ISTANBUL: 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 sanctions, bankers said yesterday.
Gold exports from Turkey to Iran jumped to $6.5bn in the first 11 months of 2012 from just $54m for all of 2011, as the United States tightened sanctions over Iran’s disputed nuclear programme.
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 in Turkey.
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. “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 believes gold sales to Iran have provided a financial lifeline to a government under the choke of sanctions. 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 said. Turkish bankers said the trade with Iran was not being handled through them and that it was business as usual for their gold trading desks.
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 buys more than 90 percent of Tehran’s gas exports — about 10bn cubic metres a year — under a 25-year supply deal.
Reuters
