Graphic=Jeong Seo-hee

As the situation in the Middle East is engulfed in turmoil, national policy banks are on high alert. They have convened and are holding meetings with executives to assess the impact of the rapidly changing Middle East situation on our economy and corporations.

According to the financial sector on the 24th, Korea Development Bank is assessing the impact of armed conflicts in the Middle East through its Integrated Crisis Response Committee following the U.S. airstrikes on Iran's mainland. The committee meets under the chairmanship of Acting Chairman Kim Bok-kyu and monitors the situation in the Middle East daily. Each department reports on trends among corporate customers and the environment for issuing industrial finance bonds to the committee, allowing the executives to discuss directions for financial support based on this information.

Other national policy banks are also closely monitoring the situation in the Middle East at the executive level. The Export-Import Bank held a crisis assessment meeting led by Senior Vice President Ahn Jong-hyeok on the 23rd. This is the fourth meeting held since the emergency martial law declaration in December last year. During the meeting on the 23rd, the Export-Import Bank reviewed trends of corporations expanding into the Middle East and assessed the scale of financial support provided to related industries. Additionally, it checked its own liquidity and assessed the possibility of further financial support. IBK Industrial Bank is monitoring Middle East risks in a weekly emergency response committee chaired by Bank President Kim Seong-tae.

The reason national policy banks are closely monitoring the situation in the Middle East is that Iran holds control over the global oil trade network. The Strait of Hormuz, located to the south of Iran, is the only passage from the Persian Gulf to the ocean and is a major oil supply route. Approximately 25% of the world's seaborne oil transportation and about 68% of Korea's imported oil pass through the Strait of Hormuz. When the U.S. carried out an airstrike with over 30 missiles on Iran's mainland on the 21st (local time), the Iranian parliament resolved to block the Strait of Hormuz and indicated that it would impose economic retaliation. The final authority to impose a blockade lies with Iran's National Security Council, and if a blockade is decided, there can inevitably be significant disruptions to our corporations' oil imports.

Even after the increasingly tense atmosphere in the Middle East shifted to a mood of reconciliation, national policy banks are not letting their guard down. Given that the local situation is changing moment by moment, there is a judgement that it is better to monitor the situation closely rather than to relax prematurely. A source from a national policy bank stated, "Even after the news of a ceasefire between Israel and Iran, the atmosphere within the bank has not changed significantly," and added, "We will carefully observe the situation and promptly decide on financial support according to government policy if necessary."