* Exports to Iran account for most of increase
* Gold helps Iran manage finances in face of sanctions
* Turkey says trade not subject to sanctions
(Adds details, background)
By Evrim Ergin
ISTANBUL, Jan 4 Turkey's gold exports rose
nearly 800 percent last year on the back of soaring sales to
Iran and the trade will continue, despite tightening U.S.
sanctions on Tehran, Turkey's economy minister said on Friday.
Turkish gold exports rose to $12.7 billion in the first
eleven months of 2012 compared to the $1.47 billion exported in
the whole of the previous year, Economy Minister Zafer Caglayan
told a briefing in Istanbul.
Around half of the exports - $6.5 billion worth - went to
Iran, while $4.2 billion went to the United Arab Emirates.
Turkey exported just $54 million worth of gold to Iran in 2011.
The shipments to Iran are not in breach of existing Western
sanctions imposed over its disputed nuclear programme, but they
have helped Tehran to manage its finances despite being largely
frozen out of the global banking system.
Washington says Tehran is enriching uranium to levels that
could be used in nuclear weapons. Iran says its nuclear
programme is for peaceful purposes.
"We will sell to any country that wants to buy from us,"
Caglayan told the news conference. "I will remain loyal to all
the international agreements I have signed. But I will not be
bound by other countries' sanctions."
Turkey is Iran's biggest natural gas customer but Western
sanctions prevent it from paying Tehran in dollars or euros.
Iran is instead paid in Turkish lira - of limited value on
international markets but ideal for buying gold in Turkey.
Couriers carrying millions of dollars worth of gold bullion
in their luggage have been flying from Istanbul to Dubai, where
the gold is shipped to Iran, industry sources with knowledge of
the business told Reuters last year.
The U.S. Senate in November approved expanded sanctions on
global trade with Iran's energy and shipping sectors and U.S.
officials fear the "gold-for-gas" trade is providing a financial
lifeline to Iran.
New sanctions are due to take effect in February and could
include measures to try to curb the trade.
Turkey's Deputy Prime Minister Ali Babacan said in November
that the lira Iran received from Turkey for its gas was being
converted into gold because sanctions meant that it could not
transfer cash into Iran.
But Caglayan said the gold trade was carried out entirely by
the private sector and was not subject to U.S. sanctions.
"It is not trade between the two states, it is being carried
out by private companies and any statement that we are carrying
out these exports in return for oil and natural gas is wrong,"
Turkey is heavily dependent on imported energy and is Iran's
biggest natural gas customer, buying more than 90 percent of
Tehran's gas exports - or about 10 billion cubic metres a year -
under a 25-year supply deal.
Turkish officials say they have repeatedly made clear to
Washington how dependent their rapidly-growing economy is on
imported energy and that it cannot simply stop importing from
Iran, its second-largest gas supplier after Russia.
The country is expected to overtake Britain as Europe's
third-biggest electricity consumer within a decade.
(Additional reporting by Ece Toksabay; Writing by Nick
Tattersall; editing by Keiron Henderson)