Turkey's exports to Iran have enormously increased in the first half of 2012, the figure being nearly $5.9 billion, up from nearly $3.6 billion for the whole of 2011, but a major portion, more than $3 billion, of that sum comes from the export of gold to Iran, which gives birth to speculations that Iranians are turning to gold as a method of saving in the face of tightening Western sanctions. The US is said to be uneasy about Iran's skyrocketing purchases of Turkey's gold, and have been following the sales. Data from the Turkish Statistics Institute (TurkStat) shows that Turkey exported gold worth $4.02 billion in the first five months of 2012, with $3.08 billion of that sum exported to Iran. This means Turkey's gold exports to Iran have increased roughly eightfold compared to the same period in 2011.
There are rumors that Iranians purchase Turkish gold via third persons in order not to be noticed, and that they entrust the purchased gold to the Central Bank of Iran (CBI), again via third persons. The CBI supports the purchases in order to gain strength in the face of increasing sanctions from Western countries. A senior government official, who declined to be named, told Today's Zaman that Iran collects gold from countries such as Dubai and India as well as Turkey. “Iranian companies both earn money through gold purchases and serve their country by strengthening its CBI.”
Driven by the sanctions Western countries have imposed against Iran, Turkey is prepared to cut its Iranian oil imports by an additional 10 percent, after an initial 20 percent cut made by Tüpraş, starting next year in order to persuade the United States to extend sanction exemptions for Turkey, which are set to expire in December. In June, Washington granted exemptions to Turkey and six other countries from its financial sanctions on Iran's oil trade in return for significant cuts in their purchases of Iranian oil, which allowed Turkey a 180-day exception from sanctions as of June 11. The exception meant Turkey's Halkbank was able to make payments to the Iranian Central Bank for oil shipments to Tüpraş without the fear of being blacklisted by the United States.
Turkey's oil purchases from Iran in recent months amounted on average to around 50 percent of its total crude buys. Turkey, whose current oil contract with Iran expires this month, was Iran's fifth-largest customer in 2011, buying more than 7 percent of Iran's oil exports. A 20 percent reduction in oil imports from last year's levels from July 1 would put Turkey's purchases at 144,000 barrels per day (bpd), and a further 10 percent cut would push them to around 130,000 bpd.
Turkey's Iranian imports rose after shipments from Libya halted last year during the country's civil war, but Ankara has again started to import from the North African country. Aside from Libya, it is also looking to other alternative suppliers, notably Saudi Arabia. Energy Minister Taner Yıldız, who announced in June that Turkey would aim to increase the number of countries it buys oil from to 14 from the present 11, said talks were underway with Saudi Arabia to secure a long-term crude oil purchase contract.
The price Turkey pays for the natural gas, $500 for 1,000 cubic meters of gas, it buys from Iran is another area of conflict with Iran, which is Turkey's second biggest gas supplier after Russia. As of the end of March, Turkey paid $418 to Russia and $282 to Azerbaijan for 1,000 cubic meters of natural gas. In the past year, many countries have made agreements with their suppliers to reduce the price of gas including numerous European countries taking action as a result of the economic slowdown in the region. However, Iran's insistence on maintaining the present price, in addition to the increasing market price of gas, has put Turkey in a difficult situation, and as result, Turkey took Iran to the International Court of Arbitration on Jan. 16. Meanwhile Russia's Gazprom, upon Turkey's demand, agreed to make an adjustment in price.
Suat Kınıklıoğlu, director of the Center for Strategic Communication (STRATİM) based in Ankara, believes Iran's uncompromising attitude towards Turkey is not surprising. Maintaining that conservative circles in Turkey keep a romantically warm perception of Iran and the Middle East countries as a whole, “Now they've come face to face with the reality,” Kınıklıoğlu told Today's Zaman. According to Kınıklıoğlu, the efforts of the Justice and Development Party (AK Party) to increase trade with Iran as a way of securing closer ties diplomatically resulted in failure. Given that none of the protocols, which were concluded with much hardship with Iran in recent years, have been put into effect, Iran seems to have simply tried to take advantage of Turkey's position on the United Nations Security Council when Turkey gave Iran a helping hand in the nuclear issue. “Following the deployment of an early warning radar system in Malatya's Kürecik town, and Turkey's stance on the Syrian issue, Turkey has seen Iran in its true colors,” commented Kınıklıoğlu, adding: “I believe it to be psychological warfare.”
The increase in the number of Iranian companies in Turkey is also an issue which raises eyebrows. According to a report issued by the Turkish Union of Chambers and Commodity Exchanges (TOBB) in mid-June, the number of Iranian-funded companies in Turkey rose for the fifth consecutive month this year, and 27 percent of foreign companies that were established in Turkey in May were Iranian-funded. According to the report, in the first five months of the year 431 Iranian-funded foreign companies were founded, while Germany comes second with only 152 companies. The TOBB previously announced that 590 foreign companies were financed by Iran in 2011, which was an increase of 41 percent compared to the previous year. And this puts Iran on the top of the list of new foreign companies established in Turkey in 2011, not only based on nominal figures but percentage-wise as well. Following the increase in the number of Iranian companies, the Iranian banking sector has shown interest in the Turkish market. About two-and-half months ago, Bank Pasargad of Iran applied for a banking license to the Banking Regulation and Supervision Agency (BDDK).
Trade between Turkey and Iran has risen sharply over the past decade with the mutual trade volume having reached $16 billion last year, and Turkey's oil and natural gas imports from Iran constitute a major portion of that figure. Relations between the two neighbors, however, have soured after Turkey agreed to host a NATO radar in Kürecik, and after the two countries took diverging stances on the Syrian issue.