November 30, 2012 -- Iran has been circumventing U.S. trade sanctions by selling oil and gas to turkey and importing billions of dollars in Turkish-held gold as payment, a report on CNN revealed. Reliance on this precious metal, which has served as a valuable bartering tool for millennia harkening back to even before biblical times, illustrates how gold can function as effective currency even when access to modern international banking is deprived.

The U.S. placed unilateral sanctions on Iran in March 2012, forbidding and severely restricting the flow of American and American-controlled funds and resources to that country. The sanctions are a direct response to the belief that Iran has undergone concerted and continuing secret efforts to attain nuclear armament, a clear rebuttal of the interests and advice of the U.S. and the United Nations. Iran denies these claims.

Given that the sanctions have been declared by the U.S. only, and not established by the U.N. or other international law, it is not illegal for Turkey to continue to buy oil from Iran. However, as a result of the American sanctions, Iran no longer has access to the SWIFT electronic financial system. So when Iran delivers oil to Turkey, it is paid in Turkish lira but is unable to transfer the value of those funds back to its home turf. To get around this, after they received Turkish lira in payment for oil, the Iranian government would turn around and use it to buy Turkish gold. The gold is exported from Turkey, but it is not clear precisely what transportation routes or methods are being used.

Turkish economists began to suspect this was occurring last spring, when Turkey exported $1.2 billion in gold to Iran, representing a 438.2 percent jump from April 2011. As outlined in the CNN story, Turkey’s Deputy Prime Minister Ali Babacan confirmed this “gold-for-oil barter system” while speaking to a parliamentary budget commission in Istanbul, Turkey in November. The official transcript was published online by the Turkish government on Wednesday of this week.

"Our gold has always been there,” said Atilla Yesilada, an economic analyst with Global Source Turkey. “The Iranians never paid any attention to it up until the last year when they were kicked out of the SWIFT banking system.

“Turkey is the big hole, the big gap, in the wall of sanctions," said Yesilada, referring to a general agreement amongst many economists that the U.S. sanctions have been effective in debilitating Iran.

Although the Turkish actions are not illegal, they are likely to offend and upset the U.S., a key military and political ally for Turkey. Under current Presidential orders, it is possible that the U.S. Treasury may impose sanctions on anyone who helps the Government of Iran obtain U.S. dollars or precious metals such as gold. An unnamed source at the U.S. Treasury Department told CNN, "We can't comment on any investigations that may be ongoing."

When speaking to the parliamentary commission, Deputy Prime Minister Babacan did not indicate the extent of his logistical knowledge about Iran’s gold shipments. This has led to much speculation in the Turkish media, heavily relying on the idea that gold bullion is being hand carried out of the country in suitcases. In Turkey, it is legal for one person to transport up to 110 pounds (50 kilos) of gold out of the country. In August, exports to the United Arab Emirates shot up dramatically, suggesting that Iran may be transporting its gold through that country, an important economic gateway to Iran.

"The picture looks like a James Bond movie. You have individuals with black suitcases carrying gold," Behzad Yaghmaian, an Iranian-American political economist at Ramapo College, told CNN. "This could not have happened in any form without the knowledge of the Turkish state. This amount could not have left the country to go to Iran without the state knowing about it."

It is not clear if this barter system remains active in place, but economists and the media will continue to watch Turkey's gold and other export statistics for clues. The government of Turkey did not respond to CNN’s request for a comment.