Turkey’s gold trade with UAE increased despite the lack of gold production in both countries 1/3 of Turkey's gold imports, and 4/5 of its gold exports is based on its trade with the United Arab Emirates (UAE) alone. Yet, according to economists, neither Turkey nor UAE produce gold; and this increase in gold trade, reminiscent of the “graft and bribery” scandal between Turkey and Iran in 2013, is extremely odd.
Turkey’s gold imports have reached 62.8 tons in July 2017, which is the highest level in history on a monthly basis. According to gold import data of the Borsa İstanbul Precious Metals and Diamonds Markets, gold imports, which was 4.4 tons in the same period of the previous year, have increased by approximately %1400 last month, according to Cumhuryet daily.
In the period between January and July, Turkey’s gold imports leapt to 237.6 tons, an increase of 8 times compared to the first 7 months of last year. This figure for the first 7 months has already surpassed the imports in all of 2016, which was 106.2 tons. Gold exports of Turkey reached 96.4 tons at the end of the first 6 months. 87% of the export has been to the UAE alone. Such a large-scale trade figure with the UAE raised suspicions about possible graft and bribery scandal. The share of the UAE in Turkey’s gold imports in the first six months has exceeded 36%.
NEITHER TURKEY NOR UAE PRODUCE GOLD
What’s interesting is that neither Turkey nor UAE produce gold despite the huge increase in gold trade. The UAE is the main address of Turkey’s gold imports and exports. According to data of Turkey’s Ministry of Economy, Turkey’s top-selling product to UAE is (unprocessed) gold, while the product that Turkey mostly buys from the UAE is also unprocessed gold by far.
In the first half of this year, Turkey sold 3.4 billion dollars of gold to the UAE, while it bought 2.9 billion dollars of gold from the same country. This situation has brought to mind the ‘‘gold trade’’ that broke out between Turkey and Iran in 2013. In graft and bribery scandal through ‘‘gold’’ trade relations between Turkey and Iran, Iranian businessman Reza Zarrab and Turkish national Mehmet Hakan Atilla, the Deputy Chief Executive of state-owned Halkbank of Turkey, had been arrested after the violation of embargo through illegal trafficking in gold trade via Iran, Turkey and Dubai (UAE). In this period, Turkey’s gold imports with Iran had reached historic heights.
‘THIS SURGE IN GOLD TRADE IS NOT NORMAL’, ECONOMISTS SAY
Economists think that there are abnormal factors behind Turkey’s surge in gold trade with the UAE.
Stating that the current situation cannot be explained with economic analysis, soL news columnist and Professor of Economics Korkut Boratav pointed out that Iran may experience a situation similar to the embargo imposed in the previous years, and added: "These increases and records in gold trade are not normal."
Remarking that Turkey’s gold import in July 2017 on a monthly basis is equal to the total gold imports in 2016, Prof. Dr Hayri Kozanoğlu stated that these import figures cannot be explained with the domestic gold demands of Turkey.
Questioning the factors behind Turkey’s extraordinary increasing gold trade based on the UAE, Kozanoğlu also said:
"This situation will seriously affect the macroeconomics of Turkey in terms of the balance of payments. Therefore, the Ministry of Finance and the Ministry of Economy should clarify the situation as soon as possible. As a country having current account deficit and foreign exchange problems, such a big leap in gold trade only in a month is a serious risk for Turkey."
