OPINION | Drugs as an Economic Threat to Turkey by Behsat Ekici

Intensive flow of narcotics generated significant amounts of dirty money in Turkish economy. The total retail value of the seized drugs is around $1.1 billion for heroin, $ 1.2 billion for cannabis, $44 million for cocaine and $110 million for the ATS (Ekici, 2013b).

By Behsat Ekici

Drug trafficking is an ever growing international security conundrum. Transnational crime syndicates have proved to be extremely resilient to counter-narcotics initiatives. Despite the efforts of national and international institutions, enormous amounts of drugs are produced, trafficked and consumed throughout the world. Transnational crime syndicates manufacture new psychoactive substances when the governments increase controls over existing drugs. Annual number of drug-related deaths has increased to 250,000 globally. Illicit drug trade proved to be an insidious threat that finances terrorism, instigates corruption, undermines economic development and erodes state authority.

Image Attribute: Operation "Hera" Cannabis Seize /  Source: Yasin Dikmen - Anatolia News Agency

Image Attribute: Operation "Hera" Cannabis Seize /  Source: Yasin Dikmen - Anatolia News Agency

Even though many international analysts recognized the threat of transnational crime in the immediate aftermath of the Cold War, international drug trafficking has been a major challenge for Turkey since 1970s (Erdinc, 2004). The scale and the nature of the drug threat changed in accordance with the macro-level changes in European and Near Eastern markets. Turkey’s precipitated economic integration with the neighboring markets provided ample opportunities for illicit drug transportation. Transnational organized crime groups (TOCs) increasingly exploited the free movement of people, legitimate businesses and foreign trade (Ekici & Unlu, 2013). In this context, the number of drug interdictions in Turkey increased more than 16-fold over the past ten years, from 5,052 in 2003 to 83,135 in 2012 (TUBIM, 2012). The exponential growth of the drug problem is also clearly visible in the number of drug-related arrests. In 2003, Turkish agencies arrested 10,855 people for drug-related crimes and the number of drug-related arrests increased 12 folds over the past ten years (130,049 in 2012) (TUBIM, 2012).

Image Attribute: Turkey's "Golden Crescent" Drug/Narcotics Transit Map

Image Attribute: Turkey's "Golden Crescent" Drug/Narcotics Transit Map

Turkey lies along the well-known Balkan Route of Afghan heroin destined for the European markets. International security literature discussed various aspects of the heroin trade throughout Turkey for more than three decades. In the recent years, however, the flow of narcotics has diversified and the TOCs began to transport other types of drugs such as amphetamine-type stimulants, cocaine and cannabis via Turkey (TUBIM, 2012). Seizures of these substances increased sharply over the past decade. Moreover, the profiles of the traffickers diversified and increasing numbers of Europeans, West Africans, Iranians, Latin Americans and Central Asians have been arrested for drug trafficking via Turkish territories (Ekici, 2013b).

Despite the exponential growth of drug-related crimes, Turkish National Security Council (MGK) perceives narcotics as a secondary threat. Indeed, illicit narcotics trade is perceived as a national security agenda to the extent that it is associated with financing of terrorism (Ekici, 2014). In line with the perceptions of the MGK members, security literature dealt mainly with terrorism and external security threats. There is a dearth of academic works in Turkey explaining the national security implications of drugs and transnational organized crime. This study aims to fill an important gap in Turkish and international security literature through extensive field research on national security repercussions of transnational drug trade.

Economic development is a principal agenda in national security councils throughout the world. For Buzan (1991a), economic strength ensures purchase of weapons, equipment and recruitment of law enforcement and military staff. Moreover, strategic power projections of the states rely on the sustainable economic backup. As in the cases of Afghanistan and Guinea Bissau, the states often fail to provide security to its citizens when there is lack of economic resources. Underpaid law enforcement and military officers often fight for the drug lords rather than their governments (Williams & Felhab-Brown, 2012).

Intensive flow of narcotics generated significant amounts of dirty money in Turkish economy. The total retail value of the seized drugs is around $1.1 billion for heroin, $ 1.2 billion for cannabis, $44 million for cocaine and $110 million for the ATS (Ekici, 2013b). The interviewed experts reported that the interdiction ratio in Turkey is around 20 percent. Once we add the non-interdicted substances, the scale of drug money increases sharply. The total annual of drug generated money is estimated around $15 billion (Ekici, 2013).

At first glance, it might be argued that the drug trade bolsters financial reserves, generates capital and creates employment, which accrues to overall economic growth. In reality however, drug money has no significant macroeconomic push effect and makes no meaningful contribution to the prosperity of the Turkish community. High-risk high-gain nature of illicit drug business hinders sustainable input into productive sectors of the national economy. Drug production and trafficking undermine export oriented sectors and currency stability. Illicit drug economy can have direct and indirect costs on the nations. Field investigations revealed that it undermines economic development and financial stability in Turkey in several respects.

First, drug generated money is ex-filtrated out of the pockets of Turkish taxpayers and transferred to transnational criminal networks. The money is never taxed and used for sustainable investments. Organized crime syndicates exploit the money to purchase additional drugs, weapons and shell companies. On many occasions, drug money is invested in off-shore banks, casinos and hotels in Cyprus, Switzerland, Iraq, UAE and Central Asia (Yetim, 2000). Drug money is mostly untraceable, as it transferred through Havala system, mainly by means of jewelers and exchange shops. Astute traffickers never buy properties on their names. Real estates, cars and land are registered on one of the relatives. A significant portion of the money has been spent for hiring gunmen, concealment makers, couriers and new vehicles for transportation. Major drug traffickers have a common tendency of buying luxury goods such as gold watches, weapons and expensive cars. This creates inflation in the districts where there is intensive drug trade. For instance, an investigator in Diyarbakır province reported that drug trade had significant impact on apartment rents (Interview with a drug investigator, on April 2, 2013, Ankara). Drug criminals pay exorbitant prices for apartments in the city center. This drew up the prices and average people have hard time paying the rents.

Second, drug trade generates an unrestrained and large black market. The uncontrolled and untaxed money downgrades financial stability. Turkish economy has undergone several crises due to immediate outflow of liquid money. The most dramatic crisis erupted in 2001 when top executives engulfed in prolonged conflicts how to tackle with the unregistered economy and underground markets. Many Turkish experts believe that drug trafficking generates the largest flow of dirty money in black markets (Yetim, 2000; Erdiç, 2004). This money is handled by criminal figures that are expert at evaporating money when they face financial crisis or strong enforcement. Immediate outflow of black money was a major problem for Turkish economy during the 1980s and 1990s. Due to high liquidity of drug money Turkish state failed to build healthy macroeconomic planning. However, the sound fiscal policies of the governments in the new millennium prevented eruption of crisis for this reason. Currently annual turnover of drugs constitute 0.013% of the national GDP (PPP) and immediate withdrawal of the dirty money poses no significant challenges to financial stability.

Third, drug consumption erodes productivity of the labor force. There is no existing study in Turkey that calculates the productivity loss caused by drug consumption. Moreover, there is lack of official data on the financial costs of illicit drug trade and abuse. According to TUBIM, lifetime prevalence of drugs is 2.7% among the people aged 15-65. Various other studies indicated that nearly 1-3% of the population used drugs in the last year (TUBIM, 2011). When we exclude the children and elderly the total number of drug users is estimated around 1 million in Turkey. Given the $17,000 GDP per capita, 1 million people can generate 17 billion dollars. Around 30% productivity loss brings 5.1 billion costs to Turkish economy. However, there is no available data on the economic costs of drug-related absenteeism, impaired performance, disciplinary problems, premature mortality, treatment, hospitalization, incarceration, homicides and violence. Demand reduction experts assert that the aggregate economic cost of drug abuse is larger than 7 billion dollars (Interview with a demand reduction expert, June 25, 2005, Ankara).

There are various un-calculated collateral costs of drug abuse in Turkey. Drug abuse undermines social values, national cohesion and contribution of citizens to the prosperity of the community. It is difficult to calculate the costs of dissolution of families and psychological impact on the other members of the family. Needle exchange and uncontrolled sex among the drug users is a major drive of the spread of HIV/AIDS, nevertheless there is no study measuring the costs of drug induced HIV infections in Turkey. Drug-driven problems reduce the number of vibrant employees among the college graduates and undermine the quality of workforce. As it leads to school dropouts and under-performance, significant amount of money invested in education is wasted.

Fourth, illicit drug markets generate economic employment for approximately 300,000 people, who have no insurance and job security. Over the long term, bulk of the drug users turn into street dealers to maintain their habits. Government statistics indicate that even larger numbers of people are trapped in perpetual drug related recruitment. Once the young adults are convicted of drug-related crimes, it becomes highly unlikely for them to get employment in the public sector. Drug addicts and traffickers are the last choice for recruiters even in the private sector. Almost all of the interviewed Turkish drug enforcement experts emphasized that a vast majority of drug convicts are re-deployed in the trafficking schemes. Once the drug traffickers professionalize in the sector, they become “path dependent”, either for the reason of being unable to get re-employed in licit economy or for the reason of their expertise in illicit trade. They build all professional relationship with drug suppliers, transporters, concealment makers and distributors. Another factor is the contempt of the money generated in the legal sector. A professionalized drug dealer earns millions of dollars in a year, which is extremely higher than they could earn in a “blue collar” job. Monthly salaries of average workers range between $500 and $2,000 dollars. The sharp contrast between the licit and illicit income is a primary incentive for recidivism, which undermines the productive workforce of the Turkish community.

Fifth, prolonged and intensive smuggling activities retarded emergence of a fully-fledged market economy, sustainable development and employment in Southeastern Anatolia Region. It led to a “Dutch disease” where reliance on the illicit sector hindered development of other core sectors that drive regional economic development. Bulk of the smuggling activities are clustered in the provinces bordering Iran and Iraq. Thousands of families in these provinces are dependent on sustainability of trans-border trafficking of illicit substances such as tea, oil, heroin and cannabis. Even though drug trafficking generated a super wealthy elite, it exacerbated income disparities. The region is the least developed part of Turkey and GDP per capita is less than a third of Istanbul ($4,400 vs. $18,100) (TUIK, 2013). Reliance on illicit activities created a vicious cycle of dirty money and under investment in licit production industry. The legal entrepreneurs are outbid in contracts by the new “businessmen” who earned enormous amounts of money from illicit drug trade.

Sixth, drug enforcement, correction and treatment inflict significant economic burdens on the government. According to TUBIM, identified economic costs of drug enforcement exceed 564,000,000 Turkish liras per year (TUBIM, 2011). A daily cost of an inmate is around 25 liras ($12) and there are nearly 25,000 drug-related prisoners. The annual total cost of drug convicts in prisons is calculated to be around 228,125,000 liras (aproximately $110 million). With all the unidentified expenses, the fight against the drug problem costs more than a billion Turkish liras (approximately $ 560 million). The sharp increase in consumption and trafficking indicates that the drug threat will inflict even higher economic costs to the Turkish state.

A real challenge for Turkey is insufficiency of investigations on financial proceeds of drug related crimes. Currently, Proceeds of Crime Unit of KOM and Financial Crimes Investigation Board (MASAK) are the two principal institutions in charge of money laundering investigations and asset recovery. There is a limited number of investigators at the center and provincial units of these organizations. Turkish law enforcement agencies carry out approximately 80,000 counter-narcotics operations per year. It is unlikely for the investigators to conduct follow up money laundering investigations after every drug interdictions. Moreover, financial investigations and asset recovery processes are long lasting and cumbersome as the Turkish State has the burden of proof. Only limited numbers of confiscations and asset recovery can be made each year in drug trafficking cases. This is a major barrier in neutralizing the activities of criminal organizations. Even though the drug traffickers are imprisoned for several years, they maintain financial power to keep up with illicit activities.

Security paradigms have been shifting over the past three decades. Drug trafficking became a paramount security challenge for the global community. Drug trafficking undermines the fundamental security interests of the states. In many parts of the world, transnational drug networks undermine political stability, territorial integrity and economic development. Drug traffickers operate in a borderless terrain. Even though the states have official border checks, transnational traffickers find different ways of avoiding controls and interdiction of the illicit transshipments. Many of the criminal organizations turn into transnational criminal corporations for a systematic avoidance of state controls.

Even though drug trafficking is often perceived as a “soft” threat, it can undermine the states’ ability to fight against “hard” military security challenges. Along with the conventional threats, Turkish National Security Council should place more emphasis on the increasing drug consumption and trafficking. Internal crime-fare should be perceived as serious as an external warfare. The MGK’s failure to respond the drugs problem will exacerbate the volume of threat to an unprecedented level. Turkish government should develop new partnerships with the relevant states to counter the drug problem. 

About The Author:

Behsat Ekici, Department of Anti-Smuggling and Organized Crime, General Directorate of Security, Turkey

Correspondence: Behsat Ekici, Department of Anti-Smuggling and Organized Crime, General Directorate of Security, Turkey. 

Acknowledgements

The author is grateful to Dr. Fazli Gökçegöz, Director of Central Narcotics of KOM for his permission on data collection and support for the research. Author also thanks statisticians Muhammet Demirci, Erdal Erez and Erdal Karasu for their assistance in data collection and analysis process.

Publication Details:

Journal of Politics and Law; Vol. 7, No. 2; 2014 ISSN 1913-9047 E-ISSN 1913-9055 
Published by Canadian Center of Science and Education. 

This is an open-access article distributed under the terms and conditions of the Creative Commons Attribution license (http://creativecommons.org/licenses/by/3.0/).  

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IndraStra Global: OPINION | Drugs as an Economic Threat to Turkey by Behsat Ekici
OPINION | Drugs as an Economic Threat to Turkey by Behsat Ekici
Intensive flow of narcotics generated significant amounts of dirty money in Turkish economy. The total retail value of the seized drugs is around $1.1 billion for heroin, $ 1.2 billion for cannabis, $44 million for cocaine and $110 million for the ATS (Ekici, 2013b).
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