February 28, 2022
4:22 PM GMT+7
A truck moves a shipping container at Pyeongtaek port in Pyeongtaek, South Korea, July 9, 2020. REUTERS/Kim Hong-Ji/Files
SEOUL, Feb 28
(Reuters) - South Korea will tighten export controls against Russia by banning
shipments of strategic items and join Western countries' moves to block some
Russian banks from the SWIFT international payments system, Seoul's foreign
ministry said on Monday.
"The Korean
government condemned Russia's armed invasion of Ukraine and, as a responsible
member of the international community, decided to actively participate in the
international community's efforts, including economic sanctions, for a peaceful
resolution of the situation," the ministry said in a statement.
Among the strategic
items that could be controlled are supplies of electronics, semiconductors,
computers, information and communications, sensors and lasers, navigation and
avionics, and marine and aerospace equipment.
Shortly after the
announcement, Russia's Ambassador to South Korea Andrey Kulik expressed regret,
blaming "strong outside pressure" on Seoul from the United States its
western partners to join them in applying sanctions.
He called Moscow's
actions in Ukraine a "special operation" aimed at defending Russia
from those western forces trying to use Ukraine "as a tool" to mount
military threats.
Two leading banks in
South Korea confirmed on Monday that while they haven't yet received specific
guidelines from SWIFT, or the member-owned cooperative for interbank payment
system, they stopped trade financing with at least seven Russian banks.
South Korea's Shinhan
Bank and one other leading lender said that they stopped issuing letters of
credit and other trade financing to PSB, VEB, VTB, Bank Otkritie, Novikombank,
Sovcombank, and Sberbank (SBER.MM). The second Korean bank declined to be identified due to the
sensitivity of the matter.
"Blocking SWIFT
will adversely affect trade financing although South Korea's overall imports of
natural gas and oil from Russia isn't that huge, at about 5-10%" of the
total, said Jeong Min-hyeon, an economist with expertise in Russia and Europe
at the Korea Institute for International Economic Policy.
"The difficulties
South Korean buyers of Russian commodities and other exporters go through with
payment difficulties could lead to supply disruption and price increases."
In its statement, the
foreign ministry also said the Korean government has decided to promote the
additional release of strategic oil reserves for stabilisation of the
international energy market, and to further review other measures such as the
resale of liquefied natural gas (LNG) to Europe.
South Korea will boost
humanitarian aid to Ukraine, the ministry added, saying its decisions have been
officially notified to the U.S. government through diplomatic channels.
It also plans to seek
exemption from Washington's sanctions against Russia as measures to block
Russia's access to high-tech products could affect South Korean exporters
including Samsung Electronics (005930.KS) and SK Hynix , local news agency Yonhap reported, citing
the trade ministry.
The U.S. government
said in the wake of Moscow's invasion of Ukraine last week it will implement
export controls designed to cut Russia off from semiconductors and other
advanced technology crucial to its weapons development and biotechnology,
measures that could hurt chipmakers including Samsung.
Reporting
by Hyonhee Shin, Yena Park, Cynthia Kim, Josh Smith and Joyce Lee; Editing by
Michael Perry and Kenneth Maxwell
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