How Iran Evades The Western Blockade: The Turkey-Dubai-Iran PetroGold Triangle

Tyler Durden's picture




 

In recent months there has been a lot of incorrect speculation that because Iran has been shut off from the petrodollar, SWIFT-mediated regime, its economy will implode as the country has no access to the all important greenback and can thus not conduct international trade - the driving factor behind the international sanctions that seek to topple the local government as Iran dies an economic death. And while there have been bouts of substantial inflation, which so far the local government appears to have managed to put a lid on by curbing gray market speculation, Iran continues to more or less operate on its merry ways with international trade most certainly taking place, especially with China, Russia and India as main trading partners. "How is this possible" those who support the Western-led embargo of all Iranian trade will ask? Simple - gold. Because while Iran may have no access to dollars, it has ample access to gold. This in itself is not new - we have reported in the past that Iran has imported substantial amounts of gold from Turkey, despite the Turkish government's stern denials. Today, courtesy of Reuters, we learn precisely what the 21st century equivalent of the Great Silk Road looks like, and just how effective Iran has been as a lab rat in escaping the great petrodollar experiment, from which conventional wisdom tells us there is no escape. Presenting: petrogold.

It all starts, contrary to the government's official denials, in Turkey. Reuters explains:

Couriers carrying millions of dollars worth of gold bullion in their luggage have been flying from Istanbul to Dubai, where the gold is shipped on to Iran, according to industry sources with knowledge of the business.

The sums involved are enormous. Official Turkish trade data suggests nearly $2 billion worth of gold was sent to Dubai on behalf of Iranian buyers in August. The shipments help Tehran manage its finances in the face of Western financial sanctions.

The sanctions, imposed over Iran's disputed nuclear program, have largely frozen it out of the global banking system, making it hard for it to conduct international money transfers. By using physical gold, Iran can continue to move its wealth across borders.

So.... gold is money? In other words, it is widely accepted, it is a store of wealth, and it is a medium of exchange? Huh. Someone tell the Chairman. He may be unaware. Apparently so, at least for countries that don't live day to day on the edge of $1 quadrillion in derivative based weapons of immediate and mass destruction.

"Every currency in the world has an identity, but gold means value without identity. The value is absolute wherever you go," said a trader in Dubai with knowledge of the gold trade between Turkey and Iran.

The identity of the ultimate destination of the gold in Iran is not known. But the scale of the operation through Dubai and its sudden growth suggest the Iranian government plays a role.

The Dubai trader and other sources familiar with the business spoke to Reuters on condition of anonymity, because of the political and commercial sensitivity of the matter.

What does Turkey get in exchange? Whatever Iran has that Turkey needs of course.

Iran sells oil and gas to Turkey, with payments made to state Iranian institutions. U.S. and European banking sanctions ban payments in U.S. dollars or euros so Iran gets paid in Turkish lira. Lira are of limited value for buying goods on international markets but ideal for a gold buying spree in Turkey.

And so, in a world in which avoiding the USD is considered lunacy by most, Turkey and Iran, quietly and effectively, have created their own loophole, in which natural resources are exchange for a local currency, which is then exchanged for gold, which then is used to purchase anything and everything that Iran needs from all those other countries that do not comply with the US and European-led embargo. Such as virtually every nation in Africa. Because gold talks, and petrodollars increasingly walk.

What is disturbing, is that Dubai is now joining in the party too, and the three way transaction may soon become the template for all other countries which are not afraid to suffer the embargo wrath of Uncle Sam:

In March this year, as the banking sanctions began to bite, Tehran sharply increased its purchases of gold bullion from Turkey, according to the Turkish government's trade data.

 

Direct gold exports to Iran from Turkey, long a major consumer and stockpiler of gold, hit $1.8 billion in July - equivalent to over a fifth of Turkey's entire trade deficit in that month.

 

In August, however, a sudden plunge in Turkey's direct gold exports to Iran coincided with a leap in its sales of the precious metal to the UAE.

 

Turkey exported a total $2.3 billion worth of gold in August, of which $2.1 billion was gold bullion. Just over $1.9 billion, about 36 metric tons, was sent to the UAE, latest available data from Turkey's Statistics Office shows. In July Turkey exported only $7 million of gold to the UAE.

 

At the same time Turkey's direct gold exports to Iran, which had been fluctuating between $1.2 billion and about $1.8 billion each month since April, slumped to just $180 million in August.

 

The Dubai-based trader said that from August, direct shipments to Iran were largely replaced by indirect ones through Dubai, apparently because Tehran wanted to avoid publicity.

 

"The trade from Turkey directly to Iran has stopped because there was just too much publicity around it," said the trader.

 

Dealers, jewellers and analysts in Dubai said they had not noticed any large, sudden increase of supply in the local gold market during August. They said that suggested the increased shipments to the UAE were sent straight on to Iran.

 

It is not clear how the gold is moved from Dubai to Iran, but there is substantial trade between the two economies, much of it conducted by wooden dhows and other ships crossing the Gulf, a distance of only about 150 kilometers (100 miles) at its narrowest point.

 

A trader in Turkey said Tehran had shifted to indirect imports because the direct shipments were widely reported in Turkish and international media earlier this year. "Now on paper it looks like the gold is going to Dubai, not to Iran," he said.

So what happens if the US demands that Dubai halt trading with Iran? Nothing much: another country will pop up to replace its place in the golden triangle, and then another, and then another. After all, they are intervening on very lucrative terms: the bid/ask in the transaction. Precisely the same reason bank flow desks keep the bond and stock market flowing day to day.

What would happen if Turkey itself sours?

The buyers may also want to make their purchases less vulnerable to any possible interference by Turkey's government. Turkey's close relationship with Iran has begun to sour as the two states find themselves on opposite sides of the civil war in Syria, with Turkey advocating the departure of President Bashar al-Assad and Iran remaining Assad's staunchest regional ally.

So more of the same: Iran would simply find a regional country that needs crude - many, many of them around - and offer to trade crude for gold, which would keep the mini petrogold cycle afloat.

Yet the biggest irony is that despite all the overt animosity between Iran and Turkey, by way of Syria, the two nations continue to transact, making one wonder just how credible are all those reports of middle eastern animosity between this country and that, or that ethnic faction and this. Not surprising: gold overcomes all differences. All of them.

Finally, the reality is that nobody is actually breaking any rules.

There is no suggestion that the gold trade means Dubai is violating international sanctions against Iran. United Nations sanctions ban shipments of nuclear-related materials to Iran and freeze the assets of some Iranian individuals and companies, but they do not prohibit most forms of trade. The UAE has not yet released its trade data for August. Officials at the Dubai customs authority could not be reached for comment despite repeated attempts to contact them.

 

Turkish trade data confirms the gold is being transported to Dubai by air. According to the data, $1.45 billion of Turkey's total gold exports in August were shipped through the customs office at Ataturk airport's passenger lounge. Almost all of the rest, $800 million, were shipped from Istanbul's smaller Sabiha Gokcen airport. Turkey's total exports of all goods to the UAE totaled $2.2 billion in August. Of that amount, $1.19 billion were registered at the Ataturk passenger lounge, while $776 million were registered at Sabiha Gokcen.

A customs broker who does business at Ataturk said couriers were boarding Turkish Airlines and Emirates flights to Dubai at the airport, carrying the metal in their hand luggage to avoid the risk of it getting lost or stolen.

 

The maximum amount of gold bullion which a passenger is allowed to take is 50 kilograms (110 pounds), he said. This suggests that during the month of August, as many as several hundred courier trips may have taken gold to Dubai on Iran's behalf.

 

"It is all legal, they declare it, they give their tax number and it is all registered so there is nothing illegal about this," the broker said. "At the moment there's quite a lot of traffic to Dubai. During September and October we have also been seeing this."

 

The trade data shows almost $1.4 billion worth of Turkey's August exports to the UAE came from a company or companies with a tax number registered in the coastal city of Izmir, Turkey's third biggest. Customs officials at Ataturk declined a Reuters request to provide documents identifying the exporters, saying the information was confidential.

 

The identity of the companies handling the business could not be confirmed. Traders said that because of the risk of attracting unwelcome attention from U.S. authorities, only a few companies were likely to be willing to get involved.

And there you have it: a perfectly counterparty free system, in which a transaction is done, and no traces are left behind. More importantly, this is the blueprint for the future, as more and more countries evade the subjugation of the petrodollar regime so ubiquitous for the past century, and which is slowly but surely being shifted to benefit those countries who are not insolvent, and who actually produce things needed by the rest of the world.

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Tue, 10/23/2012 - 13:11 | 2913144 Alpo for Granny
Alpo for Granny's picture

Smithers..release the drones.

Tue, 10/23/2012 - 13:12 | 2913151 The trend is yo...
The trend is your friend's picture

it all goes kaboom before this is alowed to happen

Tue, 10/23/2012 - 13:31 | 2913206 Dalago
Dalago's picture

So then why is Turkey ganging up on Iran's buddy, Syria?  Maybe they're all lies!

Tue, 10/23/2012 - 13:33 | 2913219 Skateboarder
Skateboarder's picture

G dub explained it really well in this article, actually. A major chunk of the pipeline goes through Syria...

www.zerohedge.com/contributed/2012-10-08/primer-real-global-geopolitical...

Tue, 10/23/2012 - 13:36 | 2913229 Kitler
Kitler's picture

< Uranium 235

< Gold 1,709

What is the most dangerous metal in Irans arsenal?

Tue, 10/23/2012 - 13:39 | 2913240 francis_sawyer
francis_sawyer's picture

They hate us for our fr- [gold & oil]...

Tue, 10/23/2012 - 13:47 | 2913270 redpill
redpill's picture

Gold?  GOLD??  Those BARBARIANS!  We must invade them immediately.

 

Love,

Mittrack Obamney

Tue, 10/23/2012 - 14:26 | 2913407 fockewulf190
fockewulf190's picture

"...not surprisingly, gold overcomes all differences. All of them."

It's not gold, it's greed. "Greed is good!" has got to be the most easily translatable quote in the world.

Tue, 10/23/2012 - 14:44 | 2913479 ParkAveFlasher
ParkAveFlasher's picture

The "most easily translatable quote in the world" is GOLD, BITCHEZ!

Tue, 10/23/2012 - 14:13 | 2913345 Wile-E-Coyote
Wile-E-Coyote's picture

Ummmm yes, maybe Turkey fired a shell into Turkey from ahhh possibly Turkey!

Tue, 10/23/2012 - 14:45 | 2913465 Jackagain
Jackagain's picture

I thought only America used false flag operations....

Tue, 10/23/2012 - 14:42 | 2913466 Jackagain
Jackagain's picture

Double post?load

Tue, 10/23/2012 - 13:29 | 2913204 overbet
overbet's picture

Zerohedge is almost unreadable for me with all these Michelle Obama ugly pic ads. Come on seriously get this shit off my screen WTF

Tue, 10/23/2012 - 13:40 | 2913232 Skateboarder
Skateboarder's picture

Install Adblock Plus on Firefox: https://adblockplus.org/en/

+

Subscribe to EasyList, EasyPrivacy, Fanboy's List, Adversity, and Antisocial lists to block ads and social networking: https://adblockplus.org/en/subscriptions

=

No ads and no FB/twitter/bullshit

Tue, 10/23/2012 - 14:20 | 2913379 caconhma
caconhma's picture

You cannot fool Mother Nature. If there is a demand, there will be a supply.

Drugs are illegal too. So what? The supplies are available at every corner in every single American city. The same was true with booze back in 1920s in America and somebody became really rich. Remember the great American dynasty Kennedy? They all were/are hoodlums.

Now, EU population is in a big distress and there are more than enough people to do a profitable business regardless of it being officially legal or illegal.

Do US and EU leaders really want to build very close ties between Iran, China, India, and Russia?

PS

Watching Romney yesterday, I concluded that he is a “high class” prostitute and he deserves white men vote. Do we really want Obama and his communist buddies to run America for another four years?

 

Tue, 10/23/2012 - 15:06 | 2913565 Svendblaaskaeg
Svendblaaskaeg's picture

Ad Muncher - the muh-cow eats it all

http://www.admuncher.com/

Tue, 10/23/2012 - 13:44 | 2913254 ezcearhoc
ezcearhoc's picture

I don't see any of them https://adblockplus.org/en/

edit: oops, yeah what the guy above me said.

Tue, 10/23/2012 - 13:51 | 2913274 redpill
redpill's picture

Oh shit, I thought that was an ad for a BBC special on Jane Goodall

Tue, 10/23/2012 - 14:13 | 2913347 debtor of last ...
debtor of last resort's picture

Google a few times bikini babes. Problem solved.

Tue, 10/23/2012 - 14:44 | 2913474 Jackagain
Jackagain's picture

Ghostery works well too....

 

http://www.ghostery.com/download

Wed, 10/24/2012 - 12:23 | 2915954 thewhitelion
thewhitelion's picture

I click on it every time.

Tue, 10/23/2012 - 13:12 | 2913150 john39
john39's picture

certainly seems like Turkey is playing all sides in this mess.

Tue, 10/23/2012 - 13:21 | 2913181 Zero Govt
Zero Govt's picture

like the merchantile Dutch during all the epic fights/farces between England, France, Germany, Spain etc etc

War is the most expensive waste of money in history, Govt has perfected the art and cornered the market in spending money stupid... but very profitable for downstream suppliers

Tue, 10/23/2012 - 13:32 | 2913217 No Euros please...
No Euros please we&#039;re British's picture

And a great excuse for a "little" austerity at home.

Tue, 10/23/2012 - 14:16 | 2913356 debtor of last ...
debtor of last resort's picture

At your service.

Tue, 10/23/2012 - 14:09 | 2913323 redpill
redpill's picture

Pfft, they're full of stuffing

Tue, 10/23/2012 - 18:36 | 2914273 Urban Redneck
Urban Redneck's picture

JANUS

certainly seems like Turkey is playing all sides in this mess.

The Turks aren't the only ones playing all sides.  Perhaps the Clouseau brigade will look into how US exports to Iran have surged this year in spite of the SWIFT roadblock (perhaps bartering and sanctions loopholes aren't as the MSM bills them)

Tue, 10/23/2012 - 13:13 | 2913154 slackrabbit
slackrabbit's picture

All they need now is peg it to gold....

Tue, 10/23/2012 - 14:22 | 2913367 Harbanger
Harbanger's picture

Peg oil to Gold?  I wonder how the Iranians are pricing it now.  A barrel of crude is about $86 USD and Gold is about $1709 USD.  Thats about 20 barrels per ounce.  Just curious what they use to set a price for exchange.

Tue, 10/23/2012 - 14:27 | 2913414 Spitzer
Spitzer's picture

There is more to this story

Iran is not trading oil for gold at the same price Dennis Gartman pays for his futures.

Think about it...

Tue, 10/23/2012 - 15:01 | 2913551 ParkAveFlasher
ParkAveFlasher's picture

15-16 barrels/oz. is the norm.

Tue, 10/23/2012 - 15:44 | 2913698 Harbanger
Harbanger's picture

Would you give an ounce of physical Gold for 15 barrels of something you're going to burn, when you can pay for it with currency?  Probably not.  They must really be giving it away for people to pay for it in Phys Gold.

Tue, 10/23/2012 - 19:44 | 2914461 ParkAveFlasher
ParkAveFlasher's picture

Gold for oil existed before dollar for oil, it will exist after it.

Tue, 10/23/2012 - 13:15 | 2913155 Jason T
Jason T's picture

We don't want the "Ben" confetti from Washington..

This is in referance to the popular german saying "we don't want any jew confetti from berlin"

http://books.google.com/books?id=AK8JgJHYEfwC&pg=PA180&lpg=PA180&dq=we+d...'t+want+the+jew+confetti+from+berlin&source=bl&ots=ZG0wyZWlf5&sig=SsTBPgI_C4vvj5dI-6yTi_2vK-w&hl=en&sa=X&ei=UtCGUICjA-nm0gGetIDoBQ&ved=0CCUQ6AEwAQ#v=onepage&q=we%20don't%20want%20the%20jew%20confetti%20from%20berlin&f=false

 

 

Tue, 10/23/2012 - 13:13 | 2913156 Silver Garbage Man
Silver Garbage Man's picture

PetroGold...Food and everything else Silver

Tue, 10/23/2012 - 13:14 | 2913160 Fips_OnTheSpot
Fips_OnTheSpot's picture

Excellent.

Tue, 10/23/2012 - 13:15 | 2913162 No Euros please...
No Euros please we&#039;re British's picture

Gold? GOLD!! Gold is obviously a barbarous terrorist and must be confiscated immediately.

Tue, 10/23/2012 - 13:15 | 2913163 Temporalist
Temporalist's picture
Iran Threatens to Halt Crude Exports If Sanctions Intensify

http://www.bloomberg.com/news/2012-10-23/iran-to-halt-oil-exports-if-san...

Tue, 10/23/2012 - 15:15 | 2913503 fockewulf190
fockewulf190's picture

Hmmm...sounds like the demand for gold phyzz is getting so great worldwide, there isn't enough of it on hand to even pay the Iranians with...at least not enough to be able to support the monthly needs of it's huge population. With China alone buying hundreds of tons officially (and who knows how much unofficially) this year alone, and other central banks joining the phyzz party, the Iranians are getting squeezed even through this back channel.

Could the market manipulation in gold and silver prices have something to do with choking Irans only real income stream? Keep the prices low and somewhat stable and watch the physical fly off the shelves. It may end up busting the Comex, and cause strokes over at the LBMA, but if the powers that be behind the scenes want supply to evaporate to try and force an Iranian implosion without war, I'm going to bet they will try.

It could also could be the real reason why the CFTC has done nothing at all despite all the obvious and blatent smashdowns that are happening almost daily. Not to mention the total avoidance of mentioning anything at all about the silver manipulation investigation. It's a national security operation in progress.

Seems to me it may be working.

Tue, 10/23/2012 - 13:14 | 2913166 h0oS
h0oS's picture

The idea that Iran can be shut out of the global economy is US hubris. Commodity payments without the use of the dollar are easily sustainable by Iran you'll see the processes by which these payments are transacted continuously improve over the years. Gold is money, as is Silver and Iran is well versed in using this money. Iran is too big, too well connected and too important to be shut out of the global economy. Add to this that no one wants the dollar and the coming dollar collapse is only going to be accelerated by backward US policy to defend Israel.

Tue, 10/23/2012 - 16:17 | 2913850 richard in norway
richard in norway's picture

oil is money

Tue, 10/23/2012 - 18:48 | 2914308 Urban Redneck
Urban Redneck's picture

Oil is actually a very efficient store of wealth if you don't pull it out of the ground (only slightly less efficient if you put it back in the ground because you have excess SPR capacity).

Tue, 10/23/2012 - 13:23 | 2913168 toomanyfakecons...
toomanyfakeconservatives's picture

The end of the petro-dollar has been in sight for some time now. The 100+ nation BRICs alliance is in the position to ditch the U.S. Dollar for international trade.

Tue, 10/23/2012 - 13:24 | 2913169 Zero Govt
Zero Govt's picture

"So.... gold is money? In other words, it is widely accepted, it is a store of wealth, and it is a medium of exchange? Huh. Someone tell the Chairman."

As lost causes go that ranks amongst the most futile. 

Bubble Ben's sopping up crappy Dimon & Blankfein soiled nappies, not Gold as he should... mal-investment at the Fed goes stratospheric.. what a turkey. 

Tue, 10/23/2012 - 13:16 | 2913171 Quinvarius
Quinvarius's picture

Finally.  A story I can enjoy reading.  All the stock bears in QE denial were getting to me. 

Tue, 10/23/2012 - 13:31 | 2913210 Skateboarder
Skateboarder's picture

Trudat. This is probably the happiest article I've read on ZH this month.

To real trade! Cheers!

Tue, 10/23/2012 - 13:18 | 2913173 topspinslicer
topspinslicer's picture

Big Government actions always have unintended consequences -- this is one way of pushing people/countries off of the dollar standard

Tue, 10/23/2012 - 13:17 | 2913174 dbTX
dbTX's picture

I like anything gold, petro or otherwise

Tue, 10/23/2012 - 13:18 | 2913175 Desert Irish
Desert Irish's picture

So.....In the event we are dragged into an Iranian or Syrian war with NATO's Article 5 invoked we could concievably be coming to the aid of a NATO member who is currently propping up the regime or a supporter of a regime we may be fighting. Yep sounds about right....

Tue, 10/23/2012 - 13:18 | 2913178 Joebloinvestor
Joebloinvestor's picture

The world never left the gold standard.

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