A Look At How Iran Corrupted Turkey To Circumvent Sanctions

Turkey's outgoing Economy Minister Zafer Caglayan (c.) talks during a handover ceremony as he is flanked by newly named minister Nihat Zeybekci (2nd from left) and former European Affairs Minister Egemen Bagis (2nd from right) in Ankara Dec. 26, 2013. Turkey's opposition accused scandal-hit Prime Minister Tayyip Erdogan on Thursday of trying to rule via a secretive "deep state", after a cabinet reshuffle that would tighten controls on police already beleaguered by government-ordered purges. The replaced ministers included EU Minister Bagis, who was allegedly named in the corruption probe but had not resigned yet, and key positions such as the economy and justice ministers. Bagis made a statement on Dec. 20, 2013, denying any wrongdoing. REUTERS/Umit Bektas

Turkey's Corruption Scandal Exposes 'Gas-For-Gold' Scheme With Iran -- David Kashi, IBTimes

Turkey has some major explaining to do in the wake of the recent corruption scandal that exposed the country's continued financial and energy ties with Iran. The arrests last week of the head of a Turkish state-owned bank and a well-known Iranian gold trader for money laundering and gold smuggling raise questions about U.S.-Turkish relations going forward.

Halkbank CEO Suleyman Aslan and Iranian trader Reza Zarrab are key players in the “gas-for-gold” scheme that allowed Tehran to buy gold with Turkish lira in exchange for Iranian natural gas and oil. Western sanctions over Iran's nuclear pogram prevented the country from getting paid in euros or dollars, so Halkbank used the precious metal to get around the restrictions.

Between March 2012 and July 2013, Turkey was able to export approximately $13 billion worth of gold to Tehran, according to Mark Dubowitz of the Foundation for Defense of Democracies.

“It was puzzling that Ankara allowed this to continue: The Turks -- NATO allies who have assured Washington that they oppose Iran's military-nuclear program -- brazenly conducted these massive gold transactions even after the Obama administration tightened sanctions on Iran's precious metals trade in July 2012,” Dubowitz wrote in Foreign Policy Thursday.

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Update: A 40-Second Guide To The Crisis In Turkey That Sent Markets Tanking And Put The Government In Its Weakest Position Yet -- Business Insider

My Comment: It is very hard to take Turkey seriously when this level of corruption is the rule and not the exception.