A scandal is brewing in Turkey, the biggest since Tayyip Erdoğan and his Justice and Development Party (AKP) took power in 2002.
The prime minister will be lucky to emerge in one piece, let alone with much of the economic stability he has spent a decade of consolidating still intact.
Dawn raids last Tuesday nabbed almost 60 people and implicated three government ministries, the directors of state banks, and some of Turkey’s most powerful businessmen in a massive corruption probe spread across three different cases.
Three members of Turkey’s cabinet resigned on Christmas Day, and one called on Erdogan to follow suit as accusations of kickbacks, smuggling, and abuse of office continue to mount.
The scandal has even acquired an international dimension as suspicions that Iran has been using Turkey’s banks to shirk sanctions were further bolstered by the arrest of Reza Sarraf, an Iranian businessmen who is accused of bribing the Economic Minister while coordinating transactions from Iran worth $US120 billion.
The AKP is scrambling to defend itself by claiming the arrests are a result of a dastardly foreign conspiracy meant to pull the rug out from under Turkey’s rising global status, while police officials have been removed and reshuffled and special prosecutors appointed to a degree that makes Nixon’s Saturday Night Massacre look like exemplary justice.
The Turkish press continues to eagerly publish the latest colourful details that emerge from the probe, including police reports of $US500,000 bribes administered in boxes of chocolate and news that Erdoğan himself was being wiretapped as part of the investigation.
Just as was the case with the Gezi Park protests, which were provoked by anger at the planned demolition of an Istanbul park to make way for commercial development, the unfolding corruption scandal is a reminder of the Turkish construction industry’s sway under the AKP.
Corruption is nothing new for Turkey’s construction industry, however. Corrupt deals in the construction of public housing led to the shoddy infrastructure that was destroyed during the massive earthquakes in 1999, causing untold death and destruction while feeding the anti-establishment outrage that propelled Erdoğan’s party to power.
Under Erdoğan, construction has become a booming sector due in no small part to government policies. The AKP’s 11 years of rule have brought with it a massive privatization campaign, with sales of government assets totaling over $US54 billion. Additionally, a new office in charge of land sales was placed under the control of the prime minister shortly after the AKP assumed power, with the stated goal of selling land for the creation of quality public housing.
Allegations of sweetheart deals and palm greasing in privatization bids, land sales, and government tenders have risen as quickly as the new skyscrapers and shopping malls that now dot Istanbul’s skyline. Businessmen close to the government have been rewarded with no-bid contracts, while state banks have been pressured to grant well-connected companies generous loans.
In addition to shady methods of obtaining credit, a number of construction barons close to the AKP and Erdoğan himself have been sold huge amounts of land, often for projects that have nothing to do with public housing. Emrullah Turanli, one of the construction barons arrested, is a case in point.
Turanli is one of a number of businessmen from the Black Sea region who have become very wealthy under AKP rule: Torunlar GYO, a real estate partnership was founded by Aziz Torun, one of Erdoğan’s childhood friends, has become Turkey’s wealthiest private real estate partnership.
Reports of the corruption scandal were immediately followed by claims that the arrests were related to souring relations between the ruling party and the Fetullah Gülen Movement (FGM), a worldwide religious organisation, educational network, and business conglomerate rooted in Turkey. The organisation bears the name of an Islamic scholar and cleric who began preaching and developing a wide-ranging network in Turkey in the 1970s, and who has resided in the United States since 1999.
An alliance between the Fetullah Gülen Movement (FGM) and the AKP was natural. The Gülen movement began penetrating Turkey’s law enforcement in the 1970s, and their influence reached its peak under the AKP. Facing a state apparatus that has been traditionally hostile toward religious political parties, Erdoğan chose to stack official positions with Gülen supporters to cement his influence in the state itself.
The FGM also proved quite useful in Erdoğan’s showdown with Turkey’s notorious deep state. Gülen-controlled news outlets eagerly published allegations leaked from court proceedings related to the Ergenekon and Sledgehammer cases, trials that Erdoğan used to imprison hundreds of high-ranking military officials over accusations of plotting a coup and being behind terrorist attacks, despite American and German forensic experts condemning the coup evidence as a forgery.
Even more importantly, FGM organisations have facilitated the development of trade networks for allied companies in Turkey’s near abroad, particularly in post-Soviet Central Asia, by opening high-quality schools to train national elites and developing close relations with political leaders.
Turkish business elites that benefit from Gülen networks are also close to the AKP, with the Çalık Group, a holding run by Erdoğan’s son-in-law, being a perfect example. Çalık Group made much of their initial money in the notoriously impenetrable and repressive state of Turkmenistan in the 1990s as the country emerged from Soviet collapse and the country’s first dictatorial president, Turkmenbashi, began to be courted by Gülen elites, who curried his favour by translating Ruhama, his “sacred writings,” into Turkish.
Gulen-connected businesses benefited from Turkey’s booming economy and the AKP government: Kaynak Holding, a company formed to supply Gulen schools, is now Turkey’s largest supplier of educational materials. Bank Asya, an Islamic bank formed by Gülenists with less than $US1 million in start-up capital in 1996, is now one of Turkey’s 10 largest banks, reaching $US14 billion in assets by 2012 while benefiting from the support that the AKP has given to Islamic banking (and a bank in which the founder of Çalık group is a major stakeholder).
The Gülen movement, in turn, promoted Turkey’s rising image abroad through the events organised by its educational foundations and efforts to cultivate close relations with influential individuals around the globe.
Yet the marriage between Erdoğan’s ruling class and the Güllenists was not to last. The AKP and the FGM strongly disagreed on a number of issues, including the direction of Turkey’s foreign policy — Gülenists favoured closer ties with Europe and condemned Turkish humanitarian aid flotillas sent to Palestine without Israel’s consent.
An Gülenist prosecutor attempted to question Hakan Fiden, the head of Turkey’s national intelligence agency, over closed-door negotiations with Kurdish rebels, forcing the government to add new legal protections for the agency. The discovery that the Prime Minister’s office was bugged led to new accusations of Güllenist meddling.
The AKP’s decision in November to close private preparatory schools, one of the FGM’s most important operations and sources of income, was the last straw. The Güllenists lashed out in response, leaking a torrent of compromising materials on the AKP, including documents detailing discussions from 2004 between the AKP government and members of the military elite on how to best curb Gülenist influence in the country.
When the first details of the scandal broke, the natural reaction was to assume that it was the latest development in the struggle between the AKP and the Gülen movement, particularly given that the prosecutor in charge of the probe is Zekeriya Oz, who had previously handled the Ergenekon case and as well as trials targeting journalists critical of the FGM.
The scandal will likely only further batter Turkey’s investment climate, which suffered a major hit last summer as the Gezi Park protests shattered the decade of stability that AKP rule had brought the country. The corruption scandal also comes as clashes between the AKP and businesses that they perceive as disloyal have reached new heights.
Following the Gezi Park protests, Koç Holding, one of Turkey’s largest business conglomerates, came under government pressure after one of the holding’s hotels allowed protesters to hide in their lobby while escaping tear gas.
Massive raids targeting Koç-owned businesses followed over alleged tax irregularities, with the largest tax auditing team in Turkey’s history being assembled to pour over the finances of Koç subsidiaries as State contracts granted to the conglomerate worth billions of dollars were thrown out.
Additionally, documents leaked to Gülenists last summer provided evidence that the government has been using the state’s intelligence agency, MIT, to gather information on opposition-leaning businessmen in order to keep their businesses from receiving government contracts, adding to a growing pile of evidence that the government has been manipulating public tender for private gain.
Luke Rodeheffer is a graduate student in Istanbul as well as a researcher at Wikistrat. He has previously written for a variety of publications, including The Diplomat, Open Democracy, The Interpreter, and New Eastern Europe.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.