Gold for Oil

Turkey skirting Iran sanctions by trading gold for crude


Turkey has exchanged nearly 60 tons of gold for several million tons of Iranian crude oil, despite its promises to uphold Western sanctions on Iran’s energy sector, according to recent Turkish reports.

By using gold instead of money, Turkey is able to skirt Western sanctions on Iran’s oil trade, particularly those pertaining to SWIFT, the global money transfer service that until recently assisted the Central Bank of Iran and other Iranian financial institutions.

Over the past several months, Turkey has given Iran 60 tons of gold, or more than $3 billion, according to a July 8 report on the Turkish news site Vatan Online. The report was translated by the Open Source Center, a translation service used by the CIA.

The exchanges raise questions about the Obama administration’s decision to grant Turkey a temporary waiver exempting it from U.S. sanctions to Iran, according to foreign policy experts and those on Capitol Hill who speculated that the revelation could spur Congress to pass a new round of Iran sanctions to prevent such trades.

“The idea that Turkey needs a waiver for more time to disconnect itself from the Iran oil trade is ludicrous,” said Michael Rubin, a former Pentagon adviser on Iran and Iraq. “Turkey is playing Obama for a fool.”

“Like a loose school girl, Obama may think he can become popular by giving away the goods to whomever tells him he is the apple of their eye,” said Rubin, a resident scholar at the American Enterprise Institute. “Obama doesn’t understand that for regional rulers like [Turkish Prime Minister] Erdogan and [Russian President Vladimir] Putin, he has gained not respect, but disdain.”

Turkey’s attempts to skirt Iranian sanctions could lead lawmakers to shape a new round of sanctions, said one Iran policy expert on Capitol Hill who is familiar with the sanctions process.

“The good news is that sanctions are now so powerful that Iran has been forced to follow Ron Paul’s advice and move back to the gold standard from the dollar. The bad news is that Iran is rapidly accumulating large amounts gold and other minerals with which to barter for goods and services,” said the source. “This is a hole Congress should plug in the next sanctions bill.”

Gold payments to Iran have been taking place “for some time,” state the Turkish reports, but have peaked in the past few months as global sanctions against Iran continue to choke its economy. In May, Turkish trade with Iran hit an unprecedented high at $1.7 billion, a leap of 513 percent, according to Turkish statistics and various reports.

Turkey, which is the fifth largest importer of Iranian oil, exported more than $3 billion worth of gold to Iran in the first five months of this year, according to data compiled by the Turkish Statistical Institute and reported on by Today’s Zaman Online, an Istanbul-based news organization; others estimated that the price could be even higher.

Turkey imports around 8 million tons of crude oil annually from Iran on average.

“The mass purchase of Turkey’s gold is being undertaken by rich Iranian families living in Turkey,” Today’s Zaman reported on Tuesday. “There are rumors that they purchase Turkish gold via third persons in order not to be noticed, and that they entrust the purchased gold to the Central Bank of the Islamic Republic of Iran, again via third persons.”

Transfers to Iran account for the majority of Turkey’s gold exports during 2012 and have come at the Iranian regime’s request, the reports show.

The Vatan Online report also revealed that Turkey’s Halkbank “converts [Turkish] money into gold and either delivers it to the officials of the Central Bank of Iran in an armored vehicle at the border, or sends it to Iran through cargo mail.”

The payments for both oil and natural gas are a sign that Turkey is cozying up to Iran and moving further from its Western allies.

“It would be laughable if it weren’t so tragic: Everyone but Obama knows that Turkey and Iran are cheating,” said AEI’s Rubin. “Heck, if precedent informs, than Erdogan himself—or at least the son-in-law to whom he often directs contracts—is probably making a handsome profit on trade.”

The underlying problem, Rubin said, “is that while Obama claims his sanctions policy is a success, Iran is moving closer to a nuclear bomb. While Obama admires himself in the mirror and tells himself how smart and popular he is, the region may very well slide into war.”

Turkish officials have denied the charges that the government trades gold for oil.

“The whole payment is made in the form corresponding agreements signed between the two parties,” Taner Yildiz, Turkey’s Energy and Natural Resources Minister, told Iran’s Fars News Agency this week.

Yildiz maintained that only cash is used to pay Iran.

Adam Kredo   Email Adam | Full Bio | RSS
Adam Kredo is senior writer for the Washington Free Beacon. Formerly an award-winning political reporter for the Washington Jewish Week, where he frequently broke national news, Kredo’s work has been featured in outlets such as the Jerusalem Post, the Jewish Telegraphic Agency, and Politico, among others. He lives in Maryland with his comic books. His Twitter handle is @Kredo0. His email address is