Tweet
INVESTIGATING THE CONSEQUENCES OF A SUCCESS STORY
Today's Zaman, Turkey
Dec 17 2007
The policies of the Justice and Development Party (AK Party) government
on issues like EU-Turkey relations, Turkey's Iraq policy and the
visibility of Islam in the public sphere have been closely followed
and documented by local and international media.
However, the impact of AK Party policies on Turkish political
economy has received less public attention, despite its enormous
significance. The AK Party has silently undermined the economic
underpinnings of Kemalist statism by facilitating the exponential
rise of foreign direct investment (FDI) in Turkey. By doing so the AK
Party has changed beyond recognition the country's informal economic
constitution, premised on a historically state-created and subsequently
state-dependent business class of exclusively Turkish origin.
Under AK Party rule, Turkey has attracted approximately $50 billion in
FDI, far more than since the republic's foundation by Mustafa Kemal
Ataturk in 1923 up to 2002. Significantly, this has been welcomed
by the country's corporate elite, who fill the ranks of Turkey's top
employers association, the Turkish Industrialists and Businessmen's
Association (TUSÝAD). The 2001 crisis separated the wheat from the
chaff in the Turkish corporate scene. The less reputable conglomerates,
whose success was solely based on incestuous relationships with the
state, were driven to the wall. Turkish economic nationalism, of
Kemalist vintage, lost its most vociferous corporate representatives.
The conglomerates left standing benefited from the post-2001
consolidation and were in position to expand partnerships with foreign
multinationals due to their best-of-breed characteristics.
They also recognized that FDI inflows were indispensable for
the country's overall stability and, consequently, for their own
future survival domestically and internationally. Moreover, they
realized significant capital gains by the rise of valuations in the
Ýstanbul Stock Exchange (ÝMKB) or by selling non-core operations to
foreigners. Cumulatively these factors have led Turkey's corporate
elite to effect a remarkably coherent shift in favor of an open,
well-regulated Turkish market place; a market place capable both of
welcoming FDI, even if that means increased competition in their home
turf, and also of generating ever-increasing amounts of capital flows
from international investors abroad to which they could have access to.
Rising FDI has also been instrumental in the AK Party's political
dominance. By contributing to macroeconomic stability, FDI helped
remove one of the key threats to its rule, a recurrence of the
2001 economic crisis which would give an opening to the Kemalist
establishment. Equally important was the reinforcement of the AK
Party's Western credentials. The vote of confidence, expressed
in billions of dollars by such names as Vodafone, Fortis and BNP,
speaks of an AK Party-led Turkey becoming increasingly integrated
into the world economy and with Europe in particular, rather than
one unmoored and drifting to an Islamic hinterland. And despite
the setbacks in the country's EU accession process, FDI flows have
maintained the confidence of international portfolio investors that
Turkey is indeed a strong convergence story, just as much as other
EU pre-accession countries, featuring an accessible market place,
improved governance and rising incomes.
The alliance between the AK Party and Turkey's corporate elite in
welcoming FDI has challenged the Kemalists' economic modernization
monopoly. This classic expression of Ataturk that Turkey should always
strive to "reach contemporary levels of civilization" has now become
fully appropriated by the AK Party. Turkey has -- by dint of its
economic growth and stability, its welcoming of foreign investors,
as well as its own increasingly confident business class -- become
stereotypical under the AK Party's rule as opposed to unorthodox,
of what it is to be a modern and contemporary country. By the same
token, the secularist establishment no longer has a positive economic
agenda. Historically it was the determination of the Kemalist
elite to replace the Ottoman minority bourgeoisie -- the Greeks,
the Armenians and the Jews -- with a Turkish business class that
underlay its success and wider societal acceptance. It has been a
long time since this project has been exhausted. And the corporate
names that this project has given birth to have themselves spelled
out its demise by essentially saying that we are strong enough to
accept foreigners in prominent positions in Turkey's economic life.
Where does that leave the Kemalist establishment? Devoid of a
comprehensive agenda for the country's future, it has been reduced
from the nation's vanguard to a guardian of its privileged position.
Admittedly the establishment still attracts the support of a large
part of the country's professional, secular middle class. Although
they have been among the primary beneficiaries of the AK Party-led
economic growth, they fear that the consolidation of AK Party rule
could lead to irretrievable regression in Turkey's social life.
Important as these pillars of support are, they cannot camouflage the
absence of a realistic alternative. Barring a major international
economic crisis, the AK Party will continue to monopolize with the
vital support of the country's corporate elite and of foreign direct
investors, the country's only viable option for the future.
* Ioannis N. Grigoriadis is a lecturer at the Department of Turkish
and Modern Asian Studies at the University of Athens and a research
fellow at the Hellenic Foundation for European and Foreign Policy
(ELIAMEP). Antonis Kamaras has worked as investment banker in Ýstanbul
for the past three years and is currently a Ph.D. candidate at the
London School of Economics and Political Science. This article is
based on a study which will appear in the upcoming issue of the
academic journal Middle Eastern Studies.
17.12.2007
Ioannis N. Grigoriadis & Antonis Kamaras* TODAY'S ZAMAN
--Boundary_(ID_d1hEiH6t99sqZnkruwi1TQ)--
Today's Zaman, Turkey
Dec 17 2007
The policies of the Justice and Development Party (AK Party) government
on issues like EU-Turkey relations, Turkey's Iraq policy and the
visibility of Islam in the public sphere have been closely followed
and documented by local and international media.
However, the impact of AK Party policies on Turkish political
economy has received less public attention, despite its enormous
significance. The AK Party has silently undermined the economic
underpinnings of Kemalist statism by facilitating the exponential
rise of foreign direct investment (FDI) in Turkey. By doing so the AK
Party has changed beyond recognition the country's informal economic
constitution, premised on a historically state-created and subsequently
state-dependent business class of exclusively Turkish origin.
Under AK Party rule, Turkey has attracted approximately $50 billion in
FDI, far more than since the republic's foundation by Mustafa Kemal
Ataturk in 1923 up to 2002. Significantly, this has been welcomed
by the country's corporate elite, who fill the ranks of Turkey's top
employers association, the Turkish Industrialists and Businessmen's
Association (TUSÝAD). The 2001 crisis separated the wheat from the
chaff in the Turkish corporate scene. The less reputable conglomerates,
whose success was solely based on incestuous relationships with the
state, were driven to the wall. Turkish economic nationalism, of
Kemalist vintage, lost its most vociferous corporate representatives.
The conglomerates left standing benefited from the post-2001
consolidation and were in position to expand partnerships with foreign
multinationals due to their best-of-breed characteristics.
They also recognized that FDI inflows were indispensable for
the country's overall stability and, consequently, for their own
future survival domestically and internationally. Moreover, they
realized significant capital gains by the rise of valuations in the
Ýstanbul Stock Exchange (ÝMKB) or by selling non-core operations to
foreigners. Cumulatively these factors have led Turkey's corporate
elite to effect a remarkably coherent shift in favor of an open,
well-regulated Turkish market place; a market place capable both of
welcoming FDI, even if that means increased competition in their home
turf, and also of generating ever-increasing amounts of capital flows
from international investors abroad to which they could have access to.
Rising FDI has also been instrumental in the AK Party's political
dominance. By contributing to macroeconomic stability, FDI helped
remove one of the key threats to its rule, a recurrence of the
2001 economic crisis which would give an opening to the Kemalist
establishment. Equally important was the reinforcement of the AK
Party's Western credentials. The vote of confidence, expressed
in billions of dollars by such names as Vodafone, Fortis and BNP,
speaks of an AK Party-led Turkey becoming increasingly integrated
into the world economy and with Europe in particular, rather than
one unmoored and drifting to an Islamic hinterland. And despite
the setbacks in the country's EU accession process, FDI flows have
maintained the confidence of international portfolio investors that
Turkey is indeed a strong convergence story, just as much as other
EU pre-accession countries, featuring an accessible market place,
improved governance and rising incomes.
The alliance between the AK Party and Turkey's corporate elite in
welcoming FDI has challenged the Kemalists' economic modernization
monopoly. This classic expression of Ataturk that Turkey should always
strive to "reach contemporary levels of civilization" has now become
fully appropriated by the AK Party. Turkey has -- by dint of its
economic growth and stability, its welcoming of foreign investors,
as well as its own increasingly confident business class -- become
stereotypical under the AK Party's rule as opposed to unorthodox,
of what it is to be a modern and contemporary country. By the same
token, the secularist establishment no longer has a positive economic
agenda. Historically it was the determination of the Kemalist
elite to replace the Ottoman minority bourgeoisie -- the Greeks,
the Armenians and the Jews -- with a Turkish business class that
underlay its success and wider societal acceptance. It has been a
long time since this project has been exhausted. And the corporate
names that this project has given birth to have themselves spelled
out its demise by essentially saying that we are strong enough to
accept foreigners in prominent positions in Turkey's economic life.
Where does that leave the Kemalist establishment? Devoid of a
comprehensive agenda for the country's future, it has been reduced
from the nation's vanguard to a guardian of its privileged position.
Admittedly the establishment still attracts the support of a large
part of the country's professional, secular middle class. Although
they have been among the primary beneficiaries of the AK Party-led
economic growth, they fear that the consolidation of AK Party rule
could lead to irretrievable regression in Turkey's social life.
Important as these pillars of support are, they cannot camouflage the
absence of a realistic alternative. Barring a major international
economic crisis, the AK Party will continue to monopolize with the
vital support of the country's corporate elite and of foreign direct
investors, the country's only viable option for the future.
* Ioannis N. Grigoriadis is a lecturer at the Department of Turkish
and Modern Asian Studies at the University of Athens and a research
fellow at the Hellenic Foundation for European and Foreign Policy
(ELIAMEP). Antonis Kamaras has worked as investment banker in Ýstanbul
for the past three years and is currently a Ph.D. candidate at the
London School of Economics and Political Science. This article is
based on a study which will appear in the upcoming issue of the
academic journal Middle Eastern Studies.
17.12.2007
Ioannis N. Grigoriadis & Antonis Kamaras* TODAY'S ZAMAN
--Boundary_(ID_d1hEiH6t99sqZnkruwi1TQ)--