Iran Evading Sanctions By Trading Oil For Gold With Turkey: Report

November 29, 2012Turkeyby EW News Desk Team

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Turkey’s deputy prime minister Ali Babacan has admitted to giving Iran billions of dollars worth of gold in exchange for energy supplies, reported CNN on Thursday, though the Turkish government insists that there remains no conflict between Ankara and Washington over their actions.

According to Babacan, in a speech to a parliamentary budget commission meeting earlier this month, “when Turkey buys Iranian oil, we pay for it in Turkish lira. ... However, it is not possible for Iran to take that money as dollars into its own country due to international restrictions, the U.S.A.'s sanctions. “

“Therefore, when Iran cannot take this money back as currency, they withdraw Turkish lira and buy gold from our market. They take the gold back to their own country,” he explained.

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The official transcript of his statements, which were published by a government website on Wednesday, confirmed suspicions that many Turkish economists have had for months, after they noticed an enormous spike in gold exports to Iran in April. Official Turkish trade data also suggested that nearly $2 billion in gold was sent to Dubai on behalf of Iranian buyers in August, while Turkish gold exports as a whole jumped more than fourfold to $11.2 billion in the first eight months of 2012.

"This is very, very 19th century, taking gold around to manage your international sanctions," said Djavad Salehi-Isfahani, a professor of economics at the Virginia Polytechnic Institute, to CNN.

"Iran lost its ability to sell oil, get electronic credit and use that to buy other stuff,” he speculated.

On Thursday, Turkey's Energy Minister Taner Yildiz insisted that there was no conflict between the U.S. and Turkey, even as Washington plans to widen trade sanctions against Iran. A senior U.S. aide told Reuters however that the proposed new sanctions against Iran may end “Turkey’s game of gold for natural gas (and oil).”

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More than 90 percent of Iran's gas exports go to Turkey under a 25-year supply deal. In August this year, Turkey also imported nearly 200,000 barrels of Iranian crude oil per day.

“Turkey is the big hole, the big gap in the wall of sanctions (by the U.S.)," said Atilla Yesilada, an economic analyst with Global Source Turkey.

"Our gold has always been there, the Iranians never paid any attention to it up until the last year when they were kicked out of the SWIFT banking system," Yesilada added.

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