SEOUL: 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 (Feb 28).
"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 will be controlled are supplies of electronics, semiconductors, computers, information and communications, sensors and lasers, navigation and avionics, and marine and aerospace equipment.
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. 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 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 US 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 and SK Hynix, local news agency Yonhap reported, citing the trade ministry.
The US 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.
Russia calls its actions in Ukraine a "special operation".