Turkish delight – trading gold for gas

Turkish foreign trade has taken a risky turn: in the first nine months of this year, Turkey exported gold to the tune of $6.4 billion (4.9 billion euros) to neighboring Iran – compared to gold worth $54 million in 2011. Turkey’s Deputy Prime Minister Ali Babacan said the steep rise in gold exports to Iran were due to that country’s fondness for the precious metal.

However, there’s more to it. Turkey receives about half of its oil exports and a fifth of its natural gas imports from Iran. But as US and European banking sanctions ban payments in US dollars or euros, Iran is paid in Turkish lira. The lira is of limited value on international markets – so Iran uses the lira to buy gold in Turkey.

Turkey would rightly say what they’re doing is legal, says Michael Rubin. “They are abiding by the letter of the sanctions, they are simply not abiding by the spirit of the sanctions,” the Mideast expert and scholar at the Washington-based American Enterprise Institute told Deutsche Welle.