Almost half a million tonnes of grain has arrived at Iran's major food port and Turkish banks are being used by the Islamic Republic as an alternative trade financing route to sidestep Western sanctions, trade sources say. Iran has been shopping for wheat at a frantic pace, ordering a large part of its expected yearly requirement in a little over one month and paying a premium in non-dollar currencies to work around toughened sanctions and avoid social unrest.
"With any number of unknowns out there - a potential attack on its nuclear facilities, the possibility that a different administration takes office in the United States, the regime is prudently laying aside (food) stocks in the event things go very wrong," said J. Peter Pham, a director with US think tank the Atlantic Council.
Food shipments are not targeted under western sanctions aimed at Iran's disputed nuclear programme, but financial measures have frozen Iranian firms out of much of the global banking system. State-run Government Trading Corporation (GTC) has stepped in to make recent purchases as private Iranian buyers have been sidelined. "There is not a problem with payments, things are settling down using non-sanctioned banks," one trade source said. "The GTC is using Turkish banks to make payments."
Iran bought around 2 million tonnes of wheat just last month from Russia, Germany, Canada, Brazil and Australia. Sanctions are worsening an economic crisis which has caused rising prices, shortages of some goods and a collapse of the local currency at a time when other countries in the Middle East are experiencing political and social unrest.
Trade sources said Iran was making payments in euros and also US dollars via non-sanctioned banks. "Apart from Turkish banks, Iran is also facilitating deals via Switzerland and is also using cash in smaller trades as well as even gold," another trade source said. "They are working around the restrictions."
AIS ship tracking data on Reuters showed 12 dry bulk vessels on Friday were anchored outside Bandar Imam Khomeini, one of Iran's largest grain terminals. At least six of the vessels were larger ships known as panamaxes, which can carry around 60,000 tonnes of grains. A further panamax was on its way to the terminal. Four vessels including one panamax ship had left the port area for new destinations in recent days after unloading, data showed.