Saturday, December 26, 2015

The Gold Scandal That Goes To The Very Top

Dubai, wealth and privilege rub shoulders with corruption and dodgy dealing (Image source)

Best known known for luxury shopping, over-the-top architecture including the world's tallest building, a lively social scene, and a facade of secular open - mindedness, Dubai ought to be even better known for the underbelly of corruption and unrestricted criminality among the billionaires, oligarchs, princes, shieks and sultans, who quietly dominate dominate the global power and financial structure and have set up bases there because the local Shiek take a very benign view of anything that earns money for Dubai without actually breaking any laws in Dubai (and Dubai has very few laws covering offshore activities of financial traders).

First, the background.

Only a few short ago Iran was a pariah state subject to international financial sanctions due to its nuclear weapons program. Israel had repeatedly threatened it would attack preemptively to prevent Iran from obtaining a nuclear weapon.
Iran had to find ways to keep its economy running, and in order to circumvent these sanctions, it resorted to the oldest trade currency known: gold.

This, in itself, is not surprising nor is it news which rogue state Iran collaborated with to breach the international embargo and obtain the gold needed to finance trade with other countries, notably those along the Pacific Rim. A Reuters article from October 2012 explained, in broad terms, just how Iran's intricate smuggling operation worked.

To see one of Iran's financial lifelines at work, pay a visit to Istanbul's Ataturk International Airport and find a gate for a flight to Dubai. 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.

"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.

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.

Three years ago then, Turkey was buying oil from Iran and paying in gold. Now with sanctions on Iran lifted, The Turkish family of Recep Erdogan are taking oil from ISIS and paying in dollars, for the simple reason that there is no banking embargo against the Islamic State like there was against Iran in 2012. One almost wonders why the international community was far stricter with Iran than it is with ISIS now.

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.

However, instead of suddenly having a craving for Turkish gold, Dubai was merely a middleman which would then resell Turkey's gold to Iran, in exchange for a very generous commission.

It is not clear how the gold is moved from Dubai to Iran, but with the two countries only a distance of only about 150 kilometers (100 miles)apart at the shortest sea crossing there is always substantial traffic between the two economies, much of it transported by wooden dhows and other ships crossing the Gulf. And like many other things in Dubai, customs controls can be very lax if 'the right people have been appraised of the geopolitical importance of the trades'.

A gold 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.

Iranian gold buyers may want to conceal their Turkish gold deliveries for fear of attracting attention from the United States, which is pressing countries around the world to shrink their economic ties with Iran.

The buyers may also want to protect their purchases from 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.

Fear not: if the family of Turkish President and international illegal oil trader Recep Erdogan were guaranteed, say 5% of the total transaction price, it would turn a blind eye, even if the Ayatollahs were singing lullabies and war chants to Assad in his bedroom.

But why gold?

Simples: while Iran's banks were locked out of SWIFT international money transfer system (until mid-2015 when Obama's historic nuclear deal with Iran was announced and let Iran back into the global financial community), and commerce was virtually impossible in fiat currency terms, the UN sanctions did not prohibit most forms of trade. As a result there was no suggestion that the gold trade involving Dubai was violating international sanctions. In fact, the west tacitly encouraged, and Turkey latched on to this great source of trade arbitrage, and unbridled corruption with both hands.

What should concern us us that the levels of oversight (including electronic surveillance) of markets by Western government and the numbers of 'intelligence gathering' operatives they have on the ground in middle eastern countries, western governments cannot possibly have been unaware of this latest example of Turkey's involvement in the Sunni Muslim plot to establish an Islamic Caliphate, why has nothing been done again. Is it the case once again that the Obama administration has sided with Islamist nutters and left Vladimir Putin to save western civilisation?


MAIN KEYWORDS: Money >> Dollar >> Oil >> Turkey

Moscow And Beijing Join Forces To Bypass US Dollar In Global Markets, Shift To Gold Trade

Throughout this omnibus volume we have been reporting for several years on the moves by Russia, China, their allies and other nations in the Asia - Pacific zone to bypass the US dollar as the reserve currency for global trade. We have now learned the Russian central bank opened its first overseas office in Beijing on March 14, marking a majot step towards forging a Beijing-Moscow alliance to bypass the US dollar in cross border trading, and to phase-in a gold-backed universal currency of trade.

Debt Crisis
Middle East
Politics, Economy
Turkey Links To ISIS
ISIS Oil expopse "Raqqa's Rockefellers", Bilal Erdogan, KRG Crude, And The Israel Connection
Turkish Convoy Allegedly Carrying Weapons To ISIS Bombed In Syria
Turkish Convoy Allegedly Carrying Weapons To ISIS Bombed In Syria
Latest Posts

Elsewhere: [Boggart Blog]...[Little Nicky Machiavelli]... [ Ian's Authorsden Pages ]... [Scribd]...[Wikinut] ... [ Boggart Abroad] ... [ Grenteeth Bites ] ... Ian Thorpe at Flickr ] ... [ Tumblr ] ... [Ian at Minds ] ... [ The Original Boggart Blog]

No comments: