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Frontières et circulations au Moyen-Orient (Machrek/Turquie)

Kilis as “little Beirut”: Shadow Markets and Illegality in the Southeastern Margins of Turkey

Kilis comme « Petite Beyrouth » : marchés clandestins et illégalité aux marges du sud-est de la Turquie
Hatice Pınar Şenoğuz

Résumés

Les frontières du Moyen-Orient ne sont pas seulement caractérisées par les relations de confiance, le caractère traversant des modes d'existence, des relations de parenté, des alliances familiales et des affinités ethniques mais également par les flux transnationaux connectant ces régions frontalières avec des réseaux commerciaux et financiers plus larges atteignant les centres métropolitains. A partir d'un travail ethnographique effectué entre le début de 2011 et la mi-2012 dans la ville-frontière de Kilis, voisine de la Syrie, cet article enquête sur les modes de production de la richesse en dehors de l'Etat formel et sur les canaux d'échange commerciaux aux marges sud-est de la Turquie. Il explore la croissance d'une économie souterraine transnationale le long des frontières sud-est de la Turquie dans la période d'Industrialisation de Substitution aux Importations (ISI), durant les années 1960-1980, et entend montrer que cette croissance anticipait l’évolution néo-libérale du secteur commercial. La période de l'ISI se caractérisait par l'imposition d'une réglementation stricte sur la circulation des devises étrangères et par l'application de tarifs douaniers élevés et de quotas sur les importations, afin de créer des conditions favorables à une industrialisation nationale.

A partir du point de vue d'un contrebandier devenu-businessman et d'une famille élargie aux origines rurales mais en pleine ascension sociale vers la classe moyenne urbaine, l'article envisage la frontière géographique non seulement comme délimitation territoriale, mais aussi comme une marge de l'économie et de la loi. Les habitants ont cherché à profiter de cette frontière-marge en l'instrumentalisant comme mécanisme d'ascension sociale, en la manipulant et en la contournant. L'article montre comment les habitants de la région frontalière ont été intégrés à la logique redistributive de l'économie souterraine, ont profité des mesures protectionnistes en percevant une taxe sur l'entrée illégale de biens de consommation, d'or et de devises étrangères, et assuré leur subsistance dans une région où, dans le cadre du développement fondé sur l'ISI, les possibilités d'emploi régulier et de salaire stable faisaient défaut.

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  • 1 Excerpt from his interview in a national newspaper (Mercan, 2002).

No one can call me heroin dealer and arms dealer. I grew out of barbering in the same way as Vehbi Koç grew rich out of grocery and Sabancı grew rich out of porterage.1

1These words, published a decade ago, come from an interview with an alleged Turkish crime boss, a man notorious for dealing gold, heroin and arms and having connections to the international underworld. Only after he had been cleared of all corruption charges and given only minor criminal fines, was he recognized as a decent businessman, and nicknamed “The Barber.” He became the most popular figure among Istanbul businessmen, and was known for his charity work in Kilis, his native town on the Turkish-Syrian border. His wealth was neither inherited, nor facilitated, let alone transmitted from his father along with the later's occupation. He gained his nickname “the Barber” during a childhood apprenticeship in his father’s barber shop, and he persisted on the job throughout his adolescence. His sticking to his childhood nickname is suggestive of his success in climbing the social ladder single-handed. The nickname also reminds of his humble roots and his birthplace, and still elicits curiosity about his successful career and eventual fortune in business. Like Koç and Sabancı, two of the wealthiest capitalists in Turkey, “The Barber” represents the “self-made man” for those who aspire to a successful career.

2It might seem suspicious that a man accused of illicit enrichment should have established himself as a decent businessmen in the eyes of high-placed state officials and has sustained his relationship with them for the past few decades. How was he able to make the jump from a small border town composed of a population of middle-size merchants, traditional notable families, low-income families and impoverished peasants to Istanbul, the financial and trade capital of Turkey? How was he able to transfer his money from the one to the other? More importantly, how could his earnings turn into rightfully earned wealth in the eyes of low-income families who had only received a tiny share of this enrichment?

3The story highlights the wealth creation process outside the formal state and market channels on the southeastern margins of Turkey. I frame my discussion with reference to the Middle Eastern context in order to redress the stereotypical images of kinship and illegality commonly used to describe the region, as they disassociate ‘traditional’ and illegal/informal forms of exchanges from contemporary market economies. Scholarly literature tends to characterize Middle Eastern borders by such illegal transactions as contraband, arising from the mismatch between borders and the economic domains they delineate (Nordstrom, 2011). This paper argues that the contestation of borders in the Middle East should not be read as putting state sovereignty at stake. Rather, it echoes scholars who regard the porosity of the border and the transgression of boundaries as indispensable to state functioning in a global system (van Schendel, 2005; Gupta, 1995; Roitman, 2004, 2007; Reeves, 2007; Das&Poole, 2004). It also suggests that the study of Middle Eastern borders shifts our epistemological standpoint beyond state-centered analyses and informs more sophisticated studies of state-society relationships.

  • 2 I have conducted a fieldwork in Kilis town between January 2011 and June 2012 for my PhD thesis sub (...)

4Drawing on eighteen-month fieldwork in Kilis town,2 I assume that the Turkish-Syrian border inflects its abutting community with values, practices and relationships not to be found anywhere else in the nation-state, and creates “the border experience” (Martinez, 1994) that is often marginalized by social analyses.

5The case of Kilis town shows that the distinct values, practices and relationships emerging on geographic margins shift the economic boundaries of the nation-state and shape domestic markets as these margins are connected by transnational flows with the metropolitan centers as well as with broader commercial and financial networks through those centers. My analysis particularly attends to the everyday subsistence economies and reciprocity-based 'traditional' relationships in the southeast margins of Turkey in order to scrutinize the ways in which these values, practices and relationships have informed broader economic structures since the 1960s.

6The knowledge of transgressive experiences and practices at the state margins is indispensable for a critical inquiry of state-imposed definitions of illegality. The adoption of state notions of illegality is a major impediment to understand how unregulated economic exchanges and financial relations emerge in the first place. An analysis of these activities deemed as criminal requires the widening of our scope beyond moralizing and stigmatizing definitions. Hence, this paper explores the “micropolitics of illegality” (Galemba, 2013) in Kilis town in order to discuss which practices, meanings and values have been involved in the expansion of transnational shadow networks across the region and in the transformation of the national economy since long before the 1980 trade liberalization.

7The barber’s story illustrates the era before the 1980 trade liberalization in Turkey. A domestic gold and exchange market had developed in connection with the trade and finance centers of the Middle East and Europe. I also introduce the rise of an extended family from a rural background to the ranks of the urban middle class of the 1960s. The story of the latter reveals the significance of local power structures in terms of patronage and kinship in facilitating upward mobility and consolidating monopoly tendencies. The family’s story demonstrates that, in order to capitalize on price differentials, rates of foreign exchange and demand structures, the border dwellers manipulated and circumvented the state regulations of the gold and foreign exchange market and import tariffs. This way, they actually took advantage of the strong protectionism that kept the import-substituted industrialization going before the 1980 coup. These values and practices continued to be effective through the trade liberalization and transition to an open economy that followed the 1980, coup : they were now promoted by the new civilian regime by way of subsidies, allowing more maneuvering room to rent-seeking enterprises within the legal boundaries.

Wealth Creation on the Margin of Economy and State

8The barber’s story offers insight into wealth generation in Kilis. My aim is not to demonstrate the ‘fraudulent ways’ in which the town’s new wealth has developed, but to provide a framework for exploring the possible trajectories of its social reproduction. Wealth generation in Kilis scaled up local actors to a transnational level, especially after the introduction of post-1980 trade liberalization in Turkey. As illustrated by the barber’s story, new wealth deserted the town after the 1980 military coup and the town lost its salience as a crossing point, at least until the eruption of a regional war in Syria during 2012.

9The barber’s cohort is among a new class of entrepreneurs rising on the national horizon with the introduction of neoliberal economic policies by former Prime Minister Turgut Özal after the military coup of 1980, which has induced substantial growth in the income gap between the rich and the poor in Turkey. Scholarly discourse tends to problematize the rise of this class as corruption, as an antithesis of free market development and as a disease-to-be-cured associated with the mentality of state authorities, particularly in underdeveloped and developing countries. Turkish economist Ziya Öniş, for instance, assumes that the Özal legacy in the post-1980 era signified the feeble commitment of a democratic polity to the rule of law and norms as well as irresoluteness for establishing the legal infrastructure necessary for a well-functioning liberalized market economy (Öniş, 2004). The problem with Öniş’s approach is its lack of comprehension pertaining the intermingling of state regulations and formal economy with criminal networks and informal markets as primary characteristics of global economic governance (Roitman, 2004; Nordstrom, 2000; Galemba, 2013). The Turkish interim government after the military coup expanded its fiscal base by subsidizing an export-led growth, blurring the legal and illegal boundaries of economic regulations. The new regulations adopted, for instance, the principle of “economic punishment for economic crime”, which aided enterprises in eluding expensive fiscal fines. Ideologically, however, the Özal years promoted the yearning for enrichment and the exaltation of wealth as the sole indicator of social status (Bali, 2013). Thus, life stories of business tycoons in newspapers or autobiographies became a common read during the 1980s and 1990s.

  • 3 Both Koç and Sabancı allegedly capitalized from their relationships with the political or bureaucra (...)
  • 4 A benevolent association of Kilis migrants established in 1993 mostly recruiting among the new weal (...)

10Hence, the barber’s reference to Koç and Sabancı quoted in this paper’s introduction is meaningful. On the one hand, these two figures are suspected of having secured wealth via state patronage, governmental incentives and favours during the first half of the Republican Era.3 On the other hand, there was a strong belief in the public in the virtues of both men as hard-working, astute, successful and in the end wealthy businessmen and models. They were taken as symbols, whose success stories showed an example of social mobility, from the lowest of occupations—having been a grocer and a porter—to the highest positions in business. The barber, as he assumed this nickname, moved to İstanbul where he continued his investments in the housing industry after he was cleared of the charges leveled against him by the military government of the 1980 coup. Now heading the Kilis Vakfı (Kilis Foundation)4 in İstanbul, he is well-known in his native town for his philanthropic activities conducted via the foundation, such as sponsoring the education and boarding of native students in the cities, poverty relief and donations for mosques, public schools and university buildings. He makes frequent appearances in his hometown and is held in high esteem by the local authorities.

11This change of image engulfed the broader new wealth of the town that had prospered out of smuggling since the 1960s. When, in the late 1980s, newspapers resurrected serious allegations concerning the existence of a transnational underworld network centered around the town, and reached out to Prime Minister Turgut Özal, Kilis gained the nickname “Little Sicilia”. Indeed, many Kilis natives, including the barber, were among the “bosses” who had become prominent in the latest news coverage and were generally connected through kinship and marriage relations (Karaduman, 1988). The news became public that, after the coup, the barber frequently had faced charges of gold smuggling, money laundering, fraudulent export and instigation for murder. When faced with arrest warrants, he had moved in Switzerland, where his residency permit allowed him to stay. He never was convicted (Yetkin, 1989). Upon one of his returns to Turkey—and after being pardoned by Prime Minister Özal—the only penalty he received was a fine of 100,000 Turkish Liras for violating the law regarding the protection of the value of Turkish currency. Yet this eventual monetary punishment was a far cry from the original sentence he was threatened with for gold smuggling, which amounted to a possible 20-year jail term.

  • 5 Sağlam argues that the then-Communist Bulgarian government facilitated the illegal traffic of gold (...)
  • 6 According to Öniş and Webb, tax rebates worked as subsidies because “first, the subsidy rate was no (...)

12When a series of investigations made the headline in the late 1980s, the barber once again became suspect. The investigations concerned allegations of money laundering and gold smuggling by a Turkish-Bulgarian ring, within which the barber was thought to have played a pivotal role. The ring was involved in transferring nearly 450 tons of gold from Turkey to Switzerland. Moreover, it was suspected of laundering illicit money to finance drug and arms trafficking, as the money was smuggled as gold out of Turkey and channelled back as foreign currencies via the Bulgarian border.5 News reports claimed that in 1980-1983, gold smuggling—due to price differentials between the two countries—had been detrimental to the Turkish economy. A bulk of foreign currency transfers—approximately $55 million worth— was also exposed as pre-financing payments for fraudulent export from Turkey. The ring members further benefited from tax rebates in exchange for currency transfers much-needed by the Turkish government. The rebates had supposedly been granted by the Özal government in order to finance the country’s development, as the markets for gold and foreign currency in Turkey had started to be just liberalized in the late 1980s and, arguably, their influx was a necessity.6

  • 7 The news resurfaced in 1989 but the date of meeting is not clear. The article series published in M (...)
  • 8 In fact, the allegations were far-reaching for Özal. It was argued that the Prime Minister also pro (...)

13When news outlets reported that Prime Minister Turgut Özal had met in Zurich prominent Turkish and Lebanese figures of the underworld—against whom arrest warrants or red notices had been issued by Turkish judicial authorities—as well as outstanding Turkish businessmen (including the soon-to-be CEO of a Turkish public bank), a corruption scandal was revealed by the media.7 It was claimed that the barber had organized the meeting in order to bring into cohort the Lebanese trader, a gold dealer known in the world market and the Turkish Prime Minister. Later on, the barber would confirm the meeting without revealing its content. He asserted that the Prime Minister had asked the Lebanese gold trader, who was, according to him, the world's top gold trader, to set up the wholesale gold market in Turkey. The proposal has been rejected by the Lebanese trader (Mercan, 2002).8

Figure 2 - New minaret adding by the barber as philanthropic activity

Figure 2 - New minaret adding by the barber as philanthropic activity

Photo courtesy by the author

  • 9 The president heads the seven-members Federal Council, which governs foreign affairs and security p (...)

14Money laundering had broader repercussions in the Swiss press. Whistleblowers indicated that the money laundered in Swiss banks by the Lebanese connection ran over $2 billion. The upheaval toppled the Minister of Justice, who was expecting to become the next president of the Swiss Confederation.9 Ironically, she had been a supporter of the anti-corruption law imposing transparency rules on bank accounts, among other measures. She had to resign in early 1989 after allegations that she had tipped off her husband, the vice chairman of the Lebanese trader's company, about a potential money laundering investigation. The Lebanese trader received no conviction in Switzerland but was forced to move to Dubai after the reform of the Swiss banking system had ended the country's status as a safe haven for illicit money.

The Story of the Koyuncu Family and the Illegal Gold Trade

15The demarcation of an international border as well as Kilis’ breaking up from French-mandate Syria constituted a major shift in internal regional trade between Kilis and Aleppo. Before the delineation of a border, trade in Aleppo had been based on the import of European-manufactured goods and the export of agricultural commodities. Local handicraft products, sheep, cattle, wool and butter imported from Southern Anatolia had been important items of commerce (Bouchair, 1986). The dislocation of southern Anatolia meant for Aleppo the loss of a large trade outlet. It also marked a decline in traditional industry alongside further European economic penetration into the Mandate. Despite border demarcation, however, regional trade persisted in the early Republican years, turning Kilis’ economy into a border economy which state authorities were helplessly trying to regulate.

16The illegal gold trade was another yet subtler means of yielding extra benefits from the cross-border movement. Trade increase, one of the consequences of the peripheral transformations of the late Ottoman era, did not foster a market-oriented agriculture made of landlord-managed estates, but “it did allow various well-placed officials to benefit from new opportunities in the circulation of products and money” (Keyder, 1991, p. 5). This argument could be extended to the early Republican economy at the border, where notables could take advantage of their social and economic power to raise profit from illegal crossings. Needless to say, the gold trade was strictly regulated by the state until its liberalization in the 1980s.

17Until the end of World War II, landed notables sold their produce in exchange for old Turkish silver coins and gold pounds. The Ottoman currency system in Syria was kept in place after the break out of these territories from the new Turkish Republic, especially after the devaluation of the French franc in 1926 (Bouchair, 1986). With the diminishing value of silver coins, by 1935, Aleppine merchants required payments in gold only, which probably induced an augmentation in the volume of gold circulation. Interviews reveal the smuggling of gold bullions was already an established system in the late 1930s. Large landholding families often employed border-dwellers as auxiliaries to sneak gold across the Turkish border. Extended families in the countryside were known to be cut for this job, since they already engaged in the illegal crossing of large packs of animals and agricultural goods to northern Syria thanks to their trans-border kinship relations.

18Yet it was not until the import-substituting industrialization (ISI) period of the 1960-1980s that local contraband trade in Kilis town became intertwined with transnational shadow networks. Then, border-dwellers could take advantage of protectionist measures by reckoning rents for the illegal entry of consumer goods, gold, and foreign currency. Key characteristics of the period were state management of the economy in order to protect the domestic manufacturing bourgeoisie from international competition, and guaranteed income redistribution as a tool to create a domestic market (Keyder, 1987, p. 150-151). Thus ISI referred to a regime in which the state played a central role in allocating scarce resources. The period was characterized in particular by the imposition of strict regulations on the circulation of foreign currencies as well as high tariffs and quotas on imports, in order to provide favourable conditions for domestic industrialization.

  • 10 This is also supported by research on the gold trade in Turkey. Drawing on interviews with exchange (...)

19In the interviews, the town's inhabitants commonly refer to the trafficking of gold and foreign currency in the period, which was traded legally to Beirut then smuggled to Istanbul via the Kilis border.10 Gold money was clandestinely channeled back via the same route. Since the 1950s, Beirut had earned a reputation as a major center in the international gold trade and Lebanon was known as the “Switzerland of the Middle East” owing to the adoption in 1956 of the Swiss-style Bank Secrecy Law (Gates, 1989, p. 19).

  • 11 It is not possible to estimate the volume of gold sold out in the Bazaar before the trade liberaliz (...)
  • 12 I presume that the unregistered exchange office-cum-jewelry shops in town worked similarly, selling (...)

20The national gold and foreign currency market, with its heart in the Grand Bazaar in Istanbul, was largely underground in the pre-1980 period, as the purchase and trade of gold and foreign currency were strictly regulated by state tariffs and taxation.11 Gold and jewelry shops in the Bazaar not only provided smooth dealings but also “[ran] a parallel banking catering system, on the demand side, mainly to businesses seeking illegal foreign exchange and on the supply side, to people wanting to quietly convert foreign exchange they were bringing to Turkey” (Naylor, 2002, p. 201). This banking catering system also served as a monetary deposit based on trust whereby international money transfers could be made clandestinely.12 Thus, the system was accessible to smugglers who aimed at transfering drug money as well as to other migrant workers looking for a better exchange rate and evading taxes on their remittances.

21Allegations that the barber’s relationship with the Lebanese trader dated back to the early 1960s dovetails with the interviewees’ claims about illegal gold trade across the Kilis border. The barber had business connections in Beirut with his father—whose international reputation as a gold dealer had also attracted smugglers from Turkey—until both father and son moved to Switzerland in the mid-1970s after the outbreak of the Lebanese civil war. According to rumours in the press, the barber was conducting business with senior and junior Lebanese traders, and controlled the gold and foreign currency traffic from his office in the Grand Bazaar.

22Not only did the ISI period transforms Kilis town into a regional hub of illegal gold and currency trade, but also the gold and currency flows changed the town landscape : it became a border zone, speckled with the high-walled warehouses of transport companies, small shops, arcades of stores and houses used as bulking and diffusing points. The shadow economy of the 1960-1980s forged a local semi-legal market, best illustrated by the ascendancy of the Koyuncu brothers in local politics. They, too, boasted that they had started from scratch, working themselves to riches out of a rural background, and eventually owning a transportation company and other firms.

Figure 3 - An arcade with shops left idle today

Figure 3 - An arcade with shops left idle today

Photo courtesy by the author

23The Koyuncu family owned a large apartment building in the town center. The ground floor was used as an office for the transportation company, specifically for national and international shipping. A door at the rear connected the spacious office, floored with old furniture, to a very large kitchen which would turn into what nearly amounted to relief services : a soup kitchen was held every Friday after prayer, when regulars and occasional visitors in need would be served hot meals. The entire building accommodated the households of several Koyuncu brothers, so the extended family practically lived together. The proximity of the apartment building to the largest town mosque made the company office a popular place to socialize, as I was told by Rıdvan, the owner of a buffet across the road. From his place, on the other side of a three-way intersection, he enjoyed full sight of both the apartment building and the mosque. From time to time, I would stop by the shop on my way to the town center for the sake of a tea and small talk, both of which were generously offered by the owner. Though a humble and meek man, he used to lose his temper when discussing the country’s agenda. These were the times when conversation neared the topic of the Koyuncu family.

24The buffet owner resented the sight of town-dwellers crowding into the company office to ingratiate themselves to the family members. He was annoyed by the fact that several families in town prospered from the shadow economy due to political patronage. The Koyuncu family had political influence. Some of its members held prominent positions in AKP, the local ruling party, although the family also had a reputation as remaining loyal to a former center right party until the death of the family head, the elder of several brothers, who was also the chairman of the local party branch. A resident of the border village from which the Koyuncu family originated remembers vividly that the family head hosted in the village during the mid-1990s the leader of the leader, who also happened to head the cabinet. Women of the village had exhausted themselves, cooking and honouring their important guests.

  • 13 The elder brother indicated that the family had migrated from Iraq to Raqqa and then settled in thi (...)
  • 14 The word is used to desribe the head of a tribal chieftainship as well as to entitle someone to a s (...)

25In the company office, I met Bahri, one of the older Koyuncu siblings. He was a man who wore traditional dress and baggy trousers as a reminder of his family’s social background. He was originally from a border village of Kilis where Arab and nomadic Turcoman tribes—who through ethnically mixed marriages had Kurdish relatives—were settled.13 The demarcation of the Turkish-Syrian frontier transformed these populations into extended families straddling the border. The man was from an impoverished stockbreeding agha14 family who was engaged in contraband trade but had lost lands and cattle after the Second World War.

26He did not refrain from telling me that the family had been involved in gold contraband before the military coup of 1980. Gold trade across the border is known to date back to the 1940s. The scale of trade was regional in the beginning : gold circulated from Beirut to Aleppo, where local dealers sold it to buyers from Turkey. The family business began with their father and consisted of taking delivery of 31-ounce gold bullions, brought from Switzerland to Beirut, smuggled through the border and then carried to the city of Gaziantep. During the 1970s, the family began delivering gold to the Grand Bazaar in Istanbul, where the gold market was reaching national prominence.

  • 15 The rise in price (TL) of an ounce of gold (31,10 gr) every five years is as follows in the regulat (...)

27Smuggling across the border was a dangerous business, since illegal crossings could entail armed clashes between villagers and soldiers patrolling the border. But the threat peaked with the planting of land mines, turning a depth of 400 to 800 meters along the borderline into a death field. The price of gold per kg and the earnings of porters, called sırtçı (literally piggybackers, since they carried the loads on their backs) rose higher and higher. Also, the volume of gold being trafficked significantly increased, with the majority of bullions being smuggled into Turkey through the Kilis border and only a slight percentage, being channeled through other points along the Turkish-Syrian frontier. The price of a kg doubled over the 1960s and saw a steady increase in the 1970s.15 A porter could earn 100 Liras for the load he carried –usually the type of load did not matter. The siblings assumed the position of local gold dealers, and their share of gain amounted to 600 and even 700 Liras per kilogram, minus the bribe given to the soldiers of the border patrols. In the late 1970s, about 300 to 400 kg of gold crossed the border daily, often with porters shuttling back and forth across the border gate on wheels, rather than sneaking into the fenced minefield.

28The family’s rise to middle-class status has to be understood within the larger context of the gold traffic from Switzerland to Istanbul via Beirut and Kilis, complemented by the flow of foreign currency (gold money) that reached Switzerland along the same route. An interview with Ender, a former gold smuggler and fellow villager of the Koyuncu family, not only stressed the role of Kilis townsmen in the Grand Bazaar, but also afforded me with a glimpse into the concomitance of gold and foreign currency trade:

“We used to scale the Bazaar up and down. Once, I saved my money on the safe box of a fellow townsman until the goods that I had bought on loan would be sold… He came a bit late. I filled the box with German marks and American dollars until he came. I collected a wad of currency in the Grand Bazaar of Istanbul.”

You take away gold from here and exchange it with foreign currency there.”

  • 16 Drawing on his interviews with exchangers from Kilis origin, Sağlam states that the traders of Kili (...)

29The smuggled gold was sold in Istanbul in exchange for foreign currency, and the latter was clandestinely circulated to Switzerland through the Kilis border.16 From 1960 to 1980, the majority of the national gold market was fed by contraband —excepting, of course, the yearly 500 to 600 kg of national gold production. Only in the last years of this period did lower-quality Iranian coins and gold bars enter the country (Sağlam, 1991, p. 65). This made Kilis natives major national dealers of gold, in close connection with underground foreign exchange markets and, among them, few succeed as crime bosses, running businesses with their transnational counterparts.

30As the barber’s story demonstrates, the gold trade is a useful case to expose the subtle and often obscured connections between transnational crime organisations and small-scale cross-border trade. As Yükseker discussed within the context of informal trade between Turkey and Russia, transnational informal trade is open to the concentration of capital and monopolization (Yükseker, 2003, p. 67-68). Thus, this form of trade can lead to the emergence of crime organisations which operate in high-risk areas with few competitors, a condition which enables them to form monopolies or gain semi-monopoly rents, to take advantage of patronage relations with the state and to use violence.

31Within this larger context, the subjective perceptions of the Koyuncu family testify even more dramatically to tendencies toward the concentration of capital and monopolization. As profits rose due to business growth and the involvement of long-distance legal and illegal buyers, border-dwellers working in such lucrative businesses became less likely to abide by redistributive norms and created family monopolies around their respective enterprises (Galemba, 2012, p. 10). The families expanded their gold business from the sector of regional small-scale trade into the underground domestic market.

Growth of Shadow Markets in the Turkish-Syrian Borderlands

32The Koyuncus were involved not only in the gold trade but also in the contraband of several goods circulating from Beirut to the Turkish border. By selling the contraband goods from Beirut, the family moved to town and restored its business in an arcade shop. The interviewees’ recollections point to the entry of consumer goods along the borders, breaching the high tariff walls before the trade liberalization of the 1980s. Trade liberalization in Beirut had transformed the city into an “open market”, facilitating the circulation of Western and Far-Eastern exports into the inlands of southeastern Turkey. The Baathist subsidies also contributed to the reduction in price of exported goods, thus alluring Kilis traders for the scaling up of their businesses.

33The family began to bring contraband goods from Syrian Aleppo and sell them to customers from other cities. One of Koyuncu brothers explained that while he was presumed to be selling tableware to customers in the storefront, the rear side of the store remained the coordination center where his brothers ran the gold business and ensured its distribution. The goods were sold to domestic tourists on bus tours who were attracted to the town by its famous contraband bazaar. The level of appeal that the town’s shops reached led the local residents to name Kilis “Little Beirut”, transforming the town into an open market, even though these goods were deemed as kaçak (both smuggled and fugitive in Turkish) when they crossed the town’s boundaries. The customers chose to afford the risk of police detection and, hence, deprivation of their acquired goods. Despite the illicit nature of this business, the goods could be freely sold and bought in the arcade shops that blossomed along the main axis of the town in the late 1960s.

  • 17 Urban population: 38,095; rural population: 36,997 according to the 1965 Population Census by Turks (...)
  • 18 Konyalı does not state the year of Chamber of Trade Records: agriculture 30%, trade 28%, artisanshi (...)

34The introduction of a money economy also interrupted the intergenerational occupational transmission by eradicating the old craftsmanship, which was already in decline. The town had 75,092 residents in 1965, almost equally divided between a rural and urban population.17 In 1968, trade had already attracted a major share of the workforce, involving one-third of the population according to the records of the town’s chamber of commerce, second only to the labor force involved in agriculture.18 The industry was largely traditional and consisted mostly of small-scale factories and workshops for olive oil and grape molasses as well as silk textile with handloom weavers. The growth of contraband trade adversely affected not only traditional craftsmanship but also crafts like radio and watch repairing, which were already in decline. The interviewees’ recollections indicate that, in order to conduct trade, the majority of craftsmen abandoned their vocations and rented shops in the newly constructed arcades.

  • 19 The number taken State Statistics of 1990, cited in Ökkeş, 1994. I assume that the number had not b (...)

35The building of Adalet Çarşısı was a precursor of the construction rush in the historic downtown. In the following decade, more contraband goods hit the shops in the arcades along the main street of the town. The old two-store stone houses with courtyards, located on the street, were doomed for demolition in order to be replaced by cement buildings. As border scholar Neşe Özgen remarks (2005), the owners of arcades in Gaziantep and Kilis were local notables and merchant-moneylenders. The building of arcades was concomitant with rapid urbanization, often accommodating shops in the downstair areas of high-rise apartment blocks. The number of shops in the arcades climbed up to 424.19

36The urban planning of 1967 accelerated the already rapid urbanization : road-building works destroyed the historical fabric of the town by widening narrow alleys and streets. Successive municipal administrations adopted similar urban development decisions, expropriating the owners of several monumental domestic dwellings geared for demolition (Bebekoğlu & Tektuna, 2008). In terms of the familial meaning of housing, this meant a symbolic detachment from the lineage located in the paternal house as the old dwellings came to be “treated primarily as a form of investment, an economic patrimony whose transmission to younger generations is expected to be carried out through the sale of the house itself and its conversion into liquid capital” (Bertaux-Wiame&Thompson, 1997, p. 133).

37My interviewees revealed that urban development turned into a drift promoted by their neighbors, local merchants and even municipality employees. The drift was actually enhanced by the economic conditions of the 1970s, under which high inflation forced money-earners to opt out of gold and foreign currency as a means of stabilizing value. The strict regulations of these markets led to the reckoning of rents to them. The sale and rental transactions for residential properties and arcade shops were made in foreign exchange and gold rather than national currency.

Figure 4 - One of the remaining stone houses

Figure 4 - One of the remaining stone houses

Photo courtesy by the author

38The local economy was increasingly enmeshed with longer-distance buyers in the domestic market. This was conditioned in two ways: either the potential buyers or consumers themselves from different cities visited the town, or Kilis traders established commercial links with these cities. A wide range of items crossing the border began to circulate in the domestic market: kitchen utensils with crystal glassware, porcelain tableware and assorted cutlery, high quality household electrical appliances and electronic goods (including Phillips and Japanese-branded radios and tape players), perfumery and cosmetics goods, cigarette paper, card decks, weave beads and other indispensable goods of daily life such as watches and straps, eye glasses, lighters, nail clippers and stationary.

Kilis Town as a Locus of Crime and Disorder

39The growth of a contraband market in the town and its increasing legitimization does not mean that contraband trade was deemed legal. In 1967, the front page of a news article published in Milliyet announced a police raid against the town’s shops most notorious for selling contraband goods. The news story was published over successive days. It went on to inform readers about the details of the raid: it had been carried out by a team of 14 select police officers ordered by the Department of Public Order of Turkish National Police, which seized many contraband goods and small weapons in the shops. The article poured encomium on the “mighty” officers and their bold cracking down on smugglers who had harassed local authorities with violence, for example by opening random fire upon their cars or raking through their houses. Numerous shopkeepers were arrested, and the newspaper article allowed for the comments of their fellow shopkeepers to be heard. The latter greeted the police operation with astonishment and tended to blame their arrested fellow for not defying the “milksops coming from Ankara”. The story also stressed that the team raided the town on the following day to inspect the rest of the shops. A picture of officers, headed by the chief of the Gaziantep police, accompanied the following day’s coverage, showing them as they were able to walk around freely “as if to prove they would not be intimidated by the smugglers”. According to the newspaper, the authorities wanted to show that the shopkeepers would not be allowed to act freely as they formerly had done.

40The media and political discourse pressing the issue of 'smuggling' in the late 1960s portrayed the town as a salient place of smuggling, and the dwellers as deviating from law-abiding society. As illustrated by the Milliyet article, dominant discourse tends to criminalize the unregulated trade by localizing it at the border regions and placing blame on local authorities for corruption or incapacity. Although newspapers implied connections between the local contraband businesses and big cities, this information was uncertain. It was suspected that the contraband trade was carried out by "the individuals residing mostly in Ankara and İstanbul and running their businesses by 'remote control'” (Akyol, 1968, p. 7). Nevertheless, it was clear that newspapers considered the raid as an intervention against an out-of-hand situation that had provided “immunity” to local traders.

  • 20 The first trade agreement signed on September 17, 1974 designated the goods allowed for exportation (...)
  • 21 For information on trade with Syria, I draw to a large extent on my interviews with Mahmut, a young (...)
  • 22 The interview with the former head of Kilis Chamber of Commerce and Industry emphasized for example (...)

41Certainly, the raid did not help end contraband trade. The business even widened, becoming spatially detached from the border. It increased in volume, as did profit margins. The signing of a trade agreement with Syria in 197420 increased the number of transportation companies. The trucks shipped to Syria local agricultural products (pine nuts, pistachios and olive oil), consumer goods and parts (hoover, electrical plugs for household appliance, chandelier glass), textile products (carpets, prayer rugs, fabrics and garments), raw materials and semi-manufactured products (processed cattle intestine and catguts).21 Still, these companies were implicated in the unregulated trade as the entry of currency was strictly controlled.22 They were also suspected of smuggling goods on their ways back, in particular cigarettes concealed in secret places in the trucks.

42Kilis shopkeepers and traders not only brought merchandise from Istanbul but also supplied contraband goods to other cities, and particularly to the informal sector of Istanbul concentrated in the Eminönü district. One of the Koyuncu brothers revealed that the family used to transfer contraband goods to Istanbul by hiding them in cars. They were then bought by traders to be then sold to a wholesaler and, eventually, placed in mobile stalls by the street sellers of Eminönü. The profit range for the Schneider pens smuggled across the border and transported to Istanbul, for instance, would be 20% after reducing the expenses, and the traders benefited from the competitive advantage of selling them for almost half the price of the same legally exported pens on the national market. Kilis traders could also invoice these goods when necessary in order to avoid police investigation. Specifically, they could ask that importer companies—who sold the same goods to the domestic market—create formal invoices in exchange for certain prices.

  • 23 See the statements by the Minister of Customs and Monopoly Ahmet İhsan Birincioğlu in TGNA minutes, (...)

43Just like the gold trade, the contraband of consumer goods from Beirut became increasingly connected with the transnational shadow economy whose actors were large-scale traders. Early examples of fraudulent export, usually associated with the post-1980 open market period, could be observed. The interviewees’ recollections suggest that entrepreneurs, including several from Kilis, produced the paperwork at the border customs for the transit shipping of goods from Beirut to Iran, except that the latter never crossed the border. The goods circulated to Kilis and nearby cities as they were shipped by small boats landing on the shores of the gulf of Alexandretta. There are numerous stories told by former smugglers about eluding the coast guard by buoying the contraband goods on the sea or, when caught, simply by disposing of them in the sea. But the large bulk of these goods were smuggled into Turkey by ships docking at the port of Mersin and transported to cities like Istanbul. As early as 1970, the ratio of contraband to domestically produced goods found in the local shops of the town was estimated to be about 20%.23

44It is not possible to verify this estimation or to determine whether the ratio of contraband to domestically manufactured goods increased over the following years. Yet it is obvious that the trope of “Kilis as Little Beirut” and its notorious image as a “smugglers’ town” are deceptive: they tend to blur the qualitative distinction between the practices of large-scale entrepreneurs involved in expanding the shadow economy and the activities of local small-scale traders. The more the border town becomes the locus of illegality in media and political discourse, the less emphasis is put on the “symbiotic relationship” between transnational crime organization and small-scale informal trade. Hence, it can be inferred that while the shadow economy expands its connections through the seaports and regional customs directorates, outer edges such as small border towns “do the dirty work of hypocrisy and absorb its negative connotations in a society wedded to an ideology of pure cleanliness but profoundly addicted to illegal transnational flows” (Heyman & Campell, 2007, p. 215). I have argued here that illegality is “a form of meaning that is produced as an outcome of the effect of the criminalized object moving between political, cultural, social, and economic spaces” (Abraham & Schendel, 2005, p. 16). Thus, the particular effects of criminalization are distributed unevenly across axes of power. For instance, a pencil sold in Kilis shops could be treated as contraband, whereas it could be regarded as catchpenny in the street-trading of İstanbul. Also, the stigma of smuggling not only disguised the connections between contraband trade and large-scale entrepreneurs but also helped them remain anonymous and thus provided protection. The fact that wealth generation entailed upward mobility and turned into a form of economic redistribution strengthened the hands of large-scale entrepreneurs who negotiated the meaning of illegality with the state.

Conclusion

45This paper contemplates the ways in which the local economies of cross-border trade have been incorporated into the expansion of transnational shadow networks with links to trade and finance centers in the region from the 1960s onwards. It also questions the ways in which the values, meanings and practices of ‘illegality’ have developed along broader channels of production and distribution in the national economy: What are the economic, cultural and political mechanisms by which economic accumulation through illegal means has provided upward mobility and has become socially accepted as rightfully earned wealth in the post-1980 era? Transnational shadow economy sustained in Kilis a distinctive redistributive mechanism largely controlled by large-scale entrepreneurs within a context where the state failed to promote public and local investments in industrialization and offer employment opportunities to the town community. Though illegal, town dwellers regarded cross-border trade activities as legitimate. For instance the barber's ‘success’ is a standing promise for the middle and lower strata of Kilis town. His success did not only consist of his moving up the social ladder by running an astute business strategy, but also of achieving the transformation of his image from a crime boss to a decent businessman, whose philanthropy is rewarded by highly-placed state officials with presented honor plates.

46The illegal or informal practices may partly replace redistributive mechanisms in complicity with state authorities in the global economy, as illustrated by the cases of the erupting informal sector with transition to a capitalist economy in post-Soviet countries (Pelkmans, 2006), emergence of local agrarian economies and illegal trade in Latin America within the context of multinational free trade agreements like NAFTA (Galemba 2008, 2012), illegal trade and gang-based road banditry in African borders (Roitman, 2004) and professionalization of the informal economy of border crossings at Israeli checkpoints (Parizot, 2014). It is widely accepted that the Özal years were responsible for policies that promoted making money in an easy way and undermined moral values, replacing them with pragmatic ideals. The cultural transformation in the post-1980 period associated with the Özal legacy normalized income-generating activities through illegal means as redistributive mechanisms, turning the right to a secure salary into a privilege, undermining peasantry and promoting a welfare regime based on assistance dependency and political patronage. The case of Kilis town indicates that the border-dwellers utilized non-state channels to resist the formal market sanctions and regulations as well as to manipulate, undermine and undo the state regulatory authority since the 1960s. They instrumentalized illegality in order to escape the more risky economic engagements and create alternative strategies of livelihood.

47This paper is a contribution to novel methodological approaches regarding the integration of Middle Eastern societies with global processes. Shifting their perspectives to the Middle East, border scholars can learn from intriguing strategies devised by ordinary citizens to maintain their standards of living as well as from the 'hidden mechanisms' informing these strategies that the state may not register. The case of Kilis underlines both the perpetuation and reinterpretation of paternalist and patriarchal relations within contemporary capitalism. The economic boom of the 1970s helped families from rural backgrounds earn money and establish themselves as independent “patrons” despite the dominance of large-scale entrepreneurs, who acted as local dealers collecting goods from small-scale traders and distributing them to the domestic market. Yet further inquiry is required into the maneuvering capacities of poorer dwellers in crafting everyday tactics and strategies. The case of Kilis town might instigate more research pertaining to the ways in which border-dwellers, especially those in the Middle East, make themselves the protagonists of their stories as they negotiate various limitations and contexts imposed by the border.

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Notes

1 Excerpt from his interview in a national newspaper (Mercan, 2002).

2 I have conducted a fieldwork in Kilis town between January 2011 and June 2012 for my PhD thesis submitted to the Sociology department of Middle East Technical University in Ankara, Turkey. The names of interviewees have been changed in order to protect their privacy.

3 Both Koç and Sabancı allegedly capitalized from their relationships with the political or bureaucratic elites to benefit from state subsidies such as tax exemption and legal protections (Selçuk, 2007). Sabancı enterprises hired, for instance, retired army officers among its board of directors. Koç family, according to Feroz Ahmad, accumulated its wealth particularly from wartime profiteering during the First World War under the auspices of state authorities (Ahmad, 1998).

4 A benevolent association of Kilis migrants established in 1993 mostly recruiting among the new wealth that had to desert the town after the 1980 coup. I have been told by the town dwellers that the military government hampered the legitimacy of their smuggling business by criminalizing them and obliged them to leave the town to re-settle their business in Istanbul. The efforts to establish their reputation as absentee notables through philanthropy seemed to be successful.

5 Sağlam argues that the then-Communist Bulgarian government facilitated the illegal traffic of gold and foreign currency across its border by establishing a company that took a commission of USD 50 per kg of gold or 1‰ for currency transactions (Sağlam, 1991, p. 63).

6 According to Öniş and Webb, tax rebates worked as subsidies because “first, the subsidy rate was not related to the total amount of taxes paid by the exporter and could exceed it. Second, the rebate scheme was introduced before the value added tax; when the actual value added tax rebate was added, the prior rebate scheme remained as a pure subsidy" (Öniş & Webb, 1994, p. 157).

7 The news resurfaced in 1989 but the date of meeting is not clear. The article series published in Milliyet did not state the date of meeting, but gave place to the statements of the Lebanese trader confirming the meeting. An article by Erbil Tuşalp in Birgün declared the meeting was in summer 1985 (Tuşalp, 2005).

8 In fact, the allegations were far-reaching for Özal. It was argued that the Prime Minister also proposed him dual citizenship and incentive to let him open a bank in Cyprus, while the gold dealer declined the proposals. The barber claimed that the Lebanese-Armenian trader did not have any illegal business with Turkey and he sold gold to the Turkish Central Bank during the Özal years. Though the governments attempted to liberalize the gold market in 1984, the Central Bank had monopoly status until 1989 (Sağlam, 1991).

9 The president heads the seven-members Federal Council, which governs foreign affairs and security policies, as well as internal affairs which are not comprised under the jurisdiction of the Swiss cantons.

10 This is also supported by research on the gold trade in Turkey. Drawing on interviews with exchangers originating from Kilis and established in the Grand Bazaar, Sağlam indicates their leading role in facilitating national and transnational gold trafficking. But in the early 1980s, transnational gold trade mainly amounted to collecting low-purity Iranian gold in the domestic market and processing it into gold of standard value. Still, the gold traffic through Syria continued until the Syrian government restricted in the mid-1980s the entry of precious metals along its borders (Sağlam, 1991: 63).

11 It is not possible to estimate the volume of gold sold out in the Bazaar before the trade liberalization, but underground sales reached somewhere from 200 to 250 tonnes between 1980 and 1982 (Sağlam, 1991).

12 I presume that the unregistered exchange office-cum-jewelry shops in town worked similarly, selling foreign currency at the market rate and facilitating money transfers outside the confines of state regulations. As a recent anecdote told by a Kilis local implies, few exchange offices also had the capacity to serve as a monetary deposit based on trust. The local townsman witnessed that a five square-meter small office could deliver his friend a bulk of money upon the shopkeepers being answered the right password. No exchange apparently had been made, but his friend received some money.

13 The elder brother indicated that the family had migrated from Iraq to Raqqa and then settled in this village in his grandfather’s time. He assumed their ethnic origin to be Arab.

14 The word is used to desribe the head of a tribal chieftainship as well as to entitle someone to a senior position within the ‘traditional’ relations of power. For example, a smuggler might be entitled as agha if he turns rich and assumes a paternal power over his employees or helpers.

15 The rise in price (TL) of an ounce of gold (31,10 gr) every five years is as follows in the regulated domestic market: 6 in 1950; 9.25 in 1955; 16 in 1960; 14 in 1965; 21.50 in 1970; 80.50 in 1975; 1,835 in 1980 (Sağlam, 1991)

16 Drawing on his interviews with exchangers from Kilis origin, Sağlam states that the traders of Kilis used to sell the gold to Jewish exchangers in Doğubank Office Block in exchange for foreign currency (Sağlam, 1991, p. 63). My interviewees, on the other hand, only pointed to the Grand Bazaar. Contrasting these accounts, I assume that the exchangers in Doğubank performed their role until the mid-1960s before the Grand Bazaar gained significance.

17 Urban population: 38,095; rural population: 36,997 according to the 1965 Population Census by Turkstats.

18 Konyalı does not state the year of Chamber of Trade Records: agriculture 30%, trade 28%, artisanship 26%, service sector 2% and industry 14% (Konyalı, 1968).

19 The number taken State Statistics of 1990, cited in Ökkeş, 1994. I assume that the number had not been changed since the late 1970s because any of the buildings was not demolished after the 1980 coup. Nevertheless, Mustafa stated the number of shops as 700 to 800. He might have included the shops outside the arcades.

20 The first trade agreement signed on September 17, 1974 designated the goods allowed for exportation and importation until the end of 1982. For details, see the Economic and Technical Cooperation Agreement between Turkey and Syria published in Official Gazette No. 17785, 17.8.1982.

21 For information on trade with Syria, I draw to a large extent on my interviews with Mahmut, a young member of a traditional landed family that owns an international taxi company; Yasin, a middle-class tradesman dealing with white sale and wholesale trade; and Murtaza, a young transportation company owner, carrying the goods of industrialists in Gaziantep to Middle Eastern countries.

22 The interview with the former head of Kilis Chamber of Commerce and Industry emphasized for example the Decree No. 17 regarding the Law No. 1567 on the Protection of the Value of Turkish Currency. The resolution requires the import of value received in exports within three months and its exchange on a Turkish bank within 10 days. See Decree no. 17 issued by Cabinet Decision 6/763 and published in Official Gazette on August 11, 1962.

23 See the statements by the Minister of Customs and Monopoly Ahmet İhsan Birincioğlu in TGNA minutes, 28th legislative term, volume 5, 3rd period, 1st session, May 26, 1970. However, deputies taking the floor remind that the contraband trade in volume tends to increase in the last decade and harms the Turkish economy a great deal.

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Table des illustrations

Titre Figure 1 - Map of Kilis and surroundings
Crédits Source: http://www.bbc.com/​news/​world-middle-east-27428620
URL http://espacepolitique.revues.org/docannexe/image/3581/img-1.png
Fichier image/png, 81k
Titre Figure 2 - New minaret adding by the barber as philanthropic activity
Crédits Photo courtesy by the author
URL http://espacepolitique.revues.org/docannexe/image/3581/img-2.png
Fichier image/png, 1,3M
Titre Figure 3 - An arcade with shops left idle today
Crédits Photo courtesy by the author
URL http://espacepolitique.revues.org/docannexe/image/3581/img-3.png
Fichier image/png, 1,4M
Titre Figure 4 - One of the remaining stone houses
Crédits Photo courtesy by the author
URL http://espacepolitique.revues.org/docannexe/image/3581/img-4.png
Fichier image/png, 555k
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Référence électronique

Hatice Pınar Şenoğuz, « Kilis as “little Beirut”: Shadow Markets and Illegality in the Southeastern Margins of Turkey », L’Espace Politique [En ligne], 27 | 2015-3, mis en ligne le 06 janvier 2016, consulté le 21 août 2017. URL : http://espacepolitique.revues.org/3581 ; DOI : 10.4000/espacepolitique.3581

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Auteur

Hatice Pınar Şenoğuz

Maître de conférences au département de sociologie
Université de Gaziantep, Turquie
pinarsenoguz@gantep.edu.tr

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