ANLARA: The Turkish government’s failure to stop militants smuggling oil across its border with Iraq and Syria is dealing a blow to the country’s economy, with oil market experts estimating the total damage at $2.6 billion this year.
Turkey failed to collect $862 million in taxes due to oil smuggled by the militant Islamic State in Iraq and the Levant (ISIL) group undermining legitimate gasoline markets. The daily quotes oil market representatives as saying that Turkish gasoline dealers lost $1.72 billion in trade to ISIL-controlled oil smuggling.
Oil smuggling into Turkey is not new, but the Syrian civil war and the rise of ISIL sparked an increase in smuggling along Turkey’s southern border, experts say. It is estimated that oil smuggling on Turkey’s Syrian and Iraqi border has increased by 314 percent since the war began.
The cost of gasoline in Turkey is one of the world’s highest due to heavy taxation, making oil smuggling attractive in Turkish markets. The size of the Turkish fuel market is estimated at $50 billion and the state makes $25 billion in tax revenues from gasoline per year. The Turkish government currently levies a 61 percent tax on gasoline, 55 percent on diesel and 50 percent on liquefied petroleum gas (LPG).
According to local Petroleum Products Employers’ Union (PÜİS) Chairman Muhsin Alkan, several gas stations in Turkey’s border provinces are having financial difficulties since most customers prefer smuggled ISIL oil which is as much as 50 percent cheaper than the fuel sold at the pump.
ISIL is believed to smuggle several tons of oil into Turkey per day. Vehicles carry smuggled ISIL oil close to the border from where oil is sent to traders inside the country via illegal pipelines, observers say. In November, Turkish Customs and Trade Minister Nurettin Canikli confirmed the illegal trade, telling a TV program, “Small quantities [of oil] could have been smuggled into the country on the backs of donkeys, which might not have been noticed.” Millet quoted Alkan as saying that some gas stations in Turkey’s southeast agreed to purchase oil from smugglers at half the market price. “A truck of diesel costs TL 95,000 on the legal market, while smugglers can provide you with the same amount of oil for TL 50,000,” Alkan explained. He added that smugglers have even established their own fleet of oil trucks, threatening the legal gas business in the provinces of Hatay, Kilis, Gaziantep, Şanlıurfa and Mardin.