Transcript: Dünya Daily Interview with Adam J. Szubin, Acting Under Secretary For Terrorism and Financial Intelligence of U.S. Department of the Treas

Dünya Bureau Chief Ferit Parlak: In a speech you made in London last December, you said Turkey should monitor its Syrian border better, you had this warning to Turkey. So, what can Turkey do more as a country that has already been affected negatively from security as well as economic aspect?

Under Secretary Szubin: Well, first I would say Turkey has tragically felt the effects of ISIL’s violent terrorism very much in a personal way at home, involving the lives of Turkish citizens. So, we understand that Turkey confronts this threat in a direct and daily way. The border between Turkey and Syria is an important issue, because it is a vulnerability that ISIL has tried to exploit both with respect to moving fighters, moving money and historically moving goods, such as oil. But we have seen the Turkish government take very impressive steps to tighten the control over the borders, to limit the flow of goods and fighters for ISIL’s behalf and we believe they are focused very intensively on this threat.

I’ll add this one last point if you will allow, which is, we are aware of allegations that the Turkish Government is somehow financing ISIL through oil purchases. We see absolutely no evidence of any purchases of oil from ISIL by the Turkish government, and we believe that Turkey has very effectively put an end to the flow of tankers across its border.

Dünya Bureau Chief Ferit Parlak: My second question is, with the rising threat of ISIL with the increase of its income from oil, how can this threat against Turkey and other countries, be eliminated? You have made some claims previously that the ISIL oil enters Turkey as well. Have you had any concrete findings about this?

Under Secretary Szubin: So, I think I answered the second part of your question already in my last question. We believe that, while historically there may have been flows of tankers across the border, the Turkish Government has put an end to that.

On the first part of your question, we do believe that ISIL’s production and sale of oil and gas, both oil and gas, have been a major revenue source for the group in hundreds of millions of dollars a year. That said, there is a lot that is going on now by the coalition of countries fighting ISIL to disrupt and take away those revenues. The most important aspect of this is the military campaign to take out ISIL’s oil and gas infrastructure. The name of the campaign by the coalition is Tidal Wave 2, which interestingly is named after an operation from World War II that targeted German army’s efforts to obtain oil from Romania. The campaign has already conducted dozens of strikes and has taken out oil and gas infrastructure from the oil-heads, well-heads to refineries, separation plants, processing plants and the tanker trucks that carry the oil and gas. And we believe it is having a major disruptive effect on this major revenue stream.

Two other points if I could on this. First, while ISIL has been able to tap into major revenues within the territory that it controls, both in the form of energy earnings and taxes against businesses and people and money movements within its territory, you also have to remember that this group is desperately in need of constant funding, because they are fighting a military campaign on multiple fronts against the Coalition, against the Iraqi security forces. They have Russian campaigns that are attacking them, and paying for that military campaign is extremely expensive. They are also trying to govern a so-called state, and keeping electricity and water flowing, and paying salaries is extremely expensive. So if we can take a major fraction of their money away, we can immediately start causing real anxiety and force ISIL to make difficult decisions. Just this month, we saw a memo where they told their fighters that they should expect a fifty percent pay cut. That is not something that ISIL can sustain, and so, we see this as a real vulnerability.

And the second point, and I will try to be brief, is you asked what can Turkey and the coalition do. Another key vulnerability is that after ISIL earns money, it often needs to spend that money outside of its territory. It tries to move money to ISIL affiliates in North Africa or in Asia, and it needs to send money outside of its territory to purchase replacement technology for its gas and oil wells, to purchase weapons, to purchase communications equipment; and this is also a vulnerability for the group. We, as a coalition, need to make very concerted efforts to stop ISIL from moving money outside of its territory and placing it into the financial system. And that is something where countries like Turkey on the border of ISIL’s controlled areas play an incredibly vital role in policing their financial system and stopping attempts by ISIL to abuse Turkey’s financial system.

Dünya Bureau Chief Ferit Parlak:  What’s your view on the claims that the entire world economy is run on “black money”?  And what is the estimated volume of black money in the world?

Under Secretary Szubin: We could do an entire interview just on this question. And my office focuses, as you know, on the threats from all types of dark money, or black money, as we sometimes call it illicit, or illegal finance from narcotics trafficking to malicious cyber activity, to terrorism financing, WMD proliferation, and then of course, the threats posed by regimes like Iran and the Bashar Assad regime in Syria and human rights abuses by governments like those. So, this is a very big topic. I don’t have a reliable estimate to give you on the amounts of money worldwide. I have seen estimates that range over a tremendous spectrum. But the amounts of money are very, very substantial. And that just reinforces the need by the U.S. and our partners, like our friends here in Turkey, to redouble our efforts both to ensure that our governments, our financial institutions are effectively defending our financial system against abuse, and are pursuing targeted measures against bad actors like terrorist financiers, like narcotics cartels, to close them out of the financial system.

Dünya Bureau Chief Ferit Parlak: What comes to your mind when you hear the name Turkey? Is it illicit money, terrorism? I am asking in terms of these problematic issues…

Under Secretary Szubin: I was going to say what comes to mind first when I hear the name Turkey first is a smile. I have very warm personal feelings for this country and for the people of this country. I have now visited multiple times in my professional capacity, but also in my personal capacity, and there are very few places on Earth that I have enjoyed visiting more than Turkey; the culture, the people… It is an incredible country.

In terms of my work, Turkey is an essential partner for us in many of the threats that we are facing because of the prominence of Turkey as a financial area, because of its trade, because of its geographic location. So, we work with your government and with Turkish financial institutions on nearly every threat that my office considers, whether it is Syria and Iran, whether it is terrorist financing, whether it is illicit money trafficking. Turkey is a vital partner on all of those issues and it is why frankly I am here today in Ankara is to meet with my partners in the Turkish government and to forward those efforts.

Dünya Bureau Chief Ferit Parlak: Speaking of Iran. My last question is what kind of money traffic do you expect to come about in the region after the lifting of sanctions on Iran?

Under Secretary Szubin: So, we are now at an interesting milestone. We have passed the implementation day under the Joint Comprehensive Plan of Action we call JCPOA. And so, we now have confirmation that Iran has taken all of the very important steps to close off the pathways to a potential nuclear weapon. The importance of that should not be overlooked. The threat I believe from an unchecked and unrestricted Iranian nuclear program was extremely significant to the world, but especially here to this region. And I believe it had the power to really destabilize the region. The fact that that threat has now been taken off the table, the fact that Iran’s break-out time has been quadrupled, and that they have no means of pursuing a nuclear weapons program for fifteen years and beyond, is incredibly valuable to us, to Turkey, I believe, and to the world.

In exchange, as you know, there are now substantial changes to the sanctions regime. And that includes lifting of international sanctions that restricted Iran’s sales of crude oil, of natural gas, of petrochemicals, as well as the broader sanctions on Iran’s shipping, trade, transportation, automotive sectors. And there is real potential for Iran to benefit from this deal. Turkey has historically done significant amounts of trade with Iran and I think we will see Turkish trade with Iran increase as a result of the deal.

From the U.S. standpoint, we are not going to be increasing our trade with Iran. Our sanctions between the U.S. and Iran bilaterally largely remain in place, because the U.S. still considers Iran a state sponsor of terrorism and we continue to prohibit U.S. companies and banks from doing business with Iran or from allowing money to flow through the U.S. But even with that, there is real potential for Iran to see benefits from this deal. And it is not the position of the U.S. to stand in the way of permitted business by third countries with Iran as we move forward.