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Sanctions, militancy increase oil smuggling through Turkey, Iraq border

Sanctions, militancy increase oil smuggling through Turkey, Iraq border

ISTANBUL: Oil smuggling has deep roots in the region. After the imposition of UN energy sanctions on Iraq in the 1990s, a robust network of smugglers, traders and bootleg refineries flourished, said by a Turkish security official here the other day.

Hundreds of entrepreneurs emerged, buying and selling small parcels of Iraq’s oil at discounted prices and transporting them across the Turkish border to sell at a markdown. Many of the business people have grown rich and powerful, with vested interests and political ties.

Energy experts and western officials say Isis may be laundering up to 80,000 barrels of oil a day worth several million dollars through this shadow market. The oil is smuggled through rugged mountain and desert routes or even legitimate crossings at Reyhanli, Zakho or Penjwan for consumption in Turkey, Iran or Jordan.

“The fact that Iraq was under sanctions for so long led Kurdish and Iraqi businessmen to fill a vacuum and create smuggling networks for Iraqi oil,” says Valerie Marcel, a Middle East and Africa energy specialist at Chatham House, the London think-tank. “Turkish, Iranian, Syrian, Iraqi networks have grown because of decades of bans on exports. From Iraq and now from Syria there is this grey market. That’s becoming a huge problem.”

The boundaries of the mostly Kurdish black market zone have never been easy to police, rarely recognised by people with cross-border kinship and trade ties. The terrain ranges from the grassy plains dividing Turkey from northwest Syria to the forbidding mountains between Iraqi Kurdistan and its Turkish and Iranian neighbours to the flatlands along Iraq and Syria’s Jordanian borders.

Smuggling underpins the economy of the semi-autonomous, three-province KRG with smugglers’ coves dotting its borders with Iran, Syria and Turkey. In towns like Hajj Omran along the Iran-Iraq border, smugglers openly regale visitors with tales of their exploits.

A Turkish official recently said seizures of smuggled fuel had risen from 35,260 tons in 2011 to more than 50,000 tons in the first six months of 2014 alone, suggesting an explosion in the trade. But the market appears to have shifted in recent weeks in response to a tightening of Turkish border controls.