As part of the response to the sanctions’ chokehold, some Iranians are now hand-carrying billions of dollars worth of gold from Turkey to Dubai.
Official Turkish trade data suggests nearly $2 billion worth of gold was sent to Dubai on behalf of Iranian buyers probably the Islamic Republic itself in August alone.
The shipments help Tehran manage its finances in the face of Western financial sanctions, which have largely locked Iran out of the global banking system. By using physical gold, Iran can continue to move its wealth across borders, although that requires people to move it about physically.
A trader in Dubai told the Reuters news agency, “Every currency in the world has an identity. But gold means value without identity. The value is absolute wherever you go.”
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 is at the center.
Iran sells oil and gas to Turkey, with payments made in Turkish lira, Reuters said. Lira are of limited value for buying goods on international markets.
In March, as the banking sanctions began to bite, Tehran sharply increased its purchases of gold bullion in Turkey, according to the Turkish government’s published trade data.
Direct gold exports to Iran from Turkey were never anything to remark about in past years. But they began to rise in March and hit $1.8 billion in July. Then in August, there was a sudden plunge in Turkey’s direct gold sales to Iran but that coincided with a leap in its gold sales to the UAE.
Turkey exported a total $2.3 billion worth of gold in August. Just over $1.9 billion, about 36 metric tons, was sent to the UAE, the latest data from Turkey’s Statistics Office show. In July, Turkey exported only $7 million in 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 told Reuters direct shipments to Iran were largely replaced in August 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, jewelers 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.
Reuters said Iranian gold buyers might want to conceal their Turkish gold deliveries for fear of attracting attention from the United States. But the buyers may also want to make their purchases less vulnerable to any possible interference by the Turkish 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.
There is no suggestion that the gold trade means Dubai is violating international sanctions against Iran. United Nations sanctions do not prohibit such trade.
Turkish trade data confirms the gold is being transported to Dubai by air. A customs broker in Turkey said couriers were boarding Turkish Airlines and Emirates flights to Dubai at the Istanbul airports, and carrying the metal in their hand luggage to avoid the risk of it getting lost or stolen.
The maximum amount of gold bullion that a passenger is allowed to take is 50 kilograms (110 pounds), he said. This suggests that several hundred courier trips may have taken gold to Dubai on Iran’s behalf during August alone.
“It’s 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.”
