Is Turkey fuelling IS' oil trade?

The accusations are severe: The Turkish government, claims Russia, is directly involved in the so-called Islamic State's (IS) oil trade.

"Turkey is the main buyer of the oil that the Islamic State stole in Syria and Iraq," Russian deputy defense minister Anatoli Antonov said in Moscow on Wednesday.

"According to available information, the political leaders of the country, President Erdogan and his family are also involved," Antonov added, though he did not provide any details.

The charge came a day after Russian president leveled his own accusations against Turkey at the climate talks in Paris. He said Russia had information that the oil from territories controlled by the terrorist group is transported via Turkey.

Turkish president Recep Tayyip Erdogan reacted firmly. "If such a thing is proved, the nobility of our nation would require that I would not stay in office," the official news agency Anadolu quoted him as saying.

The US Army came out in support of Erdogan. "That is preposterous," US military spokesman Steven Warren said on Wednesday. "We flatly reject any notion that the Turks are somehow working with Islamic State."

Early reports of oil smuggling

There have long been reports of oil deliveries from IS-held areas in Iraq and Syria to Turkey. As early as June 2014, Turkish parliamentarian Ali Ediboglu of the opposition party CHP said more than 758 million euros ($800 million) worth of oil from IS-controlled territory had been sold to Turkey. Ediboglu, an MP from the Hatay province, which neighbors Syria, said new pipelines were built especially for the transfer of that oil.

In August of the same year, Turkish newspaper TARAF reported on oil smuggling from Syria into Turkey.

"The daily deliveries of smuggled diesel amounted up to 1,500 tons," the paper wrote. "That constitutes 3.5 percent of Turkey's daily oil consumption".

Lower prices open up the market

In the spring of this year, scientists George Kiourktsoglou and Alec D. Coutroubis from the UK's Greenwich University published a study on the oil smuggling trade. They found that IS had reached a production volume of 45,000 barrels per day in February 2015. This brought the IS up to $3 million a day, the scientists estimated. IS oil is markedly cheaper than that on the regular market. If legally traded oil costs between $80 and $100 per barrel, an IS barrel sells at $25 to $60. The pricing strategy helps IS secure market share.

Both authors have closely studied tanker charter rates at the port of Ceyhan in southern Turkey and noticed a striking correlation between the IS' military activities and Ceyhan's freight rates.

"It seems that whenever the Islamic State is fighting in the vicinity of an area hosting oil assets, the exports from Ceyhan promptly spike," the authors wrote. They were able to prove this using data from three time periods in July 2014, from October to November of the same year, and January to February of 2015.

However, Kiourktsoglou and Coutroubis warned against conflating the correlation between IS battles and higher exports with proof of oil smuggling - or that the Turkish authorities are involved in it.

Fighting smuggling politically risky

But the data Kiourktsoglou and Coutroubis collected could indicate why the International Alliance against IS has been so hesitant in combating the smuggling. Granted, the alliance, led by the US, moved to destroy around a third of the terrorist organization's 900-strong truck fleet following the November 13 attacks on Paris. But beofre that, it had been relatively easy for IS to bring the goods to their recipients undisturbed.

So why the hesitation? The answer is too many people benefit from the smuggling. The IS shares its spoils - also from the smuggling business - with the people who live in the areas it controls. In the oil-rich regions, they're also allowed to build their own drilling wells and to smuggle the oil abroad themselves. If a truck carrying 30,000 liters of crude oil manages to reach its intended destination successfully, the operators are rewarded with close to €3,800 per trip.

"The result of this policy is soaring support for the caliphate," wrote Kiourktsoglou and Coutroubis.

This is what has kept the anti-IS coalition from choking off the smuggling routes. They're afraid that attacking what has become a source of livelihood for many may push more people into IS' arms. The coalition risks making enemies out of those who benefit from the smuggling business.

"Turkey looked the other way for a long time"

Russia hasn't yet delivered any proof of its claims that the Erdogan family is involved in the oil smuggling. But it's definitely plausible that the Turkish authorities weren't consistent in their efforts to inhibit the trade, according to Jan Techau, director of the Carnegie Europe Institute. In an interview with German radio station Deutschlandfunk, he said "there's a hint of truth in that with regard to the IS trade routes, to closing the borders for the traders, the borders that were the most important link to the western, open world, to the markets - Turkey has looked away for a very, very long time. Turkey has been charged with a lot of responsibility there."

After the terrorist attacks on Paris, the International Alliance has ramped up its efforts to target the IS tanker fleet. The political risks of this project are known: the destruction of the tankers could create more IS sympathizers. But the attacks are meant to help dry up an important source of financing for the terrorist organization. The anti-IS coalition's calculations are obvious: the more significant the IS' financial losses are, the less interesting the group will become to sympathizers and beneficiaries.