Turkish business suffers under Erdogan’s post-coup Gulen purge


Date posted: November 7, 2016

Anthony Skinner

In early-November, Kemal Kilicdaroglu, the leader of Turkey’s beleaguered main opposition Republic People’s Party (CHP), spoke out against the confiscation of property belonging to businessmen facing terrorism charges.

The condemnation is just one part of the broader, albeit fruitless, criticism of the unstoppable President Recep Tayyip Erdogan.

Since July’s failed coup, which the government and most Turks believe was orchestrated by U.S.-based cleric Fethullah Gulen, Erdogan has used emergency rule to eradicate proven or suspected members of the Gulen movement and other voices of dissent. An estimated 37,000 individuals from all walks of life, including business, have been arrested and 110,000 sacked or suspended from their jobs.

Seizure of Gulen-linked businesses to bolster state finances

In typical fashion, Erdogan has not pulled his punches since the failed coup. Almost 500 companies with direct or indirect links to the Gulen movement have been taken over by the government-controlled Savings Deposit Insurance Fund (TMSF). The list of holdings and single-sector businesses includes such popular Turkish companies as Boydak, Koza Ipek, Naksan, Akfa and Kaynak. Having absorbed assets worth at least $13 billion, the state has become Turkey’s largest conglomerate. The proceeds from the sale of these businesses will go into state coffers.

Critics of the ruling Justice and Development Party (AKP) expect it to sell Gulen-linked companies to government allies in the business world at a large discount. In mid-October the AKP-linked Metro Holding applied to the TMSF to acquire all of Koza Ipek Holding’s shares. Akin Ipek, the fugitive former owner of the conglomerate, asked on Twitter how Koza Ipek’s $600 million in cash and $20 billion in mining assets could be acquired by a comparatively unimpressive entity. Metro Holding’s capital comes to just over $95 million.

Irrespective of whether or not the TMSF conducts the sale of Gulen-linked businesses in a transparent manner, business confidence has suffered. Thousands of corporate accounts have been frozen by Turkey’s banks as the state investigates these clients. Although seized entities are still paying their liabilities, the government has yet to announce a formal plan on how to manage the rights of business partners or lenders owed money.

Crushing potential threats without sinking the economy

Unlike Turkey’s media, the government is being fairly selective with the businesses it is targeting in the Gulen mop-up. The purge has expanded to include businesses with alleged links to the armed Kurdistan Workers’ Party, but not beyond. Turkey’s most important businesses, in particular heavyweights Koc Holding and Sabanci Holding, have not been touched during the purge. The former had been subjected to an aggressive tax probe and robbed of a tender for getting on the wrong side of the government during the anti-government Gezi Park protests of 2013. But none of its companies were taken over by the state and none of its managers were arrested.

Sabanci and Koc are unlikely to be targeted in the medium term at least given their lack of support for the Gulen network and their national economic clout. Snaring these business heavyweights would also tip the government’s already precarious balancing act – one designed to crush the remnants of the Gulen movement but not trigger excessive capital flight and a dramatic nose-dive in already subdued FDI. This task has been made all the harder with ratings agency Moody’s cutting Turkey’s credit rating to junk status in September after Standard & Poor’s pushed the country even further into negative territory in July.

Erdogan nonetheless dislikes that which he cannot control if not dictate. Therein lies the biggest risk for an economy which during the early years of AKP rule flourished at least in part from positive, pro-market reforms. Investors need to understand the rules of the game, but if those rules are increasingly being bent, changed or applied to punish rivals and suit Erdogan’s domestic agenda, business confidence will dry up.

Anthony Skinner is a director at political risk advisory company Verisk Maplecroft.

Source: CNBC , November 7, 2016


Related News

The Alliance for Shared Values Statement on Ankara Attacks

The Alliance for Shared Values deplores the bombing attacks perpetrated against peaceful protesters today in Ankara. We are deeply saddened by the increasing number of losses and injuries and offer our condolences to the families and friends of the victims. It is now more important than ever that we do not fall prey to the pernicious intentions behind these attacks.

‘The work of Hizmet followers is really tackling the fundamentals of what is needed in the society’

Hizmet Movement is represented by the people that I’ve met. I see that there is a common purpose of like-minded people, in a very grass-root way, coming together, pushing for some ideals that they believe in, in the society, and I’m touched by the genuine motivation of the people that I’ve met. I am impressed with the sacrifice that individuals that believe in this contribute to this collective goal that they are trying to reach.

Kimse Yok Mu to send aid for Syrian refugees with 50 TIRs

Aid materials were collected from various provinces in the Marmara Region and the TIRs arrived in Bolu province. The aid material will be given to around 117, 000 Syrians in the refugee camps. 300 tons of flour, 25 tons of milk, 200 tons of dry food and clothes have been loaded in trucks.

Turkey’s purges are hitting its business class

It is not clear when the government will begin auctioning off seized firms. The risk is that the economy may gradually come to resemble Russia’s, where political loyalty is the price for keeping a slice of the pie. “It is like watching a piece of snow roll down a mountain,” says a veteran civil servant ousted in one of the purges. “You think it won’t hit you, until you realise it’s becoming an avalanche.”

Turkey’s top Muslim leader abhors terrorism

The unforgivable inhuman acts bring grief to the heart of Fethullah Gulen, a Turk considered one of the world’s 100 most important influential people advocating moderation in the Muslim world.

Black propaganda websites granted legal shield

Circles close to the Justice and Development Party (AK Party) government have been accused of conducting a large-scale black propaganda war against the Hizmet movement, which was inspired by Turkish Islamic scholar Fethullah Gülen; media outlets close to the movement; and journalists critical of the government.

Latest News

Fethullah Gülen’s Condolence Message for South African Human Rights Defender Archbishop Desmond Tutu

Hizmet Movement Declares Core Values with Unified Voice

Ankara systematically tortures supporters of Gülen movement, Kurds, Turkey Tribunal rapporteurs say

Erdogan possessed by Pharaoh, Herod, Hitler spirits?

Devious Use of International Organizations to Persecute Dissidents Abroad: The Erdogan Case

A “Controlled Coup”: Erdogan’s Contribution to the Autocrats’ Playbook

Why is Turkey’s Erdogan persecuting the Gulen movement?

Purge-victim man sent back to prison over Gulen links despite stage 4 cancer diagnosis

University refuses admission to woman jailed over Gülen links

In Case You Missed It

Turkish “religious advisors” are keeping an eye on Erdogan opponents in Belgium

Bank Asya lawyers call upon B Group shareholders to join against seizure

Criminal complaint filed against media organizations publishing Gülen’s speeches

Pioneering Turkish teachers realize long-sought dream

Kimse Yok Mu did not forget Bangladeshis in Eid al-Adha

Erdoğan’s propagandist think tanks

Gulen Denies Involvement – Erdogan Uses Coup for Repression

Copyright 2024 Hizmet News