Increased sanctions imposed by the United States are killing off Turkey’s longstanding gold-for-gas trade with Iran.
Turkey remains Iran’s largest natural gas customer and provides a direct lifeline to Tehran, which has otherwise been completely shut out of the global banking system because of its nuclear program.
Turkey has been paying Iran for its imports with Turkish lira, which are then used by Iran to buy gold bullion that can be used as foreign currency or shipped directly to Iran, reports Reuters.
U.S. sanctions, which were implemented February 6, effectively tighten the control on sales of precious metals to Iran and severally limits what the country can purchase with its oil revenue, said personnel at Halkbank, a state-owned Turkish bank.
“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.
Although the fresh round of sanctions are newly implemented, trade in Turkish gold bars to Iran had already begun drying up, as banks and dealers declined to buy bullion for fear of international sanctions.
“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.”