Footage of the Hankuk Chemi, a South Korean-flagged oil tanker, shows a boat from Iran's Revolutionary Guards in a red circle. The footage was shown at tanker owner DM Shipping's offices in Busan on January 4, 2021. Photo: AFP / Yonhap

SEOUL – South Korea has redeployed a destroyer from anti-piracy duties in the Gulf of Aden to the Straits of Hormuz after a Korea-flagged tanker was seized by seaborne units of Iran’s Revolutionary Guard on Monday.

Revolutionary Guards aboard armed speedboats seized the tanker HK Hankuk Chemi on  Monday afternoon, Gulf-time, citing environmental and chemical pollution by the vessel, according to South Korea’s Yonhap news agency. The vessel was carrying a cargo of chemicals, including methanol.

The vessel, en route from Saudi Arabia to the United Arab Emirates, was carrying 20 crewmembers – 11 from Myanmar, five South Koreans, two Indonesians and two Vietnamese. Approximately 70% of South Korean oil imports traverse the Strait.

Footage aired on Korean TV news on Tuesday showed at least five Revolutionary Guards’ armed speedboats maneuvering at speed off the tanker’s beam. Separate pictures showed the tanker arriving at an Iranian port, believed to be Bandar Abbas.

Major questions are hanging over whether the Iranian action was designed to win the country leverage – or a bargaining chip – to pressure South Korea into releasing billions of dollars worth of funds that have been frozen in South Korea since late 2019, a freeze linked to US sanctions against the Iranian government.

But another question hovers over whether there is a policy disconnect in Tehran over the issue of the frozen funds, given that Iran-South Korea negotiations on the matter were imminent, or whether the seizure was planned by both the paramilitary Guards and the government.

The 4,400-ton destroyer Choi Young was in the area on Tuesday morning as diplomats in Seoul scrambled for explanations and solutions. While a military solution looks unlikely, the positioning of the vessel offers Seoul potential policy flexibility.

TV news reports on Wednesday showed stock training footage of the South Korean naval special operations unit, the UDT-SEALs, boarding a vessel. The unit recaptured a South Korean ship that had been seized by Somali pirates in 2011.

A South Korean Navy Lynx helicopter takes off from the destroyer Choi Young during an anti-submarine exercise in the West Sea of South Korea on August 5, 2010. Photo: AFP/Lee Jin-man

A spokesperson from the Ministry of National Defense in Seoul confirmed to Asia Times that the Choi Young had arrived on station in the Strait. The spokesperson said the Choi Young routinely operates “with other forces,” but declined to confirm if that included a detachment of commandos.

A tangled web

There is speculation in the South Korean media that the vessel may have been seized in response to the freezing of Iranian assets in South Korea. The assets are being held at the behest of ally the United States.

The timing of the Revolutionary Guard action looks planned. On January 3, according to Iranian media The Tehran Times, Iranian-South Korean negotiations were imminent on the assets, with the head of the South Korea-Iranian Chamber of Commerce suggesting a barter deal between the two countries to resolve the issue.

The article stated that the head of the chamber had met the day prior with First Iranian Vice President Es’haq Jahangiri to discuss the issue.

The article also quoted President Hassan Rouhani, who had earlier said: “South Korea’s ban on Iran’s use of its central bank resources to buy basic goods, medicine and humanitarian items is by no means acceptable, and we expect Seoul to lift this restriction as soon as possible.”

It is impossible to say whether the Revolutionary Guards are operating in concert with the government, or are pushing a harder policy line of their own. However, tensions have long been apparent.

“If we look at the history of Iran there has always been a conflict between the Revolutionary Guards and the government,” said Kim Hyuck, a professor of Persian and Iranian Studies at Seoul’s Hankuk University of Foreign Studies. “This is not something shocking.”

Media speculate that some US$100 billion of Iranian assets are frozen globally. An estimated $6.5-9 billion of Iranian funds have been frozen in two South Korean banks – Woori Bank and Industrial Bank of Korea – since September 2019, after a waiver granted by the United States to South Korea for imports of Iranian oil expired. 

The funds were won-denominated as a way to undertake trade by bypass bans on US dollar transactions with Iran.

Prior to the developments of recent days, Iran had demanded the release of the funds.

In May 2020, Abdolnasser Hemmat, the head of the Central Bank of Iran, said the two Korean banks “… are preventing Iran from using its money to buy food and medicine, while this type of trade is not subject to US sanctions, and they (Korean banks) have decided to enter politics and follow the illegal and unilateral US sanctions.”

A diplomatic brouhaha blew up in June 2020 when Iran threatened to take the case to the International Court of Justice.

Asia Times was told that there were no appropriate personnel available at the Iranian Embassy in Seoul to respond to questions on the matter on Wednesday.

Iranian Revolutionary Guards on their speedboats on April 23, 2020, in the Persian Gulf off the port of Bandar Abbas, during war games dubbed “Tariq al-Qods” (Way to Jerusalem) Photo by Stringer/AFP

Caught in the middle

The Republican Guards’ seizure of the South Korean tanker took place the day after the first anniversary of the US assassination of Revolutionary Guards’ star general Qasem Soleimani, who led the Guards’ elite Quds Forces.

And on Monday, Iran restarted the enrichment of uranium at a nuclear facility, raising tensions with the outgoing Donald Trump administration in Washington. With the Joe Biden administration just weeks away from entering power, Seoul finds itself caught between Washington and Tehran.

“Because the US has a new president, right before Biden comes in, Tehran is trying to put pressure on,” regarding the frozen $7.5 billion in South Korea, Kim Hyuck a professor of Persian and Iranian Studies at Seoul’s Hankook University of Foreign Studies, told Asia Times.  

Kim suggested Tehran was seizing the initiative just ahead of Biden’s arrival in office.

South Korea’s alliance with the United States has historically been a massive boon to the country in the decades since the Korean War, guaranteeing not only national security and obviating massive domestic spending on defense, but also underwriting sovereign credit ratings and foreign direct investment.

However, drawbacks have emerged in relation to US policy in Seoul. Seoul’s efforts to restart cross-border engagement with Pyongyang have foundered due to US-led United Nations sanctions.  

And Seoul’s alignment with Washington has also caused problems in its relations with Beijing amid the cross-Pacific trade war, as well as in the Gulf.

Kim Tae-wook contributed to this article.