By Asli Kandemir
Reuters
Friday, February 15, 2013
http://www.reuters.com/article/2013/02/15/us-iran-turkey-sanctions-idUSB...
ISTANBUL -- 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 said on Friday.
U.S. officials have sought to prevent Turkish gold exports, which
indirectly pay Iran for its natural gas, from providing a financial lifeline
to Tehran, largely frozen out of the global banking system by Western
sanctions over its nuclear program.
Turkey, Iran's biggest natural gas customer, has been paying Iran for
its imports with Turkish lira because sanctions prevent it from paying in
dollars or euros.
Iranians then use those lira, 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 had 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 February 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.
"The gas-for-gold trade is very difficult after the second round
of sanctions. Iranians cannot just withdraw the cash and buy whatever they
want. They have to prove what they are buying ... so gold exports will
definitely fall," he said.
Trade in Turkish gold bars to Iran via Dubai was already drying up as
banks and dealers declined to buy the bullion to avoid sanctions risks
associated with the trade.
Reuters first reported the boom in Turkish gold sales to Iran via
Dubai last year.
Turkish Economy Minister Zafer Cağlayan signaled a decline in the trade last week when
he said that, while Turkey would not be swayed by U.S. pressure to halt gold
exports to Iran, Tehran's demand for the metal was expected to fall.
"You could say that the United States has achieved its aim,"
said a Western diplomat. "If Turkey is going to continue energy imports
from Iran, there is no other way to go than trading sanction-free
goods."
Washington says Tehran is enriching uranium to levels that could be
used in nuclear weapons and has been trying to ratchet up economic pressure
on Tehran. Iran says the program is for peaceful purposes.
Turkish ministers had acknowledged the gold-for-gas trade but said it
was carried out entirely by the private sector and was not subject to U.S.
sanctions.
Turkey, like China, India, and Japan, is heavily dependent on imported
energy and, while it has cut back on oil from Iran, has made clear it cannot
simply stop buying Iranian oil and gas.
"With so many restrictions, Iran's cash may accumulate in Halkbank accounts. ... They may have difficulty getting
some of that money out of Turkey," another senior Turkish banker said.
That could mean Tehran will look elsewhere for allies willing to try
to get round the U.S. sanctions, although it may struggle to continue to
receive gold as a payment method.
"The gold trade may switch to countries that support Iran
politically but Russian banks, for example, would be very cautious because
they are very much in the global banking system," the second banker
said.
"China may be another option. But I can say that the gold trade
is over for Turkey."
Turkey, which is not a major gold producer, was a net gold, jewelry,
and precious metals importer in 2011 but swung to being a net exporter last
year. Analysts said Iranian demand had prompted both the high imports two
years ago -- which were largely sold on to Iran -- and the surge in exports
last year.
Gold exports to Iran rose to $6.5 billion in
2012, more than ten times the level of 2011, while exports to the United Arab
Emirates -- much of it for onward shipment to Iran or conversion to hard
currency -- rose to $4.6 billion from $280 million.
Overall Turkish bullion exports fell to 10.5 tonnes
in December from 15.2 tonnes in November.
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