Turkey's gold exports rose nearly 800 percent last year on the back of soaring sales to Iran and the trade will continue, despite tightening U.S. sanctions on Tehran, Turkey's economy minister said on Friday.
According to Reuters,Turkish gold exports rose to $12.7 billion in the first eleven months of 2012 compared to the $1.47 billion exported in the whole of the previous year, Economy Minister Zafer Caglayan told a briefing in Istanbul.
Around half of the exports - $6.5 billion worth - went to Iran, while $4.2 billion went to the United Arab Emirates. Turkey exported just $54 million worth of gold to Iran in 2011.
The shipments to Iran are not in breach of existing Western sanctions imposed over its disputed nuclear programme, but they have helped Tehran to manage its finances despite being largely frozen out of the global banking system.
Washington says Tehran is enriching uranium to levels that could be used in nuclear weapons. Iran says its nuclear programme is for peaceful purposes.
"We will sell to any country that wants to buy from us," Caglayan told the news conference. "I will remain loyal to all the international agreements I have signed. But I will not be bound by other countries' sanctions."
Turkey is Iran's biggest natural gas customer but Western sanctions prevent it from paying Tehran in dollars or euros. Iran is instead paid in Turkish lira - of limited value on international markets but ideal for buying gold in Turkey.
Couriers carrying millions of dollars worth of gold bullion in their luggage have been flying from Istanbul to Dubai, where the gold is shipped to Iran, industry sources with knowledge of the business told Reuters last year.
The U.S. Senate in November approved expanded sanctions on global trade with Iran's energy and shipping sectors and U.S. officials fear the "gold-for-gas" trade is providing a financial lifeline to Iran.
New sanctions are due to take effect in February and could include measures to try to curb the trade.
Turkey's Deputy Prime Minister Ali Babacan said in November that the lira Iran received from Turkey for its gas was being converted into gold because sanctions meant that it could not transfer cash into Iran.
But Caglayan said the gold trade was carried out entirely by the private sector and was not subject to U.S. sanctions.
"It is not trade between the two states, it is being carried out by private companies and any statement that we are carrying out these exports in return for oil and natural gas is wrong," he said.
Turkey is heavily dependent on imported energy and is Iran's biggest natural gas customer, buying more than 90 percent of Tehran's gas exports - or about 10 billion cubic metres a year - under a 25-year supply deal.
Turkish officials say they have repeatedly made clear to Washington how dependent their rapidly-growing economy is on imported energy and that it cannot simply stop importing from Iran, its second-largest gas supplier after Russia.
The country is expected to overtake Britain as Europe's third-biggest electricity consumer within a decade.