Seoul’s Foreign Ministry says Seoul and Tehran have been discussing the possibility of using Iranian funds frozen in South Korean banks under U.S. sanctions to pay for COVID-19 vaccines for the Middle East country. 

A high-ranking official of the ministry said on Tuesday that the Iranian government has sought to secure COVID-19 vaccines through a global vaccine project known as COVAX Facility and that Seoul and Washington have been discussing paying for them in South Korean won.

The official said the U.S. Treasury Department has granted special approval of the plan as purchasing vaccines falls into the category of humanitarian transaction eligible for a sanctions waiver.  

The South Korean banks that are holding the Iranian funds reportedly proposed a plan to transfer the funds, but Tehran has yet to respond, possibly out of concern the funds could be frozen in U.S. banks in the process of remittance. 

The Seoul official’s remarks came after Hossein Tanhayi, the head of the Iran-South Korea Chamber of Commerce, told an Iranian news outlet that Iran and South Korea were discussing the barter of the frozen Iranian money to purchase COVID-19 vaccines and other supplies. 

Some seven billion dollars of Iran's oil money is frozen in two South Korean bank accounts, after the U.S. tightened sanctions on Iran upon its 2018 withdrawal from the Iran nuclear deal, effectively banning Seoul's indirect trade with Tehran.

The disclosure of the Seoul-Tehran talks on the matter was also made amid tension between the two countries over the seizure of a South Korean-flagged oil tanker by Iran's Revolutionary Guards Corps(IRGC) on Monday. 

The Seoul official said Iran has denied speculation that it seized the vessel to gain leverage in talks over the funds. Iran has cited alleged environmental and chemical pollution in the area by the South Korean vessel as the reason for the capture.