downgraded relations and turbulent times, South Korean companies continued to do business in Iran at great risk to themselves and their companies. Iran's diplomatic status was upgraded in the early 1990's and an ROK Ambassador was re-appointed to Tehran. -------------- ECONOMIC ACTIVITIES: OIL AND CONSTRUCTION -------------- ¶3. (C) South Korea is an energy-poor country and much of the relationship between Iran and the ROK is based on energy security and construction projects (ref A). Iran is now the ROK's fourth largest oil supplier, accounting for roughly eight percent of South Korea's total crude oil. Approximately seventy-five percent of South Korea's oil comes from Persian Gulf countries and the remaining needs are met by central Asian and other nations (2006 estimates). ¶4. (C) In addition to oil procurement, a handful of prominent South Korean companies have construction contracts with Iran including LG Electronics Inc., Daewoo International Corp., Hyundai Heavy Industries and Daelim Industrial Companies. In particular Daelim, a South Korean engineering and construction contractor, boasted in a 2004 ad for the Iran Daily of completing "twenty projects since 1975 without interruption" in Iran. MOFAT officers stressed, however, that South Korea's investment in Iran since 1968 totals no more than USD 34 million. Despite low, but consistent economic exchanges, MOFAT officers emphasized that there has "not been one instance" where South Korea has violated any of the sanctions against Iran. -------------- POLITICAL OVERTURES AND SPURNED ADVANCES -------------- ¶5. (C) The political relationship has been even more sluggish than economic relations. The most recent visit by an ROKG official to Tehran was in May of 2009 by the Vice Minister of Culture, Sports and Tourism, Yu In-chon. According to MOFAT, no ROK president has ever visited Tehran and the last Foreign Minister to visit was Han Seung-soo in August 2001. ¶6. Despite South Korea's luke-warm interest in strengthening political affiliation with Iran, the GOI is keen to push for deeper ties with the ROKG. All four of the stalled MOUs -- currently under MOFAT review -- were proposed by Iran (ref A). The GOI also proposed four additional MOUs in the past three years, which MOFAT rejected. Vice Minister of Foreign Affairs Mahdi Mostafavi, Deputy Foreign Ministers for Asia and the Pacific, Mohsen Aminzadeh and Mehdi Safarim, as well as Head of the Iranian Judiciary, Ayatollah Seyed Mahmoud Hashemi Sharudi all visited Seoul in the past four years. -------------- -------------- Rising Chinese Influence and Greater Market Share -------------- -------------- ¶7. (C) MOFAT officers said that Iran had "looked east" to strengthen ties with counties like South Korea, China and India while trying to downplay, or even avoid, Western influence. According to MOFAT, this was all part of Iran's "foreign policy of balance" where no single country's influence should dominate. Choi and Lee also said that Iranian officials at all levels continue to repeatedly voice their frustration that South Korea is often "too cautious" and "too mindful of third party influence," unambiguously implying the USG. ¶8. (C) When asked about the future of ROK-Iran relations, our contacts complained that South Korea -- in observance of sanctions or USG requests ) regularly moves out of a market or suspends business dealings, only to see China "rush in and fill the void." MOFAT also pointed out that recently South Korean companies are voluntarily curtailing Iran activities because it is simply too difficult to do business while the sanctions are in place. Choi and Lee said that if China continues its current pattern while South Korea observes the sanctions, the Iranian market would then be "handed to China on a silver platter." -------------- UPDATE ON SHIPPING AND TRANSPORT MOU -------------- ¶9. (S) MOFAT had no information on whether the Islamic Republic of Iran Shipping Lines (IRISL) was able to pay for ships that it had ordered in early 2008 (refs B,C). Per ref C, the USG, in August 2008, asked the ROK to stop delivery of ships ordered by IRISL because of connections to proliferation activities. MOFAT's response at the time was that it could not stop delivery as the ROKG would be on the hook for millions of dollars in private sector losses. During our meeting, MOFAT officers explained that there was simply no legal way to void IRISL's contract. Lee repeated that the increasing sanctions against Iran are making it more and more difficult for Iranian companies to do any type of business with South Korea and no new contracts have been pursued by IRISL. ¶10. (S) Choi and Lee reported that there has been "no progress" on three other MOUs involving energy, oil storage, finances, and media (ref A). To date, Iran and the ROK have a fully negotiated, but unsigned, agreement for extradition and mutual assistance on criminal affairs. Given Iran's current unpredictable domestic situation, MOFAT officers did not know when the treaty would be signed. ¶11. (C) MOFAT informed poloffs that the GOI had contacted MOFAT on July 24 regarding minor edits to the existing text of the Iran-ROK transportation MOU. If the ROKG accepts the proposed edits, the remaining steps are for MOFAT to notify the Ministry of Transportation and negotiate a signing date. When asked about the likelihood of MOU finalization and timing, Iran desk responded that "it would take some time" and the ROKG would notify the USG, including sharing the final draft. ¶12. (S) Full text of the revised transportation/infrastructure MOU follows. New language suggested by the GOI in ALL CAPS: BEGIN TEXT Memorandum of Understanding between the Ministry of Land, Transport and Maritime Affairs of the Republic of Korea and the Ministry of Road and Transport of the Islamic Republic of Iran on Cooperation in the Construction of Transport Infrastructures The Ministry of the Land, Transport and Maritime Affairs of the Republic of Korea and the Ministry of Road and Transport of the Islamic Republic of Iran ("the Sides") have agreed as follows in order to promote cooperation between the two countries in construction of transport infrastructures. Paragraph 1 Objective The objective of this Memorandum of Understanding ("the Memorandum") is to promote mutual benefits by sharing policies, technologies, and experiences in construction of transport infrastructures, including railways, and by encouraging participation (including investments in transport infrastructures) of companies of both countries in related construction projects. Paragraph 2 Scope of Cooperation The Sides will cooperate in construction AND DEVELOPMENT of roads, railways, PORTS, AIRPORT AND AVIATION EQUIPMENTS RELATED TO ALL TRANSPORT SECTORS AS WELL AS THE other transport infrastructures. Paragraph 3 Forms of Cooperation Cooperation between the Sides will take the following forms: a)Joint researches and exchanges of information on government plans, laws and regulations, and updated data relating to construction of transport infrastructures; b)Stimulating interchanges of personnel (relevant government officials, specialists, and technical experts) and holdings of related meetings; c)Providing support to companies of both Sides in their entrances into the transport infrastructure construction market of the other country; and d) ESTABLISHMENT OF JOINT VENTURE BETWEEN IRANIAN AND KOREAN COMPANIES ALONG WITH TRANSFER OF TECHNOLOGY FOR PRODUCTION AND SUPPLYING TRACKS, LOCUS AND THE OTHER RAILWAY ROLLING STOCKS, VESSELS, AIRPLANES AND THEIR RELATED PARTS AS WELL AS TRUCKS, INTER CITY BUSES, ROAD CONSTRUCTION MACHINERY AND E) Other forms of cooperation mutually agreed by the Sides. Paragraph 4 Implementation 1)Aiming to realize the objective of this Memorandum, the Sides will strongly encourage direct contacts between both public and private sector organizations and support the conclusion of cooperation programs between such organizations. 2)The Sides will encourage and assist private companies of both sides to form direct and friendly relations. 3)The Sides may hold working level experts' meetings participated by government officials, experts and private companies at a venue and time to be decided by the Sides in order to exchange information and to discuss forms of cooperation. 4)Unless agreed otherwise by the Sides, each Side will bear its own expenses incurred for the cooperative activities under this Memorandum. Paragraph 5 Entrance into Effect and Termination 1)This Memorandum will take effect from the date of its signature. 2)A Side that intends to terminate this Memorandum will give the other Side a written notice ninety (90) days in advance of the intended date of termination, and. in this case, the Memorandum will cease to be effective from the intended date of termination. 3)This Memorandum may be amended upon mutual written consent of the Sides. 4)This Memorandum does not create any enforceable legal obligations under international laws. Signed in duplicate in -on- 2009 in the English language. (Signed in duplicate in -on- 2009 in the English, Korean, and Farsi languages, each version being equally valid. In the case of differences in interpretation, the English language version shall prevail.) (Signature Line) For the Ministry of Land, Transport and Maritime Affairs of the Republic of Korea (Signature Line) For the Ministry of Road and Transport of the Islamic Republic of Iran End Text STEPHENS