Iran and Turkey resume their trade of gold for natural gas and make USD 120 million deal in February, circumventing tough US sanctions against Tehran over its nuclear energy program, Press TV reported.
Turkey exported almost USD 120 million worth of gold to Iran in February after it announced a moratorium in January, Reuters reported.
Data from the Turkish Statistics Institute (TUIK) showed that Ankara sold no gold to Tehran in January as banks and dealers implemented the February 6 US sanctions targeting Iranian oil revenues.
The US and its European allies have imposed illegal unilateral sanctions against Iran based on the unfounded accusation that Iran is pursuing non-civilian objectives in its nuclear energy program.
On February 6, 2013, the US Treasury Department announced new sanctions targeting Iranian oil revenues. The sanctions prevent Iran from gaining access to earnings garnered from its crude exports.
One Istanbul gold trader asking not to be named, said, “Due to the sanctions, nobody wants to attract attention. That may be the reason why exports stopped to Iran in January.”
“However, trade with Iran continues; there will always be transfers. Looking at this year’s figures, the February exports to Iran are quite low, so it shouldn’t cause issues,” he added.
On January 4, 2013, Turkish Economy Minister Zafer Caglayan slammed European Union pressures on Ankara to stop gold-for-gas trade with Iran, saying the EU demand would fall on “deaf ears.”
On December 26, 2012, Turkish Energy Minister Taner Yildiz said Ankara would keep buying natural gas from Iran regardless of Western sanctions against the Islamic Republic.
via Iran, Turkey resume gold trade despite US sanctions – Trend.Az.
Turkey exported $120 million in gold to Iran in February and, according to Reuters, this evidence reveals that despite U.S. restrictions, the trade of natural gas for gold continues between the two countries, albeit at lower levels.
Reuters reported on March 29 that TUIK, Turkey’s statistics institute, says the country did not export any gold to Iran in January 2013; however, in February, $114.9 million in gold was sold to Iran, and gold exports to Dubai, which is often a route for the transfer of gold to Iran, went up from $371 million in January to $402.3 million.
A gold merchant in Istanbul told Reuters that the gold traders do not want to draw too much attention to their dealings with Iran, which is perhaps why gold exports to Iran were stopped in January.
Iran is a major supplier of natural gas and oil to Turkey, and U.S. sanctions on Iran have put restrictions on paying for these commodities in euros or dollars.
Turkey has been exempted from U.S. sanctions on trade with Iran but that exemption is due to expire in July.
Turkey will not be swayed by US sanctions pressure to halt gold exports to Iran but Tehran’s demand for the metal may fall this year, said its Economy Minister Zafer Caglayan, Trade Arabia reported with a link to Reuters.
US officials are concerned that Turkey’s gold sales, which allow Iran to export natural gas, provides a financial lifeline to Tehran, which is largely frozen out of the global banking system by Western sanctions imposed over its nuclear programme.
Trade in Turkish gold bars to Iran via Dubai is drying up as banks and dealers increasingly refuse to buy the bullion to avoid sanctions risks associated with the trade.
Turkey has a six-month US waiver exempting it from financial sanctions against Iran, which is due to expire in July.
“We will continue to make our gold exports this year to whoever seeks them. We have no restrictions and are not bound by restrictions imposed by others,” the Turkish minister told reporters.
“There may be a decline in demand for gold exports. This is nothing to do with sanctions. We are not subject to these sanctions until July anyway, but there may be a decline in demand from Iran,” he said.
Caglayan declined to say why he anticipated Iranian demand might fall.
Turkey, Iran’s biggest natural gas customer, has been paying the Islamic Republic for oil and gas imports with Turkish liras, because sanctions prevent it from paying in dollars or euros.
Iranians then buy gold in Turkey, and couriers carry bullion worth millions of dollars in hand luggage to Dubai, where it can be sold for foreign currency or shipped to Iran.
Caglayan, who has repeatedly said that Turkey’s gold trade with Iran is carried out by private firms and is not subject to US sanctions, said other firms, including US and European companies, were continuing their exports to Tehran.
“Turkey is doing whatever is required by international obligations. The companies of those imposing an embargo on Iran today, forbidding product exports to Iran, are exporting to Iran under different guises,” he said.
The US State Department said in December that diplomats were in talks with Ankara over the flow of gold to Iran after the Senate approved expanded sanctions on trade with Iran’s energy and shipping sectors, which would also restrict trade in precious metals.
That increasing US pressure has already started to create troublesome repercussions for exporters of Turkish gold.
The spotlight on the gold-for-gas exchange contributed to a cut in Turkey’s gold exports to the UAE to some $400 million in December from nearly $2 billion in August, according to the latest official trade data.
Separately, Caglayan said Turkish state-owned Halkbank will continue its existing transactions with Iran but some other banks, with activities in the United States, had pulled back in response to US pressure.
Asked about a decision by India no longer to use Halkbank to pay for its Iranian oil imports, he said: “This is India’s decision not Halkbank’s.”
A Turkish official told Reuters that trade with Iran through a third party was no longer allowed under tighter US sanctions which went into effect on Wednesday.
“For example, Halkbank would not be able to be an intermediary in India’s oil purchases from Iran,” he said.
via Turkey says won’t halt gold flow to Iran – Trend.Az.
Turkey’s multi-billion-dollar gold sales to neighboring Iran could put the country on a collision course with its close ally, the United States, when high-ranking diplomats from the two countries hold talks in Washington.
Turkey’s Prime Minister Recep Tayyip Erdoğan shakes hands with Iran’s President Mahmoud Ahmadinejad at an Economic Cooperation Organization Summit in Baku in 2012. Despite international pressure on Turkey to stop selling gold to Iran, the two countries’ gold trade for 2012 equaled more than $11 billion. (Photo: Turkish Prime Minister’s Office.)
Turkish Foreign Ministry Undersecretary Feridun Sinirlioğlu was scheduled to be in Washington from January 14-16 for discussions with State Department officials, including US Deputy Secretary of State William Burns. The gold sales were expected to come up during the talks, which will cover a broad range of Middle East-related topics. But a senior Turkish official told EurasiaNet.org that Turkey itself did not intend to raise the gold-for-gas issue.
“We have no plans to talk about it, but the US can bring it up,” said the source, who requested anonymity.
Through the first six months of 2012 Turkey’s gold trade with Iran totaled $6.5 billion, according to various news reports. For the entire year, the value of the gold shipped to Iran from Turkey is estimated at $11-12 billion, according to industry analysts and media accounts. Worldwide in 2010-11, Turkey had total exports of gold and precious gems worth about $4 billion.
The massive 2012 gold transfers are part of the Turkish payment for its gas imports from Iran, which meets 18 percent of Turkey’s annual demand of 50 billion cubic meters. The arrangement makes Iran the country’s second-largest supplier after Russia.
The sales, made through Switzerland and Abu Dhabi, have “become probably the most important source of income to Iran and . . . have allowed Iran to use gold as its main currency for securing necessities from abroad,” commented consultant Attila Yesilada of the Istanbul-based research consultancy Global Source Partners.
The flow of gas and gold now must maneuver around a US ban introduced this year on the sale of precious metals to Iran; the latest tactic in Washington’s effort to curtail Iran’s nuclear research efforts. Authors of the legislation named Turkey as one of its prime targets. Most Turkish financial institutions have offices in the United States, and thus could be liable for prosecution; a powerful incentive for Turkish compliance with the ban.
So far, Ankara has striven to show that it is not cowed by the ban. “We are only bound by sanctions passed by the UN Security Council and not by unilateral sanctions by individual countries,” said Turkish Foreign Ministry spokesperson Selcuk Unal in December.
Nonetheless, for all the tough words, Ankara previously has avoided confrontations with Washington over Iran, and “abided by all US legal measures against Tehran,” commented Inan Demir, chief economist at the privately owned Finansbank.
In a possible gesture to Washington earlier in January, Turkish customs officials grounded a Turkish-owned cargo plane, en route from the United Arab Emirates to Iran, after it made an emergency landing at Istanbul’s Sabiha Gökçen airport. The Turkish media widely reported the plane was carrying 1.5 tons of gold and had arrived from an African country.
The dispute over gold transfers is putting Ankara in a tight spot. Iranian gas is crucial to Ankara’s efforts to diversify its gas imports. The Turkish government is reluctant to increase its already heavy dependency on Russia for energy.
One solution increasingly being touted is the age-old practice of bartering, a measure already used by India to buy oil from Iran. A Turkish diplomatic source acknowledged that a barter deal could be brokered. “Turkish government agencies will be looking into this. We need to support economic growth with all countries, including with Iran, in this challenging world economic climate,” the official said.
A business network already exists in Turkey to facilitate such trades. Over 2,000 Iranian companies now operate in Turkey, most of which have been set up in the past few years, according to the government.
Bartering has the added bonus for Turkey that, unlike gold, which it has to import, any products it barters would be locally produced. The question, though, remains of whether Turkey has a sufficient amount of tradable and desirable goods to cover their Iranian energy bill.
“The problem now is neither Ankara nor Washington knows what Iran is using its gold for; it might be buying necessities — medicine, food. Or maybe [it is] financing [Syrian President Bashar] Assad’s forces or Hezbollah in Lebanon in … some terror acts,” speculated Global Source Partners’ Yesilada. “With barter, that is completely removed from the equation because you can’t buy arms with jam.”
There remain other alternatives for Turkey, liquefied gas from Arab Gulf States, but that is more expensive. A cheaper option is from the neighboring semi-autonomous Iraqi Kurdish region, but any new pipeline would take at least a year to build. Deep divisions between the Iraqi Kurds and the central government in Baghdad over the distribution of the country’s energy riches, further complicates the issue. For now it seems Ankara will be looking for new creative ways of paying for its Iranian gas.
Editor’s note:
Dorian Jones is a freelance reporter based in Istanbul.
via Turkey: What is Iran Doing with Turkish Gold? | EurasiaNet.org.
A worker walks past the pumping station on the border between Iran and Turkey during the inauguration ceremony for the Iran – Turkey gas pipeline, January 22, 2002.
ISTANBUL — Turkey late least week acknowledged that a surge in its gold exports this year is related to payments for imports of Iranian natural gas, shedding light on Ankara’s role in breaching U.S.-led sanctions against Tehran.
In response, U.S. senators said they will seek to close this loophole. But a Turkish trade minister has warned Turkey will not respect any new U.S. measures.
Turkish Deputy Prime Minister Ali Babacan admitted Turkey was paying for its gas imports with gold. While Washington has warned it is considering new measures to prevent such payments, Turkey’s economy minister Zafer Çaglayan this week dismissed the threat.
“The U.S. sanctions stand for the U.S.,” Çaglayan said. “We have multilateral international agreements. These deals we are a party to and are binding for us. But measures taken by the EU are also not binding since we are not a member,” he said.
Iran is Turkey’s second largest supplier of gas after Russia, with more than 90 percent of Iran’s gas exports going to Turkey.
Iran provides 18 percent of Turkey’s natural gas and 51 percent of its oil. But since U.S. and European Union sanctions ban Tehran from receiving payments in dollars or euros, Ankara pays Iran for the gas in Turkish liras. The lira is of limited value for buying goods on international markets but ideal for purchasing Turkish gold. The government has not specified how it pays for Iranian oil.
Iranian analyst Jamshid Assadi, of France’s Burgundy Business School, says the arrangement works for both countries.
“Iran has difficulties to get paid, because the financial and banking transactions are so big they cannot do that. Oil and gas and sometimes the electricity they sell to Turkey, in return they get gold. This is a big source of income for Turkey and this is a solution for the trouble in Iran,” he said.
Since the start of the year, Turkish exports of gold to Iran have rocketed. According to official Turkish trade data, nearly $2 billion in gold was sent to Dubai in August on behalf of Iranian buyers.
But chief economist for Finansbank Inan Demir says that amount is not surprising.
“I think everyone knows that if you are allowed to purchase some oil from Iran, then you are going to have to pay as well, and that payment method seems to be gold. But I am sure Turkey is not the only country where these operations are being carried out. If I am not mistaken, India is carrying out transactions,” he said.
Analysts say despite growing international sanctions against Tehran, Ankara is reluctant to cut off its Iranian energy imports completely, as that would make it totally dependent on Moscow for its gas supplies.
Ties between Tehran and Ankara have become increasingly complicated in the past two years, as the Arab uprisings have polarized foreign policy goals. The countries split most recently over the Syrian conflict, where Iran supports President Bashar al-Assad, while Turkey backs rebels seeking to oust the regime in Damascus.
Suat Kiniklioglu, a former member of parliament’s foreign affairs committee for the ruling AK party, says trade relations could start to drop off.
“There are already differences over Syria with Iran and that is ongoing. I think you will see less trade, less political dialogue and less deepened dialogue with Iran,” he said.
Analysts say Ankara is believed to be looking for alternative energy suppliers to Iran, which would be favored by both Brussels and Washington as they seek to increase the pressure on the Iranian regime. But changing energy suppliers does take time, so it seems likely that gold will, for some time, continue to head to Tehran.
via Turkey Continues Trading Gold for Iranian Natural Gas.
More pressure is coming Turkey’s way over gas purchases from Iran.
After the Turkish government’s admission last week that Tehran was using revenue from gas sales to Ankara to buy gold and then shipping the metal back home, the gas-gold trade has attracted (almost certainly unwelcome) attention from the US Senate.
Reuters has reported that a group of senators are working on a sanctions package that would, among other things, end Turkey’s “game of gold for natural gas”, according to an aide. The measures could be added to a defence bill before the current US Congress breaks up; if not, the issue is very likely to be on the agenda when its successor convenes in January.
To be clear: at present Turkey’s natural gas purchases from Iran, its second biggest supplier, are not targeted by sanctions, international or unilateral. The EU is implementing gas sanctions, but they are not extra-territorial, instead governing imports by member states. US sanctions threaten action against banks that facilitate oil purchases from Iran, but Turkey currently has a waiver.
What is the case, however, is that the general sanctions push over Iran’s nuclear programme, including blacklisting by Swift, which handles global banking transactions, has rendered traditional financial transfers with Tehran near impossible, even for a neighbouring state such as Turkey. Hence Iran’s recourse to gold.
And, as the US looks for additional leverage over Iran ahead of possible bilateral talks on the nuclear file, Turkey’s gas purchases present an ever bigger target.
It is worth bearing in mind the scale of the trade – Turkey’s purchases in 2010-11 amounted to some $6bn – and its strategic importance to Ankara, which would otherwise depend even more on gas from Russia, its primary supplier.
So the sanctions could further test US-Turkish ties, already testy in the light of Ankara’s recent denunciations of Israel and prime minister Recep Tayyip Erdogan’s largely fruitless campaign for Washington to do more against Syrian President Bashar al-Assad.
But Mark Fitzpatrick, a former US State Department official now at London’s International Institute for Strategic Studies, thinks there is room for finesse.
“The [US] executive branch will be looking to implement the sanctions in a way that gives them some discretion, so they don’t punish Turkey in one fell swoop; they can request significant reductions [in Iranian gas purchases] and ‘significant’ won’t be defined,” he says, comparing such a stand to the demands Washington has always made about Chinese oil purchases from Iran. “It is going to play out in the next two years.”
Nonetheless, he suggests that, as time goes by, pressure is only going to increase on Iranian trading partners such as Turkey: “I have been predicting that the best case outcome for the Iran crisis is a long cold war, where sanctions just keep getting tighter, the Iranians keep the [uranium] enrichment programme going but it never quite reaches the crisis point where it produces nuclear weapons.”
via Turkey-Iran: gold for gas US scrutiny | beyondbrics.
Turkey exported almost USD 120 million worth of gold to Iran in February after it announced a moratorium in January, Reuters reported.
