Can Korea profit from U.S. fund to rebuild Iran?

[NEWS ANALYSIS]

A U.S.-floated proposal to help rebuild Iran is reportedly drawing attention in Seoul, with investors already betting on Korean construction stocks.

The Financial Times reported Monday that the White House is prepared to allow the creation of a $300 billion investment fund to rebuild Iran if Tehran agrees to a final settlement ending the recent war, including a nuclear deal, citing a senior U.S. official.

U.S. Vice President JD Vance effectively confirmed the discussions in a CBS News interview the same day, saying the fund was "the sort of thing" Iran could access so long as it honored its obligations.

The fund would not be financed by governments but by companies eager to invest in Iran's energy industry, and “there is interest from a lot of businesses in Europe, a lot in Asia, South Korea, Japan etc, and American companies,” according to the Financial Times. The fund's structure and management remain unclear, and any sanctions relief would be phased in, tied to progress in the nuclear talks.

No Korean construction company contacted by the Korea JoongAng Daily could confirm interest in the reported reconstruction package as of Tuesday.

"We have received no proposal related to this and have reviewed nothing," an industry source said. "The reporting seems to have come from an official's comment, but there are too many issues still to resolve, because the working-level agreement to end the war has not even been produced, and the Strait of Hormuz has not reopened."

The specific picture of how companies might be affected was only beginning to take shape, the source added, and at this stage it was “far too premature to say whether any individual firm would take part.”

Korean market analysts, regardless, are forecasting further gains for construction stocks. On Monday, Samsung E&A closed at 52,100 won, up 9.45 percent from the previous session. DL E&C rose 6.90 percent, GS E&C 5.03 percent, Daewoo E&C 4.81 percent and Kumho E&C 4.29 percent.

"Construction sector shares have risen 83.5 percent since the start of the year," said Lee Hye-jin, an analyst at Daishin Securities on Tuesday. "It is the result of rapidly spreading expectations for overseas orders, as a global nuclear-power renaissance converges with hopes for Middle East reconstruction."

Kim Sun-mi, an analyst at Shinhan Securities, said full-scale reconstruction would likely be carried out through existing engineering partners.

"Full-scale reconstruction, beginning three to 12 months out after damage assessment and safety inspections, is likely to be handled mainly through modified contracts with existing engineering, procurement, and construction firms such as Samsung E&A, GS, DL and Hyundai, to save time and cost," she said. "Firms with spare manpower capacity, such as DL E&C and GS Engineering & Construction, are expected to benefit."

For Korean firms, the appeal lies in a market long kept out of reach. Iran holds the world's second-largest natural gas reserves after Russia and the fourth-largest proven crude oil reserves, making it one of the most resource-rich nations on earth. Yet decades of conflict with the United States and sweeping sanctions have prevented it from fully tapping that wealth or integrating into global markets.

Korea and Iran were once close partners. Throughout the 1970s, Iran earned vast oil revenues and stood as a dominant power in the Middle East, while Korea sent construction crews across the region to earn foreign currency. The two countries' interests aligned, and the relationship left a lasting mark on Seoul.

In June 1977, during a visit by Tehran Mayor Gholamreza Nikpey to mark a sister-city tie, the two capitals agreed to name streets after each other. That is the origin of Tehran-ro, the 10-lane artery that now cuts through Gangnam, while Tehran has a street named after Seoul. After the 1979 Iranian Revolution and Iran's deepening conflict with the West, economic cooperation with Korea had largely ground to a halt by the 2000s.

Korea has rebuilt in Iran before. Korean companies entered Iranian reconstruction projects after the Iran-Iraq War, and a renewed opening would fit the current government's push to diversify energy suppliers and export destinations. Restoring cooperation would expand market access at a useful moment.

The prospect remains contingent. The fund depends on a final settlement that, under the memorandum of understanding due to be signed in Switzerland, would follow a 60-day extension of the ceasefire, the reopening of the Strait of Hormuz and further nuclear negotiations.

U.S. officials have said no money has yet flowed to Iran and that early relief would come only in the form of small trust-building gestures. Whether the fund materializes and whether Korean firms secure a place in it will hinge on diplomacy that is still far from settled.

BY KIM MIN-YOUNG [[email protected]]