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UĞUR GÜRSES

CONTRIBUTOR > Iran behind the record gold import

UĞUR GÜRSES

Turkey broke its all-time record with $11.1 billion worth of gold imports in the first seven months of the year. Most probably, this import looks as if it will continue in the same pace. What could be the reason? 

According to what I deduce from the developments we have recently witnessed, with a very high probability this is connected to Iran; because in foreign trade with Iran, we have an annual deficit of approximately $8 billion. Did you ever wonder how we are paying for this? Look at how we do this. 

Iran encountered a blockade regarding financial transactions and transfers after the trade embargoes imposed in 2010 by the United States and the European Union. As of March 2012, it became impossible to make any payments to Iran through the international foreign exchange transfer system SWIFT. In other words, Iran was not able to receive the foreign exchange sent to it or was not able to pay anything. On the other hand, a door was left open exceptionally for those countries like Turkey that buy natural gas and crude oil from Iran. These countries were able to import energy but were not able to make their payments through international correspondents. 

Turkey found a way to solve this through opening Iran a domestic account at Halkbank both in foreign currency and Turkish Liras. Iran, on the other hand, was able to hold the equivalent of what it sold to Turkey as energy as deposit in this bank. As a matter of fact, a formula has been found: Iran started to convert the liras and the foreign currency in these accounts to gold and started carrying it to the country. First they bought gold from the international market and then they physically brought it to Turkey. In our records, gold imports increased. Later, they sent them to their own country. This showed up as “gold export” in our foreign trade calculations. However, it was presumed that the return of this export would not come to our country. In the end, we have paid for our energy imports with gold. 

The United States which wants to cripple Iran, the country which it allowed to export energy to certain countries, in order to prevent it from receiving its payments even if they were in gold, banned gold exports to Iran as of the beginning of July 2013. 

The international press extensively covered the preparations of the U.S. to ban gold exports (or paying with gold) to Iran at the beginning of March. Well, as of the month of July, our gold exports to Iran, which had also become our indirect way of paying imports, stopped but our gold imports continued skyrocketing. 

Apparently, Iran is converting to gold at full speed the deposit accounts where its receivables are accumulated in exchange for the gas and crude oil it exports to Turkey. Since the official exports were stopped, this means that this gold is still being held in our country. According to Banking Regulation and Supervision Agency (BDDK) data, there is no increase, to this extent, in the gold assets in the banks. This means that they are either being held in secure cases or they have left the country through different routes. 

One factor that draws attention on the other hand is that the amount of gold held in the Central Bank as required reserve has increased 75 tons since the beginning of the year. In other words, roughly, it has increased $3 billion. 

Iran, which predicted a probable payment and transfer blockade, importing gold in 2011 with its receivables and bank accounts in Turkey, and in 2012, with the blockade, its carrying this gold to its country have reflected in our foreign trade. If cumulatively reviewed as of 2010, this can be seen clearly. At the end of 2012, our cumulative gold foreign trade looks on par. Since July 2013, we have seen a net import of $7.9 billion. 

Uğur Gürses is a columnist for daily Radikal in which this piece was published on Sept. 27. It was translated into English by the Daily News staff.

September/28/2013

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