Firm helps Venezuela move gold to Tur­key

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Two months af­ter Venezue­lan Pres­i­dent Ni­co­las Maduro vis­ited his coun­ter­part Re­cep Tayyip Er­do­gan in Ankara, a mys­te­ri­ous com­pany called Sardes sprang into ex­is­tence.

The firm started busi­ness with a bang in Jan­uary 2018, when it im­ported about $41 mil­lion worth of gold from Venezuela, the first such trans­ac­tion be­tween the two coun­tries in records that go back 50 years. The next month its

vol­ume more than dou­bled, with Sardes trans­port­ing al­most $100 mil­lion worth to Tur­key.

By Novem­ber, when Pres­i­dent Don­ald Trump signed an ex­ec­u­tive or­der au­tho­riz­ing sanc­tions on Venezue­lan gold — af­ter send­ing an en­voy to warn Tur­key off the trade, Sardes had shut­tled $900 mil­lion of the pre­cious metal out of the coun­try. Not bad for a com­pany with just $1 mil­lion in cap­i­tal, ac­cord­ing to reg­u­la­tory fil­ings in Is­tan­bul.

It’s not the first time that Tur­key has po­si­tioned it­self as a work-around for coun­tries fac­ing U.S. sanc­tions, po­ten­tially un­der­min­ing Wash­ing­ton’s ef­forts to iso­late gov­ern­ments it con­sid­ers hos­tile or cor­rupt. Ankara has of­ten tested the bound­aries of U.S. tol­er­ance, and the al­liance be­tween the key NATO mem­bers is now es­sen­tially bro­ken, ac­cord­ing to two se­nior U.S. of­fi­cials.

Long one of Amer­ica’s most val­ued part­ners in a re­gion strad­dling Europe and the Mid­dle East, Tur­key has in­creas­ingly found com­mon in­ter­ests with au­thor­i­tar­ian coun­tries such as Rus­sia, China, Iran and Venezuela. When Na­tional Assem­bly leader Juan Guaido de­clared him­self Venezuela’s right­ful pres­i­dent last month, the U.S. and many other West­ern coun­tries rushed to de­clare their sup­port for him. Tur­key aligned it­self with those be­hind Maduro.

Er­do­gan faced a coup at­tempt in 2016 and has fash­ioned him­self as a cham­pion of elected lead­ers ev­ery­where, even where votes were widely con­sid­ered nei­ther free nor fair. Eco­nomic ties be­tween the two na­tions are barely a fac­tor: Venezuela doesn’t rank among the top 20 trad­ing part­ners for Tur­key, ac­cord­ing to data com­piled by Bloomberg.

But that doesn’t mean Er­do­gan can’t use Tur­key’s $850 bil­lion econ­omy, the largest in the Mid­dle East, to help friends in need. While Sardes’ gold cor­ri­dor ap­pears to have closed in Novem­ber, there are other av­enues. A Sardes spokesman did not re­spond to a re­quest for com­ment.

Er­do­gan trav­eled to Cara­cas in De­cem­ber to in­tro­duce the Venezue­lan leader to Ah­met Ah­latci, chair­man of one of Tur­key’s largest gold re­fin­ers. The next month, Maduro’s close ally Tareck El Ais­sami re­cip­ro­cated with a visit to an Ah­latci re­finer in the cen­tral Turk­ish city of Co­rum. Tur­key’s pro-govern­ment me­dia re­ported that Venezue­lan gold would be pro­cessed there.

That never ma­te­ri­al­ized be­cause Ah­latci was wary of fall­ing foul of U.S. sanc­tions, ac­cord­ing to a per­son with di­rect knowl­edge of the visit. In­stead, El Ais­sami sur­veyed re­fin­ing tech­nol­ogy to try to repli­cate it back home, the per­son said, ask­ing not to be iden­ti­fied be­cause of the sen­si­tiv­ity of the mat­ter.

An Ah­latci ex­ec­u­tive was among busi­ness lead­ers who met Mar­shall Billingslea, an as­sis­tant sec­re­tary at the U.S. Trea­sury re­spon­si­ble for com­bat­ing ter­ror­ist fi­nanc­ing, who was in Tur­key on a twice-yearly visit, ac­cord­ing to a par­tic­i­pant in the meet­ings. Billingslea warned the group to avoid deal­ing with what he called El Ais­sami’s “blood gold,” the per­son said, ask­ing not to be iden­ti­fied dis­cussing a pri­vate meet­ing.

Ah­latci did not re­turn calls by Bloomberg. His son, Ah­met Metin, said by phone the com­pany “won’t com­ment.”

Billingslea’s pri­or­ity in Tur­key wasn’t Venezuela, but com­pli­ance with sanc­tions on Iran, ac­cord­ing to two peo­ple fa­mil­iar with the mat­ter. Some U.S. of­fi­cials have said they’re con­cerned there could be a con­nec­tion be­tween the two, though no ev­i­dence has been pre­sented so far to sug­gest there is.

Un­der the sanc­tions, Iran sells bil­lions of dol­lars of fuel to Tur­key ev­ery year, but then finds most of its money trapped in Turk­ish bank ac­counts be­cause of in­ter­na­tional re­stric­tions on wiring the money back to Tehran. Elab­o­rate schemes en­tail­ing the use of phys­i­cal gold have in the past al­lowed the Is­lamic Repub­lic to fi­nance its for­eign trade.

Mehmet Hakan Atilla, the for­mer head of in­ter­na­tional bank­ing at Turk­ish sta­te­owned lender Halk­bank, was con­victed last year in a New York court of par­tic­i­pa­tion in such a scheme. Tur­key says the case re­lied on fab­ri­cated ev­i­dence and de­nies wrong­do­ing. It also says it’s not obliged to abide by uni­lat­eral U.S. sanc­tions that block its abil­ity to trade with neigh­bors and other eco­nomic part­ners.

Of­fi­cial data make it im­pos­si­ble to know where the Venezue­lan gold ended up af­ter it landed in Tur­key. The Turk­ish govern­ment did not dis­close the where­abouts of the gold.

Tur­key’s fi­nan­cial as­sis­tance to U.S. en­e­mies is only one of the is­sues sour­ing once-close re­la­tions. Tur­key has also been threat­en­ing to send its mil­i­tary, the sec­ond-largest in NATO, to at­tack Kur­dish forces in Syria that the U.S. backs. And the Turk­ish cleric that Tur­key blames for the 2016 coup at­tempt, Fethul­lah Gulen, lives in Penn­syl­va­nia. The U.S. has so far re­buffed Turk­ish at­tempts to have him ex­tra­dited.

While Trump has at times taken a hard line on get­ting Tur­key into line with U.S. goals — he said last month that any ac­tion against the Kurds would “dev­as­tate Tur­key eco­nom­i­cally” — other U.S. of­fi­cials are tak­ing a more mea­sured ap­proach.

“Pres­i­dent Trump has ex­pressed his in­ter­est in ex­pand­ing the trade re­la­tion­ship be­tween the United States and Tur­key, an av­enue con­sid­er­ably more prof­itable than any­thing Maduro might have to of­fer,” White House Na­tional Se­cu­rity Coun­cil spokesman Gar­rett Mar­quis said.

That rank­ing of for­eign pol­icy and trade pri­or­i­ties isn’t lost on Ankara, ac­cord­ing to Ozgur Un­luhis­ar­cikli, head of the Ger­man Mar­shall Fund of the United States of­fice in Ankara. When a show­down with the U.S. over its con­tin­ued de­ten­tion of an Amer­i­can pas­tor led to U.S. sanc­tions against two Turk­ish min­is­ters last sum­mer, the Turk­ish lira went into a tail­spin and brought the econ­omy to the brink of col­lapse. The crash prob­a­bly pushed Tur­key into its first re­ces­sion in a decade.

“Tur­key ac­tu­ally has no strate­gic in­ter­ests in Venezuela. While it may be prof­it­ing from the gold trade, the re­turns of this are not likely to jus­tify ad­di­tional po­lit­i­cal risk that could hurt the Turk­ish econ­omy,” Un­luhis­ar­cikli said. “In short, Tur­key doesn’t have a dog in this fight and will re­frain from es­ca­la­tion with the U.S. over Venezuela.”

CHINA BACKS DI­A­LOGUE

Sep­a­rately, China’s For­eign Min­istry said peace­ful di­a­logue and po­lit­i­cal means are the “only way” to­ward en­dur­ing peace in Venezuela, adding that the coun­try backs multi­na­tional ef­forts to reach such an out­come.

Min­istry spokesman Hua Chun­y­ing’s state­ment came in re­sponse to a ques­tion about a meet­ing Thurs­day of an “In­ter­na­tional Con­tact Group” led by Uruguayan Pres­i­dent Tabare Vazquez and at­tended by lead­ers of 14 coun­tries, in­clud­ing Spain, Italy, Por­tu­gal and Swe­den.

China is a close ally of Maduro, to whom it has lent bil­lions to help shore up his regime.

Hua said China “be­lieves that Venezuela’s af­fairs should be re­solved by the Venezue­lan peo­ple un­der the frame­work of its con­sti­tu­tion and laws and through peace­ful di­a­logue and po­lit­i­cal means. This is the only way to­ward en­dur­ing peace in the coun­try.”

How­ever, she added that “China sup­ports the ef­forts by the in­ter­na­tional com­mu­nity to this end and hopes that all sides will con­tinue to play a con­struc­tive role in the peace­ful res­o­lu­tion of the Venezuela is­sue.”

Late last month, the min­istry is­sued a state­ment in Hua’s name say­ing China “op­poses ex­ter­nal in­ter­ven­tion in Venezuela,” in a re­buke to calls in the U.S. for mil­i­tary ac­tion to re­move Maduro.

Over the past decade, China has given Venezuela $65 bil­lion in loans, cash and in­vest­ment. Venezuela owes more than $20 bil­lion.

Er­do­gan

Maduro

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