Gold-for-gas trade with Iran ‘wiped out’

ISTANBUL - Reuters

US sanctions halt Turkey’s gold-for-gas trade with Iran, according to sources. REUTERS photo

Tighter U.S. sanctions are killing off Turkey’s gold-for-gas trade with Iran and have stopped state-owned lender Halkbank from processing other nations’ energy payments to the OPEC oil producer, bankers have told Reuters.

Turkey, Iran’s biggest natural gas customer, has been paying Iran for its imports in Turkish Liras, because sanctions prevent it from paying in dollars or euros.

Iranians then use those liras, held in Halkbank accounts, to 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.

Halkbank has also been processing a portion of India’s payments for Iranian oil.

A provision of U.S. sanctions, made law last summer and implemented from Feb. 6, effectively tightens control on sales of precious metals to Iran and prevents Halkbank from processing oil payments by other countries back to Tehran, bankers said.

“Halkbank can only accept payments for Turkish oil and gas purchases and Iran is only allowed to buy food, medicine and industrial products with that money,” one senior Turkish banker told Reuters.

“They have to prove what they are buying ... so gold exports will definitely fall,” he said, adding that trade in Turkish gold bars to Iran via Dubai was already drying up as banks and dealers declined to buy the bullion to avoid the sanctions risks associated with the trade.