Turkey sees no clash with U.S. over Iran 'gold for gas'

ISTANBUL - Reuters

Turkish Energy Minister Taner Yıldız. DHA Photo

Turkey's energy minister said today that he sees no conflict between Ankara and Washington over U.S. plans to widen trade sanctions against Iran, including Turkish-Iranian "gold for gas" trade.
 
U.S. senators and aides told Reuters this week that new sanctions aimed at reducing global trade with Iran in the energy, shipping and metals sectors may soon be considered by the U.S. Senate as part of an annual defence policy bill.
 
One senior aide said the move would end "Turkey's game of gold for natural gas", referring to Iran's conversion of Turkish payments for gas into gold because of the sanctions.
 
Iran sells oil and gas to Turkey, with payments made to Iranian state institutions. U.S. and European banking sanctions ban payments in U.S. dollars or euros, so Iran is paid in Turkish lira - of limited value for buying goods on international markets, but ideal for buying gold in Turkey.
 
Asked about the planned new sanctions, Turkey's Energy Minister Taner Yildiz said: "I'm not of the view that there will be any negative situation, a clash with the USA, regarding natural gas, oil and mining. We are talking with the USA."
 
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 month.
 
Turkey's Deputy Prime Minister Ali Babacan said last week that the lira Iran received from Turkey for its gas was being converted into gold because sanctions meant that it could not transfer the cash into Iran.
 
Official Turkish trade data suggests that nearly $2 billion in gold was sent to Dubai on behalf of Iranian buyers in August. The shipments help Tehran to manage its finances in the face of Western financial sanctions.
 
The sanctions, imposed over Iran's disputed nuclear programme, have largely frozen it out of the global banking system, making it hard to conduct international money transfers. By using physical gold, Iran can continue to move its wealth across borders.
 
As the banking sanctions began to bite in March, Tehran sharply increased its purchases of gold bullion from Turkey, according to the Turkish government's trade data.
 
Turkey's gold exports as a whole jumped more than fourfold to $11.2 billion in the first eight months of 2012.
 
More than 90 percent of Iran's gas exports go to Turkey under a 25-year supply deal. Turkey imports about 10 billion cubic metres of gas a year from Iran, making it the country's second-largest supplier behind Russia.