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.

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IRAN-ROK DIPLOMATIC HISTORY
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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.

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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.

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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.

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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."

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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