Three months after President Recep Tayyip Erdogan of Turkey imposed a trade embargo on Israel, and "Globes" revealed the Palestinian loophole that Israeli exporters exploited to keep up the flow of goods, it turns out that the loophole has become a highway. According to the Turkish Exporters Assembly (TiM), which represents over 95,000 exporters in Turkey, imports by "Palestine" from Turkey shot up by a surprising 1,180% in July. These imports actually end up in Israeli hands. Palestinian imports from Turkey amounted to $119.6 million in July, which compares with just $9.3 million in July 2023.
The loophole allows imports to continue directly from Turkish ports to ports in Israel, as long as the importer is Palestinian. The Palestinian importers place orders in their names with Turkish suppliers, and the goods are shipped to Israel. When they arrive in Israel, the rights to them pass to an Israeli international shipper - since there are no Palestinian shippers - who can redirect them wherever he wants.
It’s a win-win situation. It’s sufficient for an Israeli importer who has worked for many years with a Turkish supplier to find a Palestinian businessperson or straw company to release goods from Turkey to Israel. The Palestinians also gain: businesspeople in the territories have started charging commissions of 5-8% of the total value of the transactions with the Turkish exporters for recording the transactions in their names, enabling the goods to reach ports in Israel.
The result of this convergence of interests is a leap in imports to "Palestine". In April this year, Erdogan decided to restrict the export of 54 items to Israel, with the aim of harming Israel’s construction industry, which was partially dependent on cement products from Turkey. According to July’s figures from TiM, 463,000% more cement was exported to Palestine than in July last year, 51,000% more steel, and 35,000% more mining products. Automotive exports rose 5,000%.
As far as the Turkish government is concerned, exports to Israel in July were zero, as the destination for the goods is recorded as Palestine. "Confounding Erdogan’s decision on cutting trade ties with Israel, money, like water, doesn’t recognize walls and finds its way of percolating through," Dr. Hay Eytan Cohen Yanarocak, an expert on Turkey at the Jerusalem Institute for Strategy and Security and the Moshe Dayan Center for Middle Eastern and African Studies at Tel Aviv University, told "Globes". "These figures leave no room for doubt that Turkish and Israeli businesspeople found a way of circumventing the sanctions imposed by the Turkish president."
The phenomenon is also growing. Turkish exports to "Palestine" rose by more than exports to any other country to which exports exceeded $500,000 in July 2024, in comparison with June. Total exports to "Palestine" were up by 104.6%, or $58.4 million, between the two months.
The Palestinian issue is very important to Erdogan’s voter base, even critical. The Turkish president does not want to cut off trade ties with the Palestinian people, and so he and his government are for the time being turning a blind eye to the Palestinian loophole.
Another way in which the Turkish embargo is being circumvented is by recording a third country on the shipping documents. With the quantity of goods exported from Turkey daily, the Turkish authorities cannot investigate in depth the final destination of every consignment. When the goods arrive at the country recorded on the bill of lading, Piraeus in Greece for example, they are unloaded and then loaded onto another ship bound for Israel, with new documentation.
This is a safe and effective solution, but it suffers from two significant disadvantages in comparison with the Palestinian loophole: cost and time. Importers used to receiving goods within a week have to wait a month, and the prolonged process can add 30% to 100% to shipping costs.
Published by Globes, Israel business news - en.globes.co.il - on August 7, 2024.
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