US embassy cable - 05ISTANBUL357

UNCLAS ISTANBUL 000357 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR E, EUR AND EB 
TREASURY FOR OASIA - MILLS 
NSC FOR BRYZA 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD, EFIN, TU, Istanbul 
SUBJECT: INFORMAL ECONOMY TURNS DEADLY AS 10 TURKS SUCCUMB 
TO COUNTERFEIT RAKI 
 
 
Sensitive but Unclassified - not for internet distribution. 
 
1. (U)  Summary: The problem of counterfeiting in Turkey took 
a new and deadly turn this week as ten Istanbul residents 
died from alcohol poisoning after drinking counterfeit raki. 
Another forty remain hospitalized here, several in critical 
condition.  The homemade brew, some of which was produced in 
a garage in the Istanbul district of Bayrampasa, contained 
two to three hundred times the permitted level of methyl 
alcohol.  The search for the contraband liquor continues 
throughout Turkey, with police as far afield as Antalya 
reporting discovery of thousands of bottles.  Industry 
officials, who are bracing for a temporary decline in 
consumption of Turkey's national drink, blame high alcohol 
taxes for the deaths, warning that "such problems will 
continue" as long as taxes remain so high.  End Summary. 
 
2. (U) Deadly Brew: The problem first emerged over the 
weekend in Istanbul, as dozens of local residents checked 
into a number of local hospitals complaining of headaches and 
dizziness after consuming raki over the weekend.  Within 
hours, several victims had died, and by March 3 the total 
death toll stood at 10, with another forty people in the 
hospital.  Authorities quickly discovered that those affected 
had imbibed counterfeit raki, some of which contained two to 
three hundred times the permitted level of methyl alcohol. 
Investigators continue to probe the source of the counterfeit 
liquor, which was apparently packaged with the name of a 
leading Turkish brand (Yeni Raki), and was even tagged with 
the appropriate excise tags.  News reports indicate that a 
quantity of such tags, perhaps totalling as many as half a 
million, were stolen earlier in the year in Izmir.  Some of 
the illicit alcohol was apparently produced in a still in a 
garage in the Istanbul district of Bayrampasa, where nine 
people have been arrested.  Additional stills have been 
discovered in Hendek in Sakarya (to the northwest of 
Istanbul), and as far away as Malatya in eastern Turkey.  A 
large quantity of the counterfeit alcohol was found to be en 
route from Istanbul to points as far away as Antalya. 
 
3. (U) High Taxes:  Industry officials ascribe the problem to 
the high level of alcohol taxation in Turkey, noting that of 
the 22 new Turkish lira (YTL) a consumer pays for a standard 
bottle of Raki, 15 YTL go towards the various taxes that are 
imposed upon it, including value-added tax (KDV) and special 
consumption taxes (OTV).  The CEO of Mey Icki, Galip 
Yorgancioglu, which purchased the state alcohol monopoly's 
raki division last year, noted that the government has raised 
OTV taxes four times in the last two years, and that he and 
other producers warned after the latest increase that 
counterfeit production would inevitably increase.  Seventy 
percent of the price of raki goes towards such taxes, he 
added, characterizing this as an "attractive target" for 
counterfeiters. 
 
4. (SBU) Comment: Raki consumption is a favorite national 
pastime here, whether accompanying meals or serving as the 
lubricant for conversations that extend well into the night. 
This week's news, coming at a time when Turkish officials 
have been highlighting their success in fighting piracy in 
other areas, serves as an unwelcome and deadly reminder of 
the reach of illicit activities, and the continuing 
distortions that characterize the Turkish system.  Given the 
need for the GOT to maintain a large primary surplus, tax 
relief is likely not on the horizon (particularly in this 
area, given the natural inclinations of an 
Islamically-inclined government), but this week's tragedy 
highlights the way in which legitimate activities can be 
crowded out as unsavory operators seek to make a quick buck. 
End comment. 
ARNETT