SEOUL– South Korea said Friday it plans to provide financial support to local exporters in an effort to minimize the looming fallout from international sanctions against Russia over Moscow’s invasion of Ukraine.
The United States has announced new sanctions against Russia, including export controls, over Moscow’s invasion of Ukraine in a bid to restrict Russia’s ability to do business in major currencies.
The government said it will immediately provide trade financing to local exporters if they suffer business losses due to the sanctions. It also plans to draw up an emergency financing program worth of up to 2 trillion won (US$1.7 billion) if needed.
Seoul said Thursday it will join the international community in imposing sanctions against Russia though it stopped short of drawing up its own punitive measures against Moscow.
Russia is South Korea’s 10th-largest trading partner, with Seoul’s exports to Moscow reaching $9.98 billion last year, led by shipments of cars, auto parts and steel products, according to customs data.
Shipments to Ukraine came to $581.5 million in 2021, and its main export items were autos and cosmetics.
Around 120 Korean companies are doing business in Russia and 13 in Ukraine, according to the trade ministry. A total of 43 Korean nationals who had been in Ukraine for business purposes were all evacuated for safety concerns.
The number of Korean firms that have exported products to Ukraine and Russia reached some 2,300 and 5,400, respectively.
The government said the financial regulator has been checking transactions between Russian lenders slapped under the sanctions and Korean banks. It plans to devise ways for local firms and banks to use alternative ways for settlement.
South Korea said the Ukraine crisis is expected to have limited impacts on the economy in the short term, given its trade volumes to Russia and Ukraine, and a stockpile of major raw materials.
But the government is closely watching the developments of the Ukraine tensions on concerns they could jack up already high oil prices and disrupt supplies of energy and raw materials.
Oil prices topped $100 per dollar Thursday, moving to a seven-year high, amid the escalating Ukraine tensions. South Korea heavily relies on imports for its energy needs.
The government said it will also join global efforts to stabilize energy supplies if the International Energy Agency (IEA) and other nations decide to release crude reserves.
The country will also seek to diversify sources of energy imports in an effort to tackle a possible energy supply crunch.
Source: Yonhap News Agency