Iraq Refuses to Pay 560 Billion Won Despite Special Envoy, Offers Oil Instead

South Korean defense and construction companies have been unable to collect at least 565 billion won from the Iraqi government and other local entities for more than a year.

Although the South Korean government went so far as to dispatch a ministerial special envoy to recover the unpaid funds, no clear progress has been made.

According to the office of Representative Lee Jae-kang of the Democratic Party of Korea, a member of the National Assembly's Foreign Affairs and Unification Committee, long-term receivables owed to domestic companies in Iraq for more than a year amount to at least 565 billion won, including approximately 378 billion won in construction and about 187 billion won in defense.

Company A in the construction sector has been unable to receive $275.44 million, or about 378 billion won, in payments while carrying out a new town construction project in Iraq.

The unpaid receivables have piled up since 2020, and Company A has faced business difficulties such as laying off local employees, with the possibility of withdrawal even being discussed at one point.

The government has also stepped in to resolve the matter directly.

In May, the government dispatched Moon Byung-jun, former chargé d'affaires to Saudi Arabia who has diplomatic experience in the Middle East, to Iraq as a special envoy of the foreign minister to discuss the unpaid funds with the Iraqi deputy oil minister.

However, about four months later, the Iraqi Ministry of Oil reportedly responded to the effect that the Korean company should complete the remaining construction work at its own expense.

Negotiating conditions have grown even more complicated.

In the course of Iraq's general election and cabinet reshuffle, the then-deputy oil minister who had consulted with the South Korean side on the unpaid payments was reportedly arrested on government orders.

Large-scale unpaid amounts have also emerged in the defense sector, where Company B has been unable to collect $136 million, or about 187 billion won, from Iraq for projects involving base construction, logistics support, and helicopters.

Amid this situation, a plan to pay the overdue amounts in crude oil rather than cash is also being discussed on the Iraqi side.

From the companies' perspective, receiving crude oil does not immediately resolve the unpaid receivables.

This is because they would need to arrange transportation to ship the crude oil, store and refine it, and then liquidate it into cash.

If international oil prices fall, losses could occur, and companies may also have to bear the costs of transportation and stockpiling.

However, with no clear-cut solution in sight for collecting the unpaid bills, the companies involved have reportedly begun internal reviews to prepare for the possibility of receiving payment in crude oil.

Reported by Kim Min-jeong | Video by Kim MINJI | Graphics by Lee Sumin | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.