The rise of the jihadist Islamic State in Syria and Iraq has affected both the economy and security of its powerful neighbor Turkey. Yet Turkey has not taken the fight to the militants. A prolonged hostage crisis is a big part of the reason. In early June, when the militants overran Iraq’s second-largest city, Mosul, they also took over the Turkish consulate there, capturing 49 people including the consul general and three children. Within days, Turkish media outlets were banned from reporting on any developments in the crisis. The hostages remain captive.
“It is very difficult now for Turkey to manage the situation,” says Yasar Yakis, a former foreign minister. “Its hands are tied. Especially after the execution of [the American journalist James Foley] it has become all the more difficult to do something which Islamic State might perceive as a wrong move.” On Tuesday, the militants claimed to have beheaded Steven Sotloff, another U.S. journalist they were holding as a “second lesson to the United States.”
Turkey officially labels Islamic State a terrorist group, but Recep Tayyip Erdoğan, who was elected president in August after more than a decade as prime minister, has been reluctant to label the organization as such. At the end of June, shortly after the militants captured the consulate, he warned Turkish media and the political opposition not to pressure him into making “provocative statements regarding this group.” Ahmet Davutoglu, the newly appointed prime minister, more recently referred to Islamic State as “a radical organization with a terrorist-like structure.”
That organization with a terrorist-like structure has set up shop just over an hour away by car, across the Syrian border, from Turkey’s Gaziantep province, a booming export hub in the country’s south. The war in Syria had already made a dent in the local economy, cutting off Turkish traders from markets in Jordan, Lebanon, and the Persian Gulf. A month after Islamic State overran Mosul and other Iraqi cities, the province’s exports to Iraq fell 48 percent compared with last year’s figures, according to Gaziantep’s chamber of commerce.
Islamic State “has blocked the trade routes from the northern part [of Iraq] to the center,” says one food producer, who asked not to be named because of his company’s policy. “We had 15,000 metric tons going to Iraq every month [by truck]. Over the last two months that has basically stopped.” Turkey’s overall trade with Iraq has dropped 32 percent since June.
Where trade has slowed, smuggling has thrived. Since the start of the war in Syria, the amount of fuel seized at the border has tripled, according to Turkish government sources. Produced and refined on the cheap, the petrol makes its way into Turkey by truck, hauled across the border inside jerrycans or pumped through plastic pipelines. Middlemen purchase the fuel at anywhere from 1 to 1.5 liras ($0.46 to $0.69) per liter, reports Ali Ediboglu, an opposition lawmaker. By the time it arrives in places like Gaziantep, locals say, it sells for about 3 liras.
Turks pay about 5 liras per liter at the pump, more than in most countries in Europe, and double the average price in the U.S.
A large chunk of the profits appears to be going straight into Islamic State’s coffers. The Sunni militants control about 60 percent of crude oil production assets in Syria, in addition to several oil wells in Iraq, says Luay al-Khateeb, a visiting fellow at the Brookings Doha Center. “Actual production could be about 50,000 barrels per day,” he says. “Assuming a cost of $50 or 60 per barrel, that would mean sales of up to $3 million.” While some of the fuel is sold or distributed locally, he says, the rest is smuggled to southern Turkey. “It’s the only export market that Islamic State has.”
The amounts might seem paltry, al-Khateeb says, “but they definitely [help] expand operations and recruit new members.” Before the June 10 attack on Mosul, experts put the total number of Islamic State fighters at 10,000. That number is now said to have at least doubled. Hisham al-Hashimi, an Iraqi expert on Sunni insurgencies, puts it between 30,000 and 50,000.
Turkey has repeatedly come under fire, both at home and abroad, for allowing insurgents of all stripes—from moderates to hardline Islamists—to cross into Syria. Turkish officials acknowledge that many militants have been able to slip through the 560-mile border but deny lending them any support. The government has introduced stricter border controls and started screening passengers on inbound flights. It has also started to crack down on the illegal fuel trade. “We try to make sure that those smugglers know that if they smuggle now, it will be related to terrorism,” says one official.
The threat from Islamic State is metastasizing. Having already captured stretches of land in northern Syria, the militants have now set their sights on a number of towns near the Turkish border, presumably in order to open new supply routes for weapons and fighters. In Iraq, they have attempted to march on Erbil, the capital of the autonomous Kurdish Regional Government (KRG), a magnet for billions of dollars’ worth of Turkish investments.
Islamic State has also begun recruiting inside Turkey, possibly with the help of Islamist NGOs and charities. Estimates of the number of Turks who have joined the militants range from several hundred to more than a thousand. “Once they consolidate their gains in Iraq and Syria, some of Islamic State’s leadership may try to export their brand of jihadism to Turkey,” says Sinan Ulgen, a former diplomat and visiting scholar at the Carnegie Endowment for International Peace. “The biggest threat is their potential to stage suicide attacks on Turkish soil.”
While the U.S. has bombed Islamic State positions in northern Iraq, and while Germany, Italy, France, and Iran have all supplied or pledged to supply KRG forces with weapons, Turkey has not provided the Kurds with any military assistance, at least not overtly. It has provided humanitarian aid to a number of besieged cities and helped evacuate thousands of Yazidis, who belong to an Iraqi religious minority, who were stranded on Mt. Sinjar after Islamic State attacks.
Turkey has an interest in not being seen as part of a strategy to contain or eliminate Islamic State, says Ulgen, the former diplomat: “Of the countries that are part of that strategy, it is the most exposed.” Asked to comment on the impact that the hostage situation in Mosul might have on Turkey’s options against Islamic State, a Turkish official was circumspect. “We’re careful,” said the official.
Zalewski is a Bloomberg Businessweek contributor.
