March 2017Focus2017Shadow Economies

Focus on Shadow Economies: Turkey

By Nicholas Elden
Staff Writer

As Turkish Prime Minister Binali Yıldırım’s first year in office nears its end, Turkey’s underground alcohol market continues to grow. In Turkey, taxes on a multitude of items including cigarettes, alcohol, cars, and mobile phones have risen as a result of fiscal policy.

Reliance on credit cards and overspending has caused unwanted inflation and crippled Turkey’s commercial market. As the economy fights inflation and currency depreciation, taxes are needed to slow excessive spending and allow its banking system to work as a watchdog. Turkey’s current taxation methods were intended as a solution to this overspending, but instead created a shadow market for alcohol.

According to Havocscope, Turkey has a total black market value of $17 billion dollars, and is the 15th country most at risk of security risks from the global black market.  

International Business Times reports that political instability stirred up Turkey’s infrastructure since 2013. Former Turkish Prime Minister Recep Tayyip Erdogan fought with opponents who accused the leader of being autocratic and unable to accept criticism for his increased taxation. Through all of this turmoil, an underground alcohol market emerged due to Turkey’s strict new prohibitions.

Al Monitor reports that these new prohibitions have created numerous business opportunities for many. For instance, a Turkish individual named Burak B. quit his job as a pizza delivery man and took to his motorcycle to sell and deliver liquor across the nation. Newly implemented restrictions on the sale of alcohol, like Turkey’s ban on selling spirits past 10 P.M. turned regular working class citizens into members of the black market.

Restaurants have hired couriers like Burak in the past to sell imported spirits and late-night drinks for much higher prices. Because of the increased risk, potentially including a $250,000 fine, restaurants hire couriers who are more willing to take the risk. Burak stated that, “One customer told me that his late-night drink started to taste better after it was banned.”

The real question regarding these bans is, will they change Turkey fundamentally? History reveals that this is not the first time Turkey faced a prohibition, or an underground alcohol trade. When looking back at the Ottoman prohibition, the Turks innovated new and unique ways of circumventing bans, even in the face of capital punishment.

Al Monitor gave the example of Raki, a traditional Turkish spirit that was popularized in the 18th century as it was colorless when dry, and therefore easy to hide and drink in secret. Raki highlights the resilience of the Turkish people when facing the difficulties of an oppressive governing body. As far as affecting citizens, Al Monitor reports that alcohol consumption is not on the rise in Turkey, and alcoholism is not a serious problem either.

Over the past five years, Turkey has encountered its biggest blowbacks in regards to cigarette smuggling and counterfeit drug sales. Havocscope reports that an organized crime ring in Turkey was intercepted by police for selling counterfeit drugs to patients in both Turkey and the United States.  The crime syndicate sold fake cancer drugs to struggling patients for upwards of $700 while also being able to get some of their counterfeit goods into legitimate pharmacies.  

Additionally, customs have seized nearly $2 billion worth of contraband tobacco in 2013.  With over a quarter of Turkey’s population being smokers, the notion of cigarette smuggling in the black market leaves a lot to be feared for Turkey’s heads of state.

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