1. Iran's health ministry spokesperson has shared this photo of a SWIFT message. It's important.
South Korea's Woori Bank has refused to honor a ₩5.3bn ($4.1m) letter of credit from Iran's Bank Keshavarzi, which was apparently intended to pay for #COVID19 testing kits.
South Korea's Woori Bank has refused to honor a ₩5.3bn ($4.1m) letter of credit from Iran's Bank Keshavarzi, which was apparently intended to pay for #COVID19 testing kits.
2. Woori Bank and Industrial Bank of Korea are the two banks where Iran maintains significant won-denominated reserves after years of South Korean purchases of Iranian oil. Those funds are supposed to be free for use in humanitarian trade.
3. Moreover, Bank Keshavarzi remains connected to SWIFT. This makes it one of a few Iranian banks on which the whole country depends to facilitate trade in food, medicine, and medical devices by issuing letters of credit to the banks of exporters in countries like South Korea.
4. But reimbursement depends on Central Bank of Iran: CBI funds are held at Woori. The Sep 2019 designation of CBI eliminated a longstanding exemption that allowed CBI to have a role in humanitarian trade. The move led Korea and other countries to block use of these funds.
5. Back in December of last year, it was reported that South Korea was trying to get some clarity from the Trump administration so that they could get humanitarian exports to Iran going again. Unsurprisingly it has been a slow process.
financialtribune.com/articles/domes…
financialtribune.com/articles/domes…
6. In February, OFAC issued General License 8, a "fix" to the September designation of Iran's central bank that restored an exemption for CBI to facilitate humanitarian trade.
treasury.gov/resource-cente…
treasury.gov/resource-cente…
7. Part of this reason this was necessary was because OFAC needed to clear the path for the Swiss Humanitarian Trade Arrangement (SHTA), a payments channel via BCP, a Swiss bank that like Woori, had long played a central role in Iran trade.
8. But where OFAC fine-tunes, rhetoric from the State Department aims to keep suppressing trade. This was something the former head of OFAC pointed out in a @CNASdc webinar yesterday. Fear continues to keep even food and medicine from flowing.
9. "Maximum pressure" has decimated South Korea's bilateral trade with Iran. This chart shows what happened to exports/imports following Trump's inauguration. Keep in mind South Korea is an American ally! 
10. One week ago, Korean authorities indicated progress in their discussions with the Trump administration and also said they were working on KHTA, a Korean analogue to the Swiss channel.
en.yna.co.kr/view/AEN202004…
en.yna.co.kr/view/AEN202004…
11. But the SWIFT message posted by @drjahanpur makes it clear that whatever progress there has not yet been translated from political understanding into bank policy.
Iran faces the exact same problem with humanitarian trade in *every single country* during a *global pandemic*.
Iran faces the exact same problem with humanitarian trade in *every single country* during a *global pandemic*.
12. This is a very real impediment to getting medicine and medical devices into the country in a quick and effective way. By the letter of OFAC guidelines (a new Fact Sheet was issued Thursday) there shouldn't be an issue here.
treasury.gov/resource-cente…
treasury.gov/resource-cente…
13. But the Trump admin is using the "letter of the law" to hide the fact that it has made zero effort to proactively ensure that food + medicine easily gets into Iran.
The policy is human misery and it's being spearheaded by Pompeo et al. over the protests of civil servants.
The policy is human misery and it's being spearheaded by Pompeo et al. over the protests of civil servants.
14. Ok so usual suspects saying “but look it says OJWorld which is a Korean app company!”
1) That’s irrelevant to the *compliance message* from Woori.
2) It wouldn’t be unusual for a Korean tech firm present in Iran was stepping up to make a purchase of COVID-19 test kits.
1) That’s irrelevant to the *compliance message* from Woori.
2) It wouldn’t be unusual for a Korean tech firm present in Iran was stepping up to make a purchase of COVID-19 test kits.
15. Given the issues outlined above, the maker of the testing kits is unlikely to readily sell to an Iranian buyer with which it has no prior dealings.
The way to get around that is to sell to a Korean company that can ship the kits to Iran. The maker caries less risk.
The way to get around that is to sell to a Korean company that can ship the kits to Iran. The maker caries less risk.
16. OJWorld seems like a good candidate as a Korean firm already exposed to Iran risk and with financial means (hence the L/C from Bank Keshavarzi). Is this the ideal way to do it? No. But it’s the kind of intermediation *all too common* in Iran trade due to sanctions barriers.
17. Here is the relevant trade data from the Korea Customs Service. The drop in pharmaceutical exports since November 2018—when the Trump administration reimposed secondary sanctions as part of its "maximum pressure" campaign—is obvious.
