Original by Aleksey Topalov and Elena Platonova published by gazeta.ru; translated from Russian by J.Hawk
Russia is accusing Turkey in financing the Islamic State through its purchases of smuggled petroleum. Russia’s President Vladimir Putin level this accusation after Turkey shot down a Russian Su-24 bomber. Putin underscored that Russia has known of the deliveries of petroleum from terrorist-occupied regions of Syria to Turkey for a long time. According to experts, Turkey resells oil received from the IS at twice the price it paid the terrorists, and it is not bombing the Islamic State because it would be to its disadvantage, but only the Kurds.
Deputy Secretary of Finance on Counter-Terrorism and Financial Intelligence David Cohen said already at the end of October 2014 that Turkey, Iraq, and Syria are buying oil from IS at a rate of about $1 million a day. Cohen said then that IS financial power makes it rather different from terror groups of Al Qaeda type and its branches, which rely mainly on individual donations. Another major source of financing, namely ransoming hostages which amounts to about $20 million a year, which is also insignificant in comparison to the oil revenue. Therefore in order to interdict IS financing, one must first break the oil supply chain. The main question here, according to Cohen, is who is the intermediary in these transactions.
Political scientists Igor Yushkov, an expert with the National Energy Security Fund, says that while before the tanker trucks moved in a constant stream, now due to Russian bombing the operation has had to change. “Nowadays the truck columns have to disperse and their payload has grown smaller. Secondly, while before the buyer representatives visited the oilfields themselves, now they have had to organize a new cluster.”
These are the traders who are usually local inhabitants of Syria and Iraq. It is they, at IS behest, take the oil from the fields and bring it to the customers.
The Islamic State is now in control of over 60% of Syria’s oil extraction and 10% of Iraq’s. According to Yushkov, crude oil is being supplied by 10 IS-controlled fields located on the territory of these two countries. The estimates of the level of extraction vary widely. Some say it’s 350 thousand barrels a day, others it’s only 40 thousand. “But in any event the level of extraction is decreasing, due to the constant bombing of the oil fields themselves,” says Yushkov.
According to Reuters, in October 2014 IS fields generated 120 thousand barrels a day, which was equivalent to $1-4 million a day of revenue. After active bombing of oil fields began, extraction dropped to only 40 thousand barrels a day, estimates Energy Aspects analytical department head Amrita Sen in an interview with CNBC TV channel.
Yushkov moreover says that extraction would decrease independently of bombings, because IS lacks a sufficient number of engineers. IS is not developing oil fields, only squeezing them dry.
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In July 2015, the head of the Iraqi province of Ninevah energy committee Khisham al-Brikfani said that the IS oil deliveries on the Syria-Turkey route dropped from 10 thousand barrels a day to 2 thousand barrels. “But that’s the official estimate,” says Mikhail Krylov who heads the Golden Hills analytical department. “In actuality it could be as high as 250 thousand barrels a day.”
Member of the expert council of the Russian Oil Industry Union Eldar Kasayev notes that the daily volume of crude which Turkey buys from the terrorist depend on whether the intermediaries can safely cross the border between Syria and Turkey which is guarded by IS opponents.
“Turkey is one of the beneficiaries of oil trade with IS,” Yushkov adds. “Turkey is able to buy crude on the cheap, and then resells it at a higher price. Therefore IS collapse would not be beneficial to Turkey. Moreover, according to unconfirmed reports, one of the firms buying IS oil is owned by the Turkish president’s son Bilal Erdogan”
Incidentally, Turkish ministries have more than once denied Turkey’s participation in the sale of “terror” oil. Turkish MFA spokesman told the Wall Street Journal, the amount of confiscated petroleum on the Syria-Turkey border has tripled since the war started in 2011. “We are trying to stop the smuggling, but it is very difficult to control that border,” said the Turkish official.