Turkey Then and Now: From the Mustafa Ataturk era to Tayyip Erdogan

Impact of ISIS on Turkey’s Profitable Textile Industry

2015 Rumi Forum Fellowship

Uruj Perwaiz


Turkey Then and Now: From the Mustafa Ataturk era to Tayyip Erdogan. Impact of ISIS on

Turkey’s Profitable Textile Industry.

This paper will briefly cover the background and history of Turkey from the Seljuk and Ottoman era (10th century to 20th century) to Mustafa Kemal’s introduction of radical reforms which transformed the Ottoman-Turkish state into a new secular republic in 1920. It will then discuss current foreign relations under the current leadership of President Tayyip Erdogan, specifically focusing on the textile industry. Turkey is in a unique geo-political and cultural location to appeal to Eastern and Western demands of Asia and Europe. How Turkey manages to balance this dynamic will be covered in this paper by discussing:

–         History of Turkey

–         Democratization and Judicial Reform

–         Minority Issues

–         Refugee and Displaced Persons Accommodations

–         Turkey’s Regional Role

–         Foreign Investment in Turkey’s Private Sector

–         Impact on Turkey’s Textile Industry

The topics above will be detailed according to information received during the fellowship through interviews, research, and studies. Of particular interest, the article will focus especially on the handling of the mass migration of refugees and displaced persons due to the Iraq War, Syria’s Civil War, and the recent ISIS conflict in the Levant. The article will also touch on the many minorities living in Turkey and what their status, opportunities, and limitations include. Finally, in terms of International Relations and Business, the article will analyze the impact the regional conflict has had on Turkey’s profitable textile industry, the export of textiles, and the relations with Asian suppliers and Western customers in terms of maintaining a booming textile industry. In conclusion, the article will consider whether Turkey should be used as a model of success or lessons-learned for other countries faced with similar regional issues.

History of Turkey

Turkish history covers a time frame of over 4,000 years. The Turks started settlement in Anatolia in the early 11th century mostly by migrations and incursions. The Anatolian Seljuk State was established from 1080-1308 and was the first Turkish State in Anatolia.

The Ottoman Empire rose in 1299, named after its founder, the Turkish ruler Osman. The Ottoman Empire ruled for 623 years over a vast territory covering three continents and ended at the completion of the First World War. The Ottomans captured Constantinople during the reign of Sultan Mehmet II in 1453, causing the fall of the Byzantine Empire, ending the Middle Ages and beginning the New Age. At its height, the Ottomans ruled over what is today Greece, Bulgaria, Bosnia and Herzegovina, Croatia, Kosovo, Macedonia, Montenegro, Serbia, Slovenia,

Albania and Romania in the Balkans, over all the islands in the Eastern Mediterranean, and over what is today the Middle East. The Ottoman Empire came to a decline in the 19th century with the nationalist movements and the self-determination movements and rebellions of the Balkan nations, supported by the European powers and Russia. By 1918, The Ottoman Empire signed the Mondros Armistice. Under this Armistice, the territories of the Ottoman Empire were occupied by Britain, France, Russia, and Greece. In effect, this was the actual end of the Ottoman Empire.

Meanwhile, a national resistance and liberation movement emerged under the leadership of Mustafa Kemal Ataturk or “Father of Turks”. The Lausanne Peace Treaty was signed in 1923 with Great Britain, France, Greece, Italy and others. The Treaty recognized the creation and international borders of a Turkish State and guaranteed its complete independence. The Republic was proclaimed on October 29, 1923. For the first time in centuries, the Turkish people enjoyed self-rule. Mustafa Kemal was elected as the first president of the Republic of Turkey.

As president for 15 years, until his death in 1938, Mustafa Kemal Atatürk introduced a broad range of reforms in the political, social, legal, economic, and cultural spheres that were virtually unparalleled in any other country while maintaining a neutralist policy towards war.

During this time, only Greek and Armenian Christians and Jews were formally acknowledged as minorities. All Muslims in the republic were considered Turkish regardless of ethnic origin. The concept of Turkishness was based on social and cultural conditioning not ethnicity. Anyone could rise to the highest positions of state so long as they identified themselves as Turkish.

The state also made items of Western dress compulsory and replaced Ottoman Arabic with a variant of Latin script for written Turkish. The state saw religious sentiment as one of the greatest threats to its aims for peace and modernity. However, following Atatürk’s death in

1938, Turkey was led by a series of appointed, elected and military coup leadership and

Atatürk’s neutralist policies were eventually abandoned as Turkey joined NATO.

Finally, a period of relative peace and government reform stability emerged in the 1980s and in 1983 Turgut Özal became prime minister. Under Özal tourism boomed and foreign investment was encouraged, including in the textile industry, for which Turkey had been famous for centuries. Özal promoted a free market economy and initiated a liberalization and privatization process. Turgut Özal died in 1993 but his legacy continues today with Turkey’s important industries in continuing to be tourism and textiles.

Democratization and Judicial Reform

When the Justice and Development Party (AKP) won the July 2007 early elections in a landslide victory and firmly consolidated its hold on power, the country appeared ready for a new and more democratic constitution—one that would finally replace the constitution of 1982 written under military rule.

What emerged shortly after the elections was not a new constitution but a major political crisis. Prime Minister Recep Tayyip Erdoğan of the ruling Justice and Development Party opted for a constitutional reform package that lifted the headscarf ban in Turkish public universities. This amendment almost resulted in the closure of the AKP on the grounds that it followed an Islamist agenda. The AKP was found guilty of nurturing an Islamist agenda.

When the 2015 Rumi Fellows asked Ms. Ayse Dilek Ertukel, the Turkey Director at National Democratic Institute (NDI), if there is a particular political party in Turkey that has campaigned or promised to increase Turkey’s exports and benefit the private sector, Ertukel indicated that Turkish exports have decreased due to the impact of ISIS across the border. Further, she stated,

Stability is a huge issue for everyone in this country. It’s a trauma that dates back to the end of the Ottoman Empire. If you say, ‘We need to make a plan.’ they will ask, ‘Why? Tomorrow will be different.’ This is a country where people have learned to live with instability. Every party says ‘We will bring stability.’ It’s sort of something they have to say it. But, it’s definitely something [President of Turkey Recep Tayyip] Erdogan is saying- he plays on that image of a ‘father’ and he communicates that he will be here and comfort the people. People in Turkey refer to themselves as ‘sheep’. They want a strong leader who will tell them what to do.

Minority Issues

Ethnic minorities make up 30% of the population in Turkey. The 1923 Treaty of Lausanne recognizes Armenians, Greeks, and Jews as ethnic minorities. The 1923 Treaty of Lausanne defines minorities on the basis of religion. Therefore, this legal status is not granted to Muslim minorities, such as Kurds. Many of the Muslim minorities who do not have legal status as minorities are descendants of  Muslim muhajirs (refugees) who were expelled from lost land due to the shrinking Ottoman Empire. These groups have assimilated into and intermarried with the majority Turkish population and have adopted the Turkish language and way of life.

Refugee and Displaced Persons Accommodations

The law provides protection and assistance for asylum-seekers and refugees, regardless of their country of origin. Since the Syrian crisis began in 2011, Turkey—estimated to host over one million Syrians—has maintained an emergency response of a consistently high standard and declared a temporary protection regime, ensuring non-refoulement and assistance in 22 camps, where an estimated 217,000 people are staying. The number of refugees and asylum-seekers in Turkey in 2015 is expected to rise to nearly 1.9 million, including 1.7 million Syrian refugees.

The main group of people of concern in Turkey are Syrian refugees. The greatest challenge the authorities will face in maintaining support for refugees will be the increasing size refugee population and the geographical area they cover. The refugee crisis began in 2011, when thousands of Syrian citizens fled across the border to Lebanon and Turkey.

Syrian Refugees are Syrian nationals who fled Syria with the escalation of the Syrian Civil War. To escape the violence, over 4 million Syrian refugees have fled the country to neighboring Turkey, Lebanon, Jordan, and Iraq. As of February 2015, Turkey has become the world’s biggest refugee-hosting country with 2.1 million Syrian refugees. Turkey has spent over US$6 billion on direct assistance to these refugees.

There are over 2.1 million Syrian refugees in Turkey, more than any other country. Around 30 percent of these refugees live in 22 government-run camps near the Syrian-Turkish border. Refugees who register for temporary protection status are able to obtain access to government services, such as health and education, as well as the right to apply for a work permit in certain geographic areas and professions. However, discussions with textile industry leaders have remarked that not all refugees are issued work permits, while doing so would benefit the industry. This is further discussed below.








An increasing number of Syrian refugees are fleeing across the border into Turkey, overwhelming urban host communities and creating new cultural tensions.

The 2015 Rumi Fellows discussed the Syrian refugees’ impact on the dramatic decrease of Turkish exports to Syria and Iraq with members of the TUSKON Group. The TUSKON Group (“The Confederation of Businessmen and Industrialists of Turkiye”) is a non-governmental and

non-profit umbrella organization representing 7 business federations, 202 business associations and over 50,000 entrepreneurs from all over Turkey. Considering Iraq was Turkey’s 2nd largest export market, the impact of the refugee’s on the decrease of Turkish exports to Syria and Iraq has been significant. The TUSKON members stated,

Refugees are coming from Syria. [This has] brought down wages, and rich [refugees] have increased rent in that area. People have issues regarding migrants and issues regarding refugees. [There are] 2.5 million refugees. [There is a] logistical mistake by the government; they couldn’t keep track of the people coming in.

The 2015 Rumi Fellows also visited the Ipeknur Textile factory and discussed the refugees’ employment situation with Mr. Murat Tarakci, Managing Director. Tarakci said of the refugees, They [Turkish residents] want office jobs or marketing jobs. At the moment, we are facing problem to find workers as well. Because the salaries are not satisfying the Turkish workers. Syrian refugees work in the textile mills and accept lower salaries. The situation right now, is that the government doesn’t allow them [refugees] to have labor cards. If the government makes legal registration for them, of course more companies will employ these people. At the moment, many companies employ them illegally. There is, of course, a cost benefit to employ them [refugees] at a lower wage.

Turkey’s Regional Role

The Islamic State of Iraq and the Levant (ISIL), also known as the Islamic State of Iraq and Syria (ISIS), is a Salafi jihadist extremist militant group and self-proclaimed Islamic state and caliphate, which is led by and mainly composed of Sunni Arabs from Iraq and Syria. As of March 2015, it has control over territory occupied by ten million people in Iraq and Syria, and has nominal control over small areas of Libya, Nigeria, and Nangarhar Province in eastern Afghanistan. The group also operates or has affiliates in other parts of the world, including South Asia.

The rise of Islamic State in Iraq and Syria (ISIS), the Islamist militant group that has seized a chunk of land stretching from northern Syria to central Iraq, has struck fear into the hearts of leaders around the world. The group began in 2004 as al Qaeda in Iraq, before rebranding as ISIS two years later. It was an ally of — and had similarities with —Osama bin Laden’s al Qaeda: both were radical anti- Western militant groups devoted to establishing an independent Islamic state in the region. But ISIS —more than al Qaeda, which disowned the group in early 2014 — has proven to be more brutal and more effective at controlling territory it has seized.

In the wake of several days of violence in the summer of 2015 which included an ISIS-linked attack inside Turkey and several assassinations of Turkish police officers linked to various armed Kurdish insurgent groups (known as Kurdistan Workers Party or “PKK”), Turkey deployed military force for the first time against ISIS. Turkish fighter jets have struck Islamic State targets in Syria and the government has rounded up hundreds of suspected militants in a coordinated crackdown. This bombing is a major tactical shift for Turkey, which has long been reluctant to follow the US-led coalition in taking military action against ISIS.

An anti-ISIS coalition opened Turkish airbases for coalition aircraft to conduct attacks against ISIS. This agreement marked a major shift in Turkish policy. The new policy will allow Turkey to leverage further action against ISIS in order to advance its own strategic interest towards limiting the spread of armed Kurdish groups along the Turkish border.

The 2015 Rumi Fellows discussed ISIS with Turkey’s Republican People’s Party (“CHP”) Vice Chairman, who was previously Turkey’s Ambassador to Iraq, His Excellency Ambassador Murat Ozcelik. The CHP is the main opposition to Turkey’s ruling Justice and Development Party (“AKP”). Ambassador Ozcelik stated:

ISIS is a terrible terrorist organization. Therefore, one must really deal with that. Turkey must do everything in their capacity to help international organizations in their efforts… Dealing with ISIS… in this region is complicated. One cannot do these things without alliances and allies.

In another discussion between the 2015 Rumi Fellows and members of the TUSKON Group, a member of TUSKON stated, “ISIS is a hindrance to us, of course. [Turkey] have been busy working against terrorists. 30,000 to 40,000 Turks have been killed.”

Foreign Investment in Turkey’s Private Sector

Turkey has transformed with a new path in the global economy. Turkey is recognized as one of the growth engines of the newly emerging multi-polar global system. The Turkish economy is already the 17th largest in the world and the 6th largest in Europe. Turkey has transformed itself from an agricultural economy to an industrial economy over the last 30 years. Private sector investment is now the core of economic growth and job creation throughout the country. During the global economic crisis, Turkey’s performance was above par. The economy contracted about 4.8% in 2009, but bounced back with 8.9% growth in 2010. By 2011, Turkey’s growth rate hit a record of 8.5% and became the 3rd after China and Argentina among the G20 nations.

Turkey’s economic transformation started in the mid-1980s. Before 1980, the Turkish industry’s focus was to substitute import gaps. The state was heavily involved in monetary and trade policies. While Prime Minister Özal was in office, Turkey transformed into a free market economy. A liberalization and privatization process was initiated and exposed appropriate industrial cities in Anatolia.

Turkey’s noticeable turning point was the 2001 economic crisis. After the 2002 election, the political stability and the stabilization program after the crisis directly improved the Turkish economy. There was a rapid shift from labor intensive and low technology to technology intensive sectors, export-oriented industrialization accelerated, and the entrepreneurial spirit of the Turkish business community became stronger.

Conveniently, Turkey is a three-hour-flight away from most countries between Italy and China, and Turkish entrepreneurs are involved in business in every part of this US$10 trillion region. The Turkish business community has an increasing organizational capability, which has greatly broadened Turkey’s regional influence.

The IMF defines Turkey’s economy as an emerging market economy. The CIA World Factbook lists Turkey among the world’s developed countries and it is defined by economists and political scientists as one of the world’s newly industrialized countries. The country is among the world’s leading producers of agricultural products; textiles; motor vehicles, ships and other transportation equipment; construction materials; consumer electronics and home appliances.

In 2006, Turkish companies made clothing exports worth US$13.98 billion; far exceeding the US$10.67 billion which were made by the EU member states. Lifting the sanctions on Iran, the neighbor with which Turkey shares its second longest border after Syria, has generated great excitement among Turkish companies, especially those in the industry, commerce, tourism and construction sectors. As a result of this, 13 Turkish sectors which includes textiles will be strongly positioned on the Iranian market in terms of output, sales, export, investment and manufacturing.

Turkey has the opportunity to take the lead in Iran’s market before other industrial nations. The textile market in Iran is an untapped market for ready-to-wear products. Turkish textiles specializes in stitching units in which garments are manufactured. There is a prestige associated in Iran with European brands and Turkish textile companies have the avenue to export these ready-to-wear labeled garments. From Turkey’s perspective, it is easier to fill the gap. Textiles and apparel will increase Turkey’s exports between Turkey and Iran.

Iranian textile manufacturers voiced their disagreement with the removal of tariffs on trade and the general terms of preferential trade agreement that, in their view, had tilted the scale to the benefit of their Turkish counterparts. In response, Mr. Mojtaba Khosrow-Taj, the Iranian Deputy Minister of Industry, stated that the biggest trade obstacle that textile manufactures faced was smuggling of cheap textiles from India and Pakistan. Khosrow-Taj further asserted that Iranian textile manufacturing has only 50% of the customer base domestically. He praised the top quality and efficiency of Turkish textile producers.

The impetus for Turkey to gain a greater textile market share in Iran comes from the Western countries’ increasing hesitancy to do business with regions perceived as susceptible to ISIS. Mr. Murat Tarakci, the Managing Director of Ipeknur Textiles, explained to the 2015 Rumi Fellows how foreign investment in Turkish textiles has been impacted.

ISIS is so close. There is a fear for companies to deal with textile companies in Turkey. There isn’t a problem in the Western part of Turkey, the problem is mostly in the Eastern part. Of course, maybe those [foreign] companies in the Eastern part could face this kind of issue. We have all kinds of investors. Especially for textile businesses, there are so many foreign investors. Right now, there isn’t much risk to come to visit Turkey. Foreign investors come and control their products and make agreements. But, because of what is happening in the Eastern part of Turkey, the investors are scared to come to Turkey. During the Gezi Park protests in Turkey, the clients would not come. If there was a trip planned, the customer would call and ask about the problem and schedule to come later. The protests were in Istanbul, not even in this region.

Impact on Turkey’s Textiles Industry

The Turkish economy’s most competitive and high value-added sector is the textile and clothing sector. The textile sector’s advantages include qualified labor and an integrated structure which includes all the processes starting from obtaining raw materials through to delivering the goods to the consumer. This means it can win an important share in exports, employment and gross national product. Despite the contribution of this sector to the economy, in recent periods, significant difficulties have occurred due to global competition and the impact of ISIS.

To enhance the textile industry the Istanbul Exporters Union, and textiles and clothing (ITKIB) was created in 1986, by the Secretariat for Foreign Trade, to facilitate the expansion and streamlining of export of textiles from Istanbul. The Union contains four independent union representatives that are included in the Board ITKIB:

  • Union of exporters of finished clothing;
  • Union of exporters of textiles and raw materials;
  • Union of exporters of leather and leather products;
  • Union of exporters of carpets

As of 2013, the Textile Industry contributed 7% to Turkey’s GDP. Clothing and textiles is among the largest and best-performing sectors of the Turkish economy. There are some 56,000 textile and clothing companies operating in the country and they employ around two million people. In 2013, Turkey ranked 8th and 4th in global cotton production and consumption, respectively. The country ranked third in organic cotton production after India and Syria.

The changeability and unpredictability of government policies created risks for the textile and clothing sector. These negative effects made it difficult to predict the future and develop appropriate strategies, and also caused fluctuations in the cost of items. The presence of ISIS in Iraq has caused Istanbul-based companies working with, or in, Iraq to suffer from a significant drop in business. “We have been affected so much by the turmoil in the Middle East, especially the Iraqi crisis. Our sales have come to a standstill. There has been a 90 percent decrease in sales,” says Mr. Davut Burkay, who runs a textile company in the busy Beyazit district of Istanbul. “We had to lay off 20 of the 30 employees in my company,” he added. “Now, we have difficulty in paying the remaining personnel’s salaries.”

The TUSKON Group told the 2015 Rumi Fellows, “The textile industry in Turkey is not doing very good. [There is] great pressure because of India and China. The quality of [the] Turkish textile industry is very good, so the goal is to look at niche markets, high quality markets.”

In recent years, Turkish exports to Iraq stand at US$12 billion annually, making it Turkey’s second-biggest export market after Germany. According to the Turkish Exporters Assembly, exports to Iraq in 2014 fell by 21% in June, 46% in July and 27% in August. This not only distresses the textile sector, but also construction, food, and transportation.

“For Turkey, exports are crucial for not just the development but also the sustained resilience of the economy,” says Mr. Haluk Dincer, head of Tusiad, Turkey’s biggest business confederation, who argues that the country needs to transform its trading sector to ramp up exports and move higher up the value chain. Now those markets to the south and east are languishing. According to trade figures for July 2014, sales to Iraq, which is Turkey’s second biggest export destination, fell 45% compared with July 2013. And the chaos in Syria has shut off a traditional export route to the Gulf.

About 1,700 trucks a day were passing through Habur, Turkey’s main crossing into Iraqi Kurdistan, but beyond the boundaries of the Kurdish Regional Government (KRG) the country can be perilous. The Turkish foreign ministry and the country’s chambers of commerce are working together to evacuate Turkish executives and workers from areas of danger.

“There is no problem with our trade with Kurdistan but to get our trucks down to the rest of Iraqi territory will be very difficult,” says Mr. Serif Egeli, a Turkish businessman who has been travelling to Iraq for 40 years. Egeli also stated that the broader crisis in Iraq will reduce any existing demand for Turkish goods and services.

Mr. Hikmet Dundar Karagoz, the Director of Protocols and Strategic Cooperation in the Department of International Affairs at Fatih University spoke to the 2015 Rumi Fellows about the impact on Turkey’s private sector, profits, and economy due to ISIS. Karagoz answered, Turkish transporters have lost 60% of their budget in the last 6 months in Iraq. Turkey began to lose profits in Middle East countries. Turkey earns from export. 25% of Turkey’s export is to Middle East. And, it earns from tourism. Western tourism decreased. [There have been] negative impacts due to ISIS. The first market of Turkey was Western countries and European countries. The first loser of this conflict was the Kurdish people. The transport of goods impacted the Kurdish people too.

There is a risk that ISIS-produced cotton could make its way to international markets via Turkish wholesalers, who buy it at cut-rate prices from the Islamic State. Turkey is the EU’s number two supplier of fabric and third for clothing, according to data compiled by the UIT, a French textile trade association.

According to industry insiders, raw cotton from ISIS controlled fields in the Raqqa and Deir ez- Zor regions has made its way to Turkey. Turkey has reportedly officially refused to accept this cotton, the sources added, but it seems Islamic State militants may have found a way around the block.

But even assuming all of Syria’s cotton production made its way to Turkey, a “highly doubtful” scenario according to Mr. Jose Sette, Executive Director of the International Cotton Advisory Committee (ICAC), a group that brings together cotton producing and consuming countries, this would only represent about five percent of the cotton used in Turkey. “It seems grossly unfair to tarnish the entire Turkish textile industry on the basis of such a small and unsubstantiated number,” said Sette.

The TUSKON Group and the 2015 Rumi Fellows discussed alternatives to maintain the survival of Turkey’s textile industry. When asked if the TUSKON Group has a way that they can mitigate the impact on its members, a member said,

Just like there is a narrowing down of similar markets for America and Europe, for regional members of TUSKON, they pointed us in the direction of Africa. They are looking at increasing commercial activities in Africa. Also, we have been encouraged to increase entrepreneurship amongst women, particularly women at home. And encourage women who are already businesswomen to get them to export into other markets.


While Iraq was Turkey’s 2nd largest export customer, the impact of ISIS has decreased Turkey’s export to Iraq and Syria dramatically. Turkey can continue to target the North American and European markets but will have to decrease operating costs in order to provide competitive rates in comparison to its main competitors (India, Bangladesh, Vietnam, and China). Turkey can take advantage of the dire mass migration of refugees into Turkey by utilizing the incoming migrants as workforce labor in its textile factories. With the high quality of textile goods produced out of Turkey and the low cost of refugee labor available, Turkey can emerge from this damaging phase in its textile industry and continue to maintain its position as a leader in the sector.

Turkey’s refugee policies to grant work permits to some of the refugees allows the textile industry to legally benefit from an increased low-cost work force. This policy could prove to be successful in maintaining Turkey’s economic stability through the uncertainty of its neighbors’ civil wars and fight against ISIS and consideration should be given to expanding it to include other refugees who are currently ineligible. Further, by providing an avenue for legal employment to the increasing refugee population, Turkey can promote the self-sustainability of those refugees, thereby reducing the burden of welfare support. Increased productivity in the textile industry can be marketed to new regions, such as Africa, broadening the Turkish textile industry’s market. This model of broadening economic opportunities may prove successful and worthy of further study to determine its effectiveness for other countries facing similar challenges from massive influx of refugees.


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Country Profile – Turkey

http://www.fibre2fashion.com/textile-market-watch/countryprofile/turkey-textile-industry- overview/

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ISIS: Everything you need to know about the rise of the militant group http://edition.cnn.com/2015/01/14/world/isis-everything-you-need-to-know/

New routes in 13 sectors of the Iranian market http://www.dunya.com/ekonomi/ekonomi-diger/13-sektorde-yeni-rota-iran-pazari-269171h.htm

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Turkey carries out first ever strikes against Isis in Syria http://www.theguardian.com/world/2015/jul/24/turkish-jets-carry-out-strikes-against-isis-in- syria-reports

Turkey Expands Campaign Against ISIS and the PKK


Turkey’s Judicial “Reform” Will Undermine Democracy


Turkey Loses Iraqi Market to Iran over ISIS


Turkey private sector’s agility a big advantage http://www.hurriyetdailynews.com/turkish-private-sectors-agility-a-big- advantage.aspx?pageID=238&nID=72277&NewsCatID=345

What is ISIS?


Will your clothes help fund ISIS?

http://www.dailymail.co.uk/news/article-3227773/Will-clothes-help-fund-ISIS-Terror-group- gets-stranglehold-Syrian-cotton-production-amid-fears-bought-unscrupulous-dealers-selling- western-fashion-houses.html