Banks continue Turkey gold trade despite Iran link
Arab News - 09 January, 2013
Banks are continuing to exchange gold in Turkey, despite US pressure over
the country's booming gold-for-gas trade with Tehran, which helps Iran cope
with international sanctions, bankers said yesterday.
Gold exports from Turkey to Iran jumped to $ 6.5 billion in the first 11
months of 2012 from just $ 54 million for all of 2011, as the United States
tightened sanctions over Iran's disputed nuclear program.
Turkey is Iran's biggest natural gas customer, but Western sanctions prevent
it from paying Tehran in dollars or euros. Iran is instead paid in Turkish
lira — of limited value on international markets but ideal for buying gold
While the shipments are not in breach of existing Western sanctions, they
have helped Tehran to manage its finances despite being largely frozen out
of the global banking system.
The US State Department said in December that US diplomats were in talks
with Ankara over the flow of gold to Iran after the US Senate approved
expanded sanctions on global trade with Iran's energy and shipping sectors
in November that would also restrict trade in precious metals.
One senior US official said at the time that the new sanctions, which have
yet to take effect, would end "Turkey's game of gold for natural gas".
"We continue our business as usual," a senior foreign banker said of his
bank's gold trading activities in Turkey, declining to be named because of
the sensitivity of the issue.
"We're always careful in transactions if we have doubts about the source of
the money or the identity of the customer; however, we have not faced any
extra ban with regard to gold transactions," he said.
Washington says Tehran is enriching uranium to levels that could, with
further enrichment, be used in nuclear weapons and believes gold sales to
Iran have provided a financial lifeline to a government under the choke of
Iran says its nuclear program is for peaceful purposes.
Turkish Economy Minister Zafer Caglayan said last week that the gold sales
to Tehran would continue, saying the trade was carried out entirely by the
private sector rather than between states and was not subject to sanctions.
Couriers carrying millions of dollars worth of gold bullion in their luggage
have been flying from Istanbul to Dubai, where the gold is shipped to Iran,
industry sources with knowledge of the business told Reuters last year.
Turkish bankers also said the trade with Iran was not being handled through
them and that it was business as usual for their gold trading desks.
"Iran is not carrying out its gold trade via the Turkish banking system; it
is the private sector selling gold to Iran. We do not face any pressure
regarding this issue," said a senior banker from a Turkish bank.
Interbank gold trading is not particularly common among Turkish banks,
though lenders usually swap dollars for gold as the central bank allows them
to keep a portion of their forex reserve requirements in gold.
Turkey is heavily dependent on imported energy and is Iran's biggest natural
gas customer, buying more than 90 percent of Tehran's gas exports — about 10
billion cubic meters a year — under a 25-year supply deal.
Turkish officials say they have repeatedly made clear to Washington how
dependent their rapidly growing economy is on imported energy and that it
cannot simply stop importing from Iran, its second-largest gas supplier
Turkey's Deputy Prime Minister Ali Babacan said in November that the lira
Iran received from Turkey for its gas was being converted into gold because
sanctions meant that it could not transfer cash into Iran.