Venezuela sending gold to Turkey to avoid sanctions

Venezuela is sending gold to Turkey to avoid possible confiscation under international sanctions, Hurriyet newspaper reported.

The country is no longer sending gold for refining in Switzerland because it fears the precious metal may not be returned, Venezuelan Mining Minister Victor Cano told reporters, according to the newspaper. Instead, it is sending the precious metal to “allied countries”, he said.

The decision to send gold to Turkey was made according to an agreement between the two countries’ central banks, Cano said.

The minister was responding to accusations by the political opposition that the government was selling gold to Turkey to compensate for declining production of oil, which provides most of the country’s foreign exchange. He said the government was not sending gold “contraband” to Turkey.

Last year, the U.S. government imposed economic sanctions on Venezuela for human rights abuses and undermining democracy. President Nicholas Maduro, who attended the inauguration of Turkish President Recep Tayyip Erdoğan last week, accuses the United States of waging an unjust economic war on the country. Erdoğan has made similar claims about the treatment of Turkey by Western financial institutions.

Cano declined to say which Turkish companies were involved in the refining of the gold and how much had been processed. He did say that about 9.1 tonnes of gold had been purchased by the government from small miners this year.

Turkey’s government has been embroiled in a scandal involving an Iranian gold trader and officials of state-run Halkbank, who evaded U.S. sanctions on Iran through fictitious gold trades. U.S. authorities are currently considering whether to impose financial sanctions on Halkbank for its role. The financial sanctions could amount to tens of billions of dollars, analysts say.

The minister said the gold sent to Turkey is returned to Venezuela to become part of the central bank’s reserves.

Turkey’s current account deficit has widened to 6.5 percent of GDP this year partly as a result of gold imports. The deficit has increased concern that the country’s economy is overheating, leading to losses for the lira of about 20 percent since January.