Three months after Turkish President Recep Tayyip Erdogan imposed a trade embargo on Israel, and after Globes exposed the Palestinian loophole that Israeli exporters were exploiting to keep goods flowing, it turns out that the loophole has become a highway. According to the Turkish Exporters Assembly (TiM), which represents more than 95,000 exporters in Turkey, “Palestinian” imports from Turkey rose by a staggering 1,180% in July. These imports actually end up in Israeli hands. Palestinian imports from Turkey amounted to $119.6 million in July, compared to just $9.3 million in July 2023.
This loophole allows for direct imports from Turkish ports to Israeli ports to continue, as long as the importer is Palestinian. Palestinian importers place orders in their name with Turkish suppliers, and the goods are then shipped to Israel. When the goods arrive in Israel, their rights are transferred to an Israeli international shipping company—since there are no Palestinian shipping companies—which can redirect them wherever it wants.
This is a win-win situation. An Israeli importer who has worked with a Turkish supplier for years can simply find a Palestinian businessman or a shell company to export goods from Turkey to Israel. The Palestinians also benefit: Businessmen in the Palestinian territories have begun to collect commissions of 5% to 8% of the total value of transactions with Turkish exporters in exchange for registering the transactions in their name, which allows the goods to reach ports in Israel.
The result of this convergence of interests is a jump in imports to “Palestine.” In April of this year, Erdogan decided to restrict the export of 54 goods to Israel, with the aim of harming the Israeli construction industry, which was partially dependent on cement products from Turkey. According to July figures from the Industry and Trade Regulatory Authority, 463,000 more cement was exported to Palestine than in July last year, 51,000 more steel, and 35,000 more mining products. Car exports rose by 5,000%.
As for the Turkish government, exports to Israel in July were zero, with the destination of the goods registered as Palestine. “Contrary to Erdogan’s decision to cut trade ties with Israel, money, like water, does not recognize walls and finds its way through them,” Dr. Hai Eitan Cohen Yanarocak, an expert on Turkish affairs 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 doubt that Turkish and Israeli businessmen have found a way to circumvent the sanctions imposed by the Turkish president.”
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The phenomenon is also growing, with Turkish exports to Palestine rising by a greater percentage than exports to any other country with exports exceeding $500,000 in July 2024, compared to June. Total exports to Palestine rose by 104.6%, or $58.4 million, between the two months.
The Palestinian issue is of great importance to Erdogan’s voter base, in fact, it is of great importance. The Turkish president does not want to sever trade relations with the Palestinian people, which is why he and his government are currently ignoring the Palestinian loophole.
Another way to circumvent the Turkish ban is to register a third country on the shipping documents. With the amount of goods being exported from Turkey every day, Turkish authorities are unable to thoroughly investigate the final destination of each shipment. When the goods arrive in the country registered on the bill of lading, such as the port of Piraeus in Greece, they are unloaded and then loaded onto another ship bound for Israel, with new documents.
This is a safe and effective solution, but it suffers from two major drawbacks compared to the Palestinian loophole: cost and time. Importers who used to receive goods within a week are forced to wait a month, and the lengthy process can add 30% to 100% to shipping costs.
This article was published in Globes, Israeli Business News – en.globes.co.il – on August 7, 2024.
© Copyright Globes Publisher Itonut (1983) Ltd., 2024.