As the US has now introduced measures that prevent Iran from accepting payment from Turkey in gold for the natural gas Turkey buys, Iran is looking to establish a new system that will keep trade going. Because the transfer of funds would be a violation of the sanctions, Iranian officials have proposed setting up a joint company with Turkey to conduct trade by barter.
The proposal was communicated to a delegation from the İzmir Chamber of Commerce (İZTO) while it was in Tehran on business last week. Ekrem Demirtaş, chairman of İZTO, said they will prepare a detailed report to present to Zafer Çağlayan, Turkey's minister of economy.
Because of the American embargo, Iran had been conducing trade with Turkey using gold as a method of payment. Turkey would send Turkish liras to Iran, which would then convert the liras to gold to accept as payment for the natural gas. However, at the beginning of the month, the US Senate adopted an additional sanctions package that included measures to stop the gold-for-natural-gas trade between Iran and Turkey.
When it became clear that payment in gold would be blocked by new sanctions, Iran proposed a system of barter with Turkey. The issue was on the agenda of İZTO's visit to the Tehran Chamber of Commerce, Industries, Mines and Agriculture from Dec. 22-24. Suggestions to bypass the trade problems were discussed in the talks with chamber head Yahya Ale Eshaq and Iranian Deputy Industry, Mines and Trade Minister Hamid Safdel.
The Iranian side proposed the establishment of a joint company to conduct trade by barter. Demirtaş said he believes it will be possible for Turkey to conduct business with Iran by barter. Noting that Iran, as is goes through difficult times, wants to see Turkish businesspeople at its side, Demirtaş said: “Because of the embargo, no transfer of money is possible between the two countries. Payment in gold has also become difficult after the US introduced additional measures. So, in the talks, barter was brought up as a method that would allow bilateral trade to keep going.”
Though barter may seem like a primitive way to conduct trade, it is used around the world. “It is possible to conduct trade between the two countries by barter, but it should be done according to rules,” he commented.
The bilateral trade volume between Turkey and Iran is $20 billion, shared almost equally by the two countries, but Demirtaş believes it is possible to double this figure.