In this Saturday, Dec. 13, 2014 photo, Turkey’s President Recep Tayyip Erdogan addresses a meeting in Istanbul. (AP Photo)
Observers inside and outside of Turkey are increasingly raising concerns over the authoritarian turn in President Recep Tayyip Erdogan’s “New Turkey.” The economic foundations of this turn have not been heavily analyzed, however, and are especially important because Erdogan’s power does not rely on military might, as do many other dictatorships in the region. Instead, Erdogan’s power rests on what might be called an upgraded version of clientelism, or clientelism 2.0.
Two features set clientelism 2.0 apart from more common types of personalistic clientelism or simple abuse of power. The sheer extent of corruption and the way Erdogan and his Justice and Development Party (AKP) have seemingly turned it into a science is mind-boggling. Many public procurement bids, public land sales, or privatizations of considerable size go through the system with the blessing of government leaders. For example, in reference to rezoning plans in Istanbul that were involved in the Dec. 17, 2013 corruption probe, former minister Erdogan Bayraktar stated that, “… a large part of the confirmed zoning plans that are in the investigation file were made under the orders of Mr. Prime Minister [Erdogan].” Likewise, this new upgraded clientelism serves less for the personal gains of party officials and more to sustain the party’s grip on power and to further its political goals. The combined effect of upgraded clientelism is that AKP can consistently extract resources from society for patronage, which in turn largely insulates it from conventional types of accountability, thereby displaying characteristics similar to rentierism and the authoritarian governance associated with it.
Erdogan’s upgraded clientelism operates through a complex mechanism that rests on two principal sources of revenue, in addition to the regular government budget, to function. On one hand, the prime minister commands a substantial, yet secretive, extrabudgetary discretionary fund, Ortulu Odenek. Legally, the prime minister can allocate this money as he or she pleases without any oversight or accountability. Moreover, the prime minister is not required to disclose where the money is spent. According to recent media reports, this account was allocated 1.24 billion Turkish liras in 2013 (approximately $700 million). In 2003 when Erdogan first began using this account as prime minister the same figure was 103 million liras (approximately $70 million). The total budgetary allocation between 2003 and 2014 is over 7 billion liras (between $3.5 and 4 billion depending on fluctuations in currency value), a substantial amount for any government, especially those purporting to be democratic.
On the other hand, a sophisticated rent-seeking system reigns over public procurement bids, both at the local and central government levels. Local AKP officials reportedly encouraged donations to be made to handpicked NGOs like TURGEV, which is run by Erdogan’s son, Bilal Erdogan, or for future “projects” of the party. These “donations” usually range between 10 percent and 20 percent of the bid amount. Interestingly, some theologians even issued religious edicts that justify these “donations.” Due to the nature of these transactions, we do not have precise information on the amount of such “donations” for the cause of AKP. Anecdotal evidence however provides some context. For example, when a major Turkish daily, Sabah, was up for sale, the then-Prime Minister Erdogan asked several business owners who were close to him to chip in to buy the newspaper and maintain its control, which they did in 2013, according to various audio tapes made public. Seven business owners pitched in for a total purchase amount reported by Turkish daily Today’s Zaman to be around $700 million.
Distribution of various benefits, such as jobs, money and other services constitute the most important mechanism to buy acquiescence among the constituency in many clientelism-nestled systems. Erdogan’s “New Turkey” is no exception. Widespread charges of nepotism and favoritism in the hiring practices of staff agencies, usually with the added benefit of extraordinarily high pay scales, is one layer of such distributive networks. Another layer is a series of subsidies that benefit the lower classes. For example, the heavily subsidized health-care system and low inflation rates – after decades of continuous high inflation ranging mostly between 35 percent and 70 percent – decrease the cost of living for many in the country, functioning as de facto subsidies.
On the heels of the transformation of the Turkish economy following the economic liberalization process in the 1980s and 1990s, AKP rode the high waves of a rising, socially conservative, economically liberal bourgeoisie to create its own economic elite. Through clientelism and an extensive patronage network, the party managed to secure two distinct benefits. First, this core business group offered political support to AKP and Erdogan by way of controlling the public opinion and promoting the party’s political agenda. Second, this bourgeoisie formed the core of Erdogan’s financial coffers, which ultimately became the economic bedrock of his new regime.
Here are a few examples of the extent of the patronage networks. Ethem Sancak, a business owner believed to have close ties to Erdogan, purchased a public motor company, BMC, which was estimated to be valued at around 1 billion Turkish liras ($480 million) for around 750 million liras ($358 million). According to Taraf daily, the land itself of BMC is valued between 1-1.5 billion liras. Sancak also owns three newspapers, Aksam, Star and Gunes, which appear to be functioning as propaganda outlets for AKP.
Businessman Mehmet Cengiz is another example. According to Taraf newspaper, Cengiz won 28 bids in the last decade or so with an approximate worth of 88 and 100 billion liras ($46 and 52 billion). In 2005, Cengiz purchased a major public aluminum processing company, Eti Aluminum, as part of the government’s privatization drive for $305 million. The company was a profitable one at the time with annual profits close to $30 million. Moreover, according to Turkish daily Radikal, Oymapinar Hydroelectric Company, a public hydroelectric company, was included in the deal for no additional cost to Cengiz. Oymapinar’s annual profitability was at around 100 million liras (about $60 million).
And as one final example, Turkey will host the largest airport in the world. Istanbul’s new airport is slated to open in 2018. The highest bid for the project was in excess of $29 billion and won by a five-company consortium of Limak Holding AK, Cengiz Holding AS, Kolin Insaat, Mapa AS and Kalyon Group. All business owners in this consortium are reportedly very close to the AKP government. Moreover, the agreement between the state and the consortium stipulates that the State Treasury is a guarantor for all the debt of the consortium in case things go wrong, which effectively translates into an absolutely-no-risk investment.
In addition, no-bid government contracts and bid-rigging allegations have also become more common in recent years. For example, a bureaucrat working with the former E.U. Minister Egemen Bagis alleges the widespread use of no-bid government contracts in the ministry. This may put many state and local agencies at the risk of prosecution because such no-bid contracts violate state regulations and draw criticism from many in the bureaucracy. The European Union, indeed, launched an investigation into “misuse” of E.U. funds in the face of these allegations. Additionally, the AKP government has amended the Public Tender Act more than 30 times since it took power in 2002, seemingly a strategy to put more sectors beyond the act’s reach. According to Ayse Bugra, a professor at Bogazici University in Turkey, in 2012, more than 30 percent of all government contracts were handed without a bid.
In stark contrast to providing generous business deals, the state levies excessive financial costs against business owners who chose not to be co-opted by AKP. For example, a former media mogul, Aydin Dogan, was billed 826 million liras ($516 million) for taxes and fines in 2009. Similarly, the Koc family, owners of one of the largest industrial conglomerates in Turkey, was fined 65 million liras ($30 million) against its Tofas auto manufacturer in 2013 and 160 million liras ($61 million) against Turkish Petroleum Refineries Corporation (TUPRAS) in 2015.
With clientelism so rampant and publicly evident, why do judicial authorities not take action against perpetrators? Alternatively, why is there little popular reaction to widespread corruption? The logic of this new clientelistic system demands the co-optation of critical actors into AKP’s patronage network. Several judicial reforms between 2010 and 2014 allowed AKP to control, manipulate and subjugate the judicial branch to the executive branch. The result is either lack of investigation into allegations of corruption or the undermining of ongoing prosecutions. The graft charges of Dec. 17-25, 2013 illustrate this point.
The popular dimension of the issue reveals two crucial dynamics about Erdogan’s new clientelism. The extensive control of the media by Erdogan and the AKP allows for consistently positive coverage in the public and private media outlets. The opposition, by contrast, lacks any serious, or positive coverage, in the same outlets, which bolsters AKP’s talking points to win public opinion. Likewise, lower socioeconomic classes tend to depend on the government’s subsidized health care or, as Fuat Keyman notes, “free coal, free food, and free primary school textbooks for the poor and disadvantaged segments of society.” These subsidies are usually strategically targeted to ensure acquiescence and support from a large segment of the lower income population.
One of the great casualties of this “New Turkey” is the democratic process. The media suffers greatly in the face of governmental pressure: Journalists are being prosecuted and imprisoned at rates that put Turkey among the worst jailers of journalists in the world. Societal and parliamentary opposition is being greatly intimidated and suppressed. Increasing levels of authoritarianism are best illustrated by the excesses of a new partially approved internal security bill, which expands police powers to use “deadly force” against protesters and conduct warrantless searches. Similarly, the intolerance against the opposition reveals itself most recently in the intense public discussions about how the main opposition party, The Republican People’s Party (CHP), and the largest bank of Turkey, Is Bankasi (CHP holds a share of the bank), are under threats of shutdown and government takeover, respectively. The domestic woes of the Erdogan regime also translate into a Turkey that is weak and confused in the international arena as illustrated by the hesitancy to face the Islamic State threat on its borders, by its regional isolation and by a marked weakness in attracting international investment, as demonstrated by Prime Minister Ahmet Davutoglu’s recent visit to New York.
This new upgraded clientelistic system, or clientelism 2.0, of Erdogan’s is one of the reasons why many Turks did not take issue with widespread reports in the Turkish media that 1 billion euros ($1.3 billion) were stashed in Erdogan’s private residence on the day of the first graft probe on Dec.17, 2013. For many Turks who support AKP, Erdogan’s “New Turkey” boiled down to either realizing the party goals at all costs or their continued attachment to this extensive network of clientelism.
Turkey is no Saudi Arabia or Iran as far as hydrocarbon resources and rentierism are concerned. Yet, Erdogan’s “New Turkey” looks, in some ways, awfully similar to classic cases of rentier states. At its core, both rely on the buying of popular acquiescence and patrimonialism, a form of governance where all power flows from the ruler. The nature of state-society relations and governance remains the same – with the state at the center of societal distribution of benefits – but the key difference between the two is the financial source of the rentier structure. In other words, Erdogan’s upgraded clientelism exhibits identical patterns of behavior to rentierism with emphasis on “the allocative function of the state and the circulation of rent throughout the economy over the productive economic sphere.”
Those expecting Turkey to remain a democratic regional powerhouse may be forced to revise that assumption in light of this new quasi-rentier clientelism 2.0 system, a system that seeks to erode recent democratic inroads. Not only does Erdogan’s power rest on this extensive patronage network, but through his cronyistic relationships with numerous business owners, the AKP government has found a vast and reliable source of revenue, reducing their reliance on the support of Turkey’s citizenry. If Turkey, with its level of economic development and large middle class, is unable to uphold democratic governance in the face of clientelistic challenges, are the forces of traditional patrimonialism too powerful to overcome for the rest of the region?
A.Kadir Yildirim is an assistant professor of political science at Furman University in Greenville, S.C., where he teaches courses on comparative politics, politics of the developing world, Turkish politics and the Middle East. He was previously a postdoctoral fellow in regional political economy at Princeton University’s Niehaus Center.
