03 December 2015
Black Marks, Black Market, Black Oil
Russia tries to roast Turkey by adding oil and turning up the heat.
by Neil Tidmarsh
The most surprising and potentially the most effective blow Russia struck against Turkey this week in retaliation for the downed Su-24 bomber was the accusation that Turkey is buying oil from Isis.
President Putin accused Turkey of collaborating with Isis by buying its oil, thus profiting from an illicit trade and funding the terror group’s activities. He claimed that Turkey shot down the Russian plane to protect the Isis supply lines. And he insists that the trade is officially endorsed. “According to available information, the highest level of political leadership of the country, President Erdogan and his family, are involved in this criminal business” the Russian deputy defence minister told a press conference, and added that Turkey was Isis’s biggest customer. Various sections of the Russian media are pointing the finger at Erdogan’s son Bilal, a businessman who owns a Maltese shipping company.
President Erdogan has vigorously denied these claims. He has challenged the Kremlin to substantiate them or stand guilty of slander. He promised to resign if he is proved wrong.
Isis controls most of the crude production and refining facilities of the oil-rich Euphrates river valley in Syria and Iraq. Oil is its biggest source of revenue. Production is estimated to be between 30,000 and 40,000 barrels daily, generating a million dollars a day or almost half a billion dollars a year. Isis sells the crude to traders at the well-head; the traders process the crude at small refineries in Isis territory, then sell it to other parties in Syria and Iraq. The surplus is presumed to be smuggled out of those countries and sold on an international black market. Isis profits from the well-head sales and from taxes on the supply chain within its territory; but by the time the oil reaches the international market it may well have changed hands many times.
Smuggling oil across borders for illicit sale has been endemic in the region for a long time. Oil from Saddam Hussein’s Iraq and from sanctioned Iran managed to find buyers in spite of international oil embargoes. Reports claim that the Kurdish Regional Government in Iraq pipes its oil to Turkey, from where it is shipped via the port of Ceyhan for distribution at sea to other ships off Malta, in defiance of the Iraqi government in Baghdad which insists that such trading is illegal. The routes which oil takes from Isis territory to whatever market it finds in other countries were probably well-established even before the advent of Isis.
Today the Russian defence ministry called a press conference at which it revealed satellite images and video footage which it claimed show trucks and tankers carrying oil into Turkey from Isis territory along three routes; from Isis territory in Iraq to the Turkish town of Batman, and from Isis territory in Syria to Batman and to the ports of Dortyol and Iskenderun. It also claimed that some oil passes through Turkey to other countries.
The US treasury claimed more than a year ago that Turkish middlemen were buying oil from Isis. It also claimed that Isis oil had been sold to Kurds in Iraq who then sold it on into Turkey. It is possible that Turkish elements such as dealers, customs officials and intelligence officers are involved in this smuggling and black market, but that doesn’t necessarily mean that the government or Erdogan or his family are involved, and although the Kremlin has indicated that it has more material to disclose, it has not yet proved that they are.
The US treasury’s claim that Isis are trading with their enemies the Kurds shows just how complicated the situation is. The treasury also claims that the Assad government is buying oil from its enemy Isis (a counter-claim that Erdogan was quick to make against Russia, Assad’s ally). It is difficult to understand why Assad would need to buy oil from his enemy when he has two oil-rich allies, Iran and Russia. It’s equally difficult to understand why Erdogan would deliberately antagonise Russia, Turkey’s biggest supplier of oil on whom it depends almost completely for energy, just to protect the supply-line for relatively small amounts of low-quality oil. The answer is probably that smuggling and black-market trade is undertaken by individuals – whether Syrian, Iraqi, Kurdish or Turkish – for whom profit is more important than whoever their countries’ enemies happen to be.
If, however, Russia does manage to prove that the Turkish government or Erdogan and his family are indeed directly involved, then that would be altogether more critical and damaging.
In the meantime, Isis oil revenues are being threatened in other ways. The collapse in oil prices since October of last year means that well-head prices levied by Isis on traders must be very low indeed if it is to be at all worthwhile for those traders to process and then transport their product to their illicit markets. Enemy Arab forces and Kurds have recently seized oil fields from Isis in the southern province of Hassakeh. And in recent weeks, US and Russian planes have launched bombing campaigns against trucks and tankers transporting oil through Isis-held territory. They claim to have destroyed more than 1,300 such vehicles in less than a month.
Turkey would do well in the eyes of the world to answer Russia’s accusations by joining in such a campaign.
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