EVERYBODY KNOWS, BUT NOBODY KNOWS, PART I

THE AMERICAN
December 2008

Atatürk’s victory over the Entente powers was complete and irreversible, but if contemporary critics of Turkey’s governing Justice and Development Party (known by its Turkish acronym, AKP) are correct, his victory over the retrograde forces of religion is not. Recently, the AKP’s attempt to lift a 1989 prohibition on headscarves in Turkish universities prompted a constitutional crisis.

In March, Turkey’s chief prosecutor initiated a legal case to ban the party outright for plotting the Islamist subversion of the Republic. The challenge to the headscarf ban formed the gravamen of his brief. Months of ferment and feverish rumors ensued as the Constitutional Court weighed the evidence. Prominent critics of the party were arrested in pre-dawn raids and charged with plotting a coup. In August, the judges came down narrowly—by one vote less than the required majority—against the party’s closure. Ten of the eleven judges agreed, however, that the AKP had become a “focal point of activities against secularism.” The Court rebuked the party sharply and curtailed its state funding.

The verdict resolved the immediate crisis, but the conflict between Turkey’s arch-secularists and the AKP has hardly been settled. Indeed, a casual reader of the Turkish press could be forgiven for concluding that headscarves are Turkey’s most urgent concern.

They are not. Turkey’s most urgent concerns are the weakness of its political and legal institutions and the corruption that permeates its economy. Absent institutional reform, it does not much matter which palace faction emerges ascendant in the short term or how many girls wear headscarves to school, for the long-term outcome is apt to be the same: Turkey will not become a theocracy, but it will likely suffer severe economic turmoil, preceded or followed by more political instability.

It would be a stretch to say that Turkey is on the verge of becoming the next Iran. The percentage of Turks who believe political parties should be based on religion has dropped during the AKP’s time in power from 41 percent to 25 percent. The number who wish to see their country ruled by Islamic law has declined from 21 percent to 9 percent. Poll after poll has indicated that under the AKP, the number of Turks who pray five times daily and fast during Ramadan has diminished. Popular support for a theocracy is largely absent.

Also largely absent, however, are a coherent constitution, an effective legal system, a trusted judiciary, enforceable contract law, a disinterested civil service, modern bookkeeping, accurate property records, a rational system for tax collection, a successful education system, honest cops, incorruptible politicians, transparent campaign financing, a responsible press, a deep popular commitment to democracy, and a widespread sense of civic responsibility. Amid the (mostly manufactured) hysteria over Turkey’s imaginary future as an Islamic Republic, attempts to rectify these problems have been crowded out.

Turkey’s institutions are weak for distinct historical reasons. In 1922, the new Republican assembly of Turkey overthrew the House of Osman, assuming its authority. Atatürk purged the bureaucracy of its Ottoman elements and radically Westernized the education system. Even the Ottoman script was replaced with a Latin one, cutting off every Turk born thereafter from 600 years of Ottoman culture and signaling the alignment of the Republic with Europe, not the Muslim East. Islamic courts were abolished and replaced with a secular legal apparatus modeled word-for-word on the Swiss, German, and Italian civil and penal codes.

The development of these institutions in Europe, however, was accompanied by centuries of coterminous social and cultural evolution; and while the later Ottoman sultans engaged, often vigorously, in Westernization, Turkish institutional reform came haltingly, if at all. Atatürk’s reforms were by no means a commensurate process; if so, he would not have famously declared them to be “for the people, despite the people.” The Turkish state—hypertrophied under Atatürk’s étatist rule—has since tended to suppress the growth of the non-state institutions, such as a free press, that work in tandem with parliaments, bureaucracies, and legal systems to ensure their efficacy.

Turkey thus remains under the sway of Byzantine and Ottoman social, economic, and legal habits that poorly serve a modern nation-state. This historical background, more than the rise of political Islam, is the greatest barrier to Turkey’s integration into Europe and the global economy; and because it has ensured a perpetual cycle of rising expectations followed by political and economic crises, it is a major cause of the rise of political Islam in Turkey.

It should surprise no one to learn that Turkish politics are colored by oriental clientelism, Byzantine nepotism, and widespread corruption. But these problems are more severe than commonly assumed; their ramifications are more profound than commonly appreciated; and the situation is not getting better under the AKP—or, if it is getting better, it is not getting better fast enough.

The AKP came to power promising reform. It has stayed in power because it is perceived, in Turkey, to be delivering reform, and it has received tremendous support from Europe, the United States, the International Monetary Fund, the World Bank, foreign investors, and the foreign press for the same reason. If the AKP is not, in reality, getting very far—if the reports of substantial reform are wrong, predicated on faulty data, and derived from faulty analysis—then it is only a matter of time before Turkey experiences its next major financial meltdown, much like the one that brought the AKP to power in the first place. When this happens, the AKP will be voted out of power, if it has not already been ousted by the courts or the military.

It is therefore less essential than people assume to know whether, in the small hours of the night, the leaders of the AKP dream of neutering the army, ending democracy, and destroying Turkish secularism: this is said to be their long-term plan, not their medium-term strategy, and chances are that they won’t survive long enough for anyone to know. But it is essential to grasp that without the reform of Turkey’s institutions, nothing much better—for Turkey or the world—is likely to replace them.

***

We must appreciate just why the AKP was elected. Rigorous research on this subject has been done by Konda, a Turkish consulting group known for its unusually prophetic opinion polls. (Prior to the June 2007 elections, Konda predicted that the AKP would take 47 percent of the vote. They took exactly 47 percent of the vote.) As Konda’s founder, Tarhan Erdem, told me, the AKP is “perceived above all as the party that can best manage the economy. That they are the party of Islamic values is secondary.”

Konda surveyed the electorate in August 2007. It found that 70.4 percent of Turks ranked poverty as the nation’s most pressing problem. “Acts against secularism” and “acts against democracy” ranked well below “insufficiency of social security system.” The electorate believed the AKP to be the party most able to address the problem of poverty. A plurality of respondents said no party could solve the problem, but 34.9 percent believed the AKP could do it. Only 10.5 percent said this of the CHP, Turkey’s oldest party and the only real rival to the AKP. The CHP calls itself “center-left,” but the correct description is really “statist-nationalist,” and whatever you call it, it is moribund. In the past two general elections, the CHP has been thrashed.

Konda’s founder, who directed this research, is no fan of the AKP. Erdem joined the CHP in 1953 and served briefly as the party’s general secretary. He is also a columnist for the left-leaning newspaper Radikal and makes no secret of his belief that the AKP leadership dreams of destroying Turkish secularism. Nonetheless, he trusts what his polls tell him: that the people who voted for the AKP do not share this dream.

Overwhelmingly, the poorer the voter, the more likely he or she was to vote AKP. When asked which issues were most important to them in casting their votes, 78.3 of respondents chose “economic situation and expectations.” “One can easily see,” concludes Konda’s analysis of these data, that “these elections progressed, not on the secular-anti-secular axis as generally claimed, but rather on an axis of aggravation.”

The leaders of the AKP are pious Anatolian businessmen who look and sound like ordinary rural Turks. They visit the poorer regions of Turkey and speak earnestly and respectfully to people for whom the CHP leadership can barely disguise its contempt. Given Turkey’s massive income inequality—87 percent of the population earn less than the average income—it is not surprising that the CHP, a party correctly associated with the wealthy urban elite, is in deep electoral trouble.

This is not to say that religion and the AKP have nothing to do with each other. Of course not. From the 1950s through the 1980s, Turkey experienced slow but steady economic growth. In the 1990s, the economy stalled and then shrank. “During this period,” Erdem said, “people were forced to lean on each other. They met in cafes and mosques, and the things that helped them to stick together were, basically, Islamic qualities and principles…. During this time there was a search for new political values. During the preceding 30-year span, they had tried every single party and realized none of them were any good, so they were looking for another avenue.” The AKP was that avenue.

Last year, the AKP was returned to power with an increased share of the vote. Again, the reasons for this were chiefly economic: the party was perceived to have delivered the goods. Foreign observers have been rhapsodic about the AKP’s economic record. The Economist expressed the consensus view: “They are more successful than any secular predecessor.” The words repeatedly invoked are “shrewd,” “sound,” “disciplined,” and “miracle.” This economic miracle is generally taken as axiomatic, even as domestic and foreign observers remain deeply divided about the party’s commitment to secularism and democracy, tending to argue either that Turkish secularism is, as the AKP claims, so strict that the rights of pious Turks are routinely violated, or so fragile, as its opponents claim, that the rights of impious Turks are in immediate jeopardy.

Both perspectives are easily understood. The 1982 Turkish constitution defines “secularism” in a particularly severe manner. The preamble, for example, states that there “shall be no interference whatsoever by sacred religious feelings in state affairs and politics.” In other words, no politician here may proclaim his faith in the manner that every mainstream American politician does, and must, to be elected. The constitution was clearly intended to function as an iron barrier against the encroachment of political Islam, but it has resulted, in practice, in the denial of education to roughly three-quarters of Turkish women. This cannot be reckoned a workable, durable separation between religion and the state. Further undermining the constitution’s utility is the issue of its legitimacy: it was ratified by referendum during a period of military rule; no public debate about its terms was permitted.

But if the AKP has a fair case against the Turkish constitution, its detractors have a fair case against the AKP. The blood associated with political Islam—from Algeria through Iran to Afghanistan—is hardly calculated to reassure. Neither is the company the AKP used to keep: Prime Minister Tayyip Erdoğan’s political mentor was former Prime Minister Necmettin Erbakan, who came to power promising to “rescue Turkey from the unbelievers of Europe,” wrest power from “imperialists and Zionists,” and launch a jihad to recapture Jerusalem. Weeks after taking office, Erbakan departed on a rapturous friendship tour of Iran. He was soon ousted by the Turkish military. The AKP’s critics have not forgotten this, nor should they.

Nonetheless, much of the handwringing about the AKP’s crypto-Islamism is political theater. The reality is that if the Turkish economy tanks, the AKP will lose popular support. Indeed, when the court case against the AKP spooked the markets, polls immediately showed a substantial drop in the party’s approval ratings. When the markets rallied in response to the court’s conciliatory verdict, the AKP’s ratings went right back up. Turkey is now beginning to feel the effects of the global financial crisis: the lira has plummeted; exports have fallen off; unemployment is soaring. Polls show that support for the AKP has been sharply attenuated. This party cannot stay in power without the support of the electorate. The military is in the hands of the AKP’s enemies. No one doubts that if the AKP were to announce tomorrow that it no longer saw the need for elections, the military would immediately hang them all.

The most important question to ask, then, is not whether the AKP is committed to secularism and democracy—the military is devoutly committed to the former and more or less in favor of the latter—but whether it has really delivered the economic goods, and if not, what that means for Turkey.

***

According to the standard narrative about the AKP’s economic record, the nationalist-secularist establishment opposed foreign investment in Turkey, which it viewed as a form of imperialism. The elites were well served by the state-run economy and the patronage system to which it gave rise, even if the rest of the country was not. The AKP represents a free-market revolt: small businessmen from Anatolia had been cut out of the spoils system; they took power, deregulated, privatized, removed barriers to foreign investment, and reduced the state sector over the anguished screams of the secularist bureaucracy that had long controlled and profited from it. Lo, an economic miracle occurred.

Foreign observers have been rhapsodic about the AKP’s economic record. The Economist expressed the consensus view: ‘They are more successful than any secular predecessor.’

Here are some commonly reported statistics: when the AKP took power, foreign direct investment (FDI) in Turkey was $1 billion; in 2007, FDI stood at $19.8 billion, an amount equal to the past 20 years combined. Under the AKP, Turkey’s average economic growth rate has been over 7 percent, compared with an average of 2.6 percent during the previous decade. Per capita income rose in their first term (2002-2007) from $2,598 to $5,477. In the 1990s, inflation reached highs of 100 percent; under the AKP it has been reduced to an average of 10 percent. Foreign debt has declined from nearly 80 percent of GDP in 2001 to less than half of GDP today. The budget deficit has dropped from 16 percent of GNP to 1 percent. Public sector debt has been reduced from 91 percent of GNP to 51 percent.

Looks good, doesn’t it? I thought so, too. Previously, I have accepted these statistics at face value and applauded the AKP’s economic record. But having looked more closely at the question, I am now recanting. These statistics might be right, but they might also be nonsense. The truth is, nobody knows.

I say this because Turkey has one of the largest underground economies in the world. By definition, data about the size of the underground economy do not exist. But economists in Turkey estimate it to be worth somewhere between one-third and two-thirds of Turkish GDP. Every major economic sector in Turkey—agriculture, construction, markets, textiles, tourism, shipping—is largely underground, off-the-record, and undeclared. No one knows how big these sectors really are. No one knows if they are growing or shrinking. No one knows how they are being financed. No one knows where the profits are going. Of the 23 million people working in Turkey, only 10 million are working on the record. The economic growth rates commonly cited in the press cannot be meaningful. They cannot even be approximate. They probably pertain to less than half of the Turkish economy.

Osman Altuğ, an economist at Marmara University who specializes in the study of Turkey’s underground economy, told me that he can think of only one country in modern history with an underground economy so large by comparison with the official one: Argentina under Carlos Mendez. “Not even Africa is this bad,” Altuğ said. Other economists may not go so far, but most agree that as underground economies go, Turkey is top-tier.

Altuğ has been campaigning since the 1970s to establish a system for collecting income tax modeled on America’s Internal Revenue Service. He has been an adviser to all of the major political parties. He told me that he has pleaded with all of them to make the institution of such a system a priority. So far, he has had no success. “We know from questionnaires,” he said, “and this is the only way we can get data, that only 3.5 million people in Turkey pay income tax. The other 60 million? Nothing. Only 7.5 percent of the Turkish budget comes from income tax.”

Without income taxes, you have no tax returns, and thus no data about who is earning what, or how. “The statistics used by foreign observers when they talk about the AKP are totally distorted by this situation,” said Altuğ. “They’re based on the overground economy. They bear no relationship to reality.” (It is important to note that none of Altuğ’s research has been translated into English. He has done some of the key work on the Turkish economy, and very few Westerners can read it.)

No recent Turkish government has made much effort to change this situation. A progressive income tax system would obviously be more sensible than regressive indirect taxation, but the parties do not want to inflame their benefactors, and they do not want to appear to be levying taxes. Instead, they borrow and borrow and raise indirect taxes, penalizing the poor far more than the rich. When the price of oil goes up, they blame U.S. policy in Iraq, even though two-thirds of the price of a liter of gasoline goes into government coffers. “They borrow money from the U.S. to stay in power, then blame them for Turkey’s financial problems,” said Altuğ.

For the same reasons, the AKP has been funding many of its popular subsidy and development projects with borrowed money, rather than with tax revenues. In particular, it has been raising a great deal of money through the issuance of bearer bonds—instruments that are, in effect, signed “To whom it may concern.” This means that the government does not know whom it is borrowing from, or if it does, there is no record of it. “Whoever has money,” said Altuğ, “they take it.”

A number of the AKP’s critics have charged that the party is financing its activities with “green money”—money funneled through Islamist banks and holding companies, particularly those sponsored by the Saudis—but Altuğ suspects that this green money is, in fact, recycled Turkish money. “You make the money here, underground, you kick it out of the country to launder it, then bring it back.” Sounds plausible, but who knows? There is no way to track this.

The challenge of analyzing the Turkish economy is compounded by the almost complete absence of bookkeeping. Only 260,000 firms in Turkey hold balance sheets; what the rest of them are doing is unknown. The property deed system is similarly opaque. An acquaintance of mine—an American who works in commercial real estate—rolled his eyes when describing the pointlessness of looking for a deed at Tapu Dairesi, the property records bureau. If you’re lucky enough to find it at all, he said, you have no guarantee that it bears any relationship to reality.

It is not even clear what the population of Turkey really is. Last April, the head of the Election Commission noted in passing that 5 million voters seemed to be, curiously enough, missing. This week, 6 million of them were reported to have been found. Interestingly, they were found just ahead of upcoming local elections, and discovered in particularly large numbers in districts where the AKP could use a bit of extra support.

You might think it would still be possible to measure the inflation rate accurately. You go out to the stores and see if prices are rising, right? Not quite. The Consumer Price Index (CPI), according to the Turkish National Bureau of Statistics, is based on, among other things, rental prices. No one is telling the government the truth about those: landlords here tend to keep two rental contracts, one for the tenant, one for the tax authorities. I calculate the CPI every time I go shopping here in Istanbul. I buy roughly the same basket of commodities every week. According to my calculations (based on the cost of toothpaste, soap, milk, eggs, bread, kitty litter, and trash bags at the Cam mini-market on Susam Sokak, a block or so up from the big white mosque), inflation in Turkey is rising faster than the government claims. My CPI isn’t very meticulous, but neither is the government’s.

The paucity of meaningful statistics means that we have no idea whether there has been an economic miracle here, and neither does the AKP. On March 1, 2008, the government claimed that per capita GDP was $5,480. On March 15, it claimed it was $7,500. On March 27, it claimed it was $9,000. A bit of hand-waving accompanied the revision of these statistics: the new figures, supposedly, were based on a fancy formula for calculating the size of the underground economy. Given that economists’ estimates of the size of various sectors of the underground economy diverge by as much as 60 percent, it is amazing that anyone took these numbers seriously.

“Didn’t anyone notice this?” I asked Altuğ.

He raised an eyebrow. “Everybody knows, but nobody knows.”

***

The opacity of the economic system perverts the political system profoundly. “Whoever controls the money, controls politics,” said Altuğ, “but no one knows who controls the money. It’s all off the record. So the underground economy says, ‘I’m the boss. I decide.’”

Party finance laws? There are some on the books, but they are vague to begin with and anyway ignored. “Campaign financing is a total mystery. All the parties are exactly the same this way. In this sense, there is no true multiparty system. Turkey’s like a chocolate factory where the wrappers come in different colors—blue, red, green—but the chocolate is the same, because the people who finance the system stay the same.”

Each party, Altuğ believes, is financed by about 40 people. “They vary from party to party, but they’re the ones with all the power.” The financiers choose candidates they can control. “You want your party candidates to be uneducated and easily manipulated,” he said, “not educated and competent.” This system gives rise to staggering levels of corruption. “If there were a corruption Olympics,” said Altuğ, “Turkey would get the gold medal.”

Altuğ reckons that 94 percent of all construction in Istanbul is illegal. I’m not sure how he arrived at this estimate—it is probably too high; others to whom I’ve spoken believe the figure is closer to 60 percent—but 60 percent is still extraordinarily high. There is a lot of construction going on in my neighborhood, but it takes place only at night. Istanbul lies on a massive fault zone. Everyone knows this construction is shoddy; everyone knows what will happen when the big earthquake comes. “If the construction companies are fined, they just pay the penalties and keep on building,” said Altuğ. “It’s not enough to stop them. The government doesn’t really clamp down because they need those companies to support them financially.”

Is there any difference between the AKP and the other parties, I asked Altuğ?

“No difference at all. Absolutely no difference. Red money, green money, headscarves—that’s all a distraction until the economy is on the record. Otherwise you’re just doing business with Al Capone.”

***

Mustafa X is in one of the following industries (he does not want me to say which one or use his real name): construction, waste management, water management, garbage collection. He has been working since the 1980s with municipal governments throughout Turkey. A period of massive corruption, he told me, began under Turgut Özal, who came to power after the 1980 coup. Özal famously declared that his bureaucrats “knew how to take care of business.” The comment was widely understood to mean, “My bureaucrats don’t get paid enough, but they sure know how to make up for it.”

This was roughly when Mustafa X went into business. “I was very clearly aware of the change. Prior to this, Turkish governments tended to be ideological; from here on in, it was all business. Before, if you got caught with a suitcase of dollars on you, you went to jail. But our society wasn’t ready for freedom. It got corrupt.”

Had there been any improvement in this situation under the AKP, I asked? He shook his head emphatically. No. “There used to be checks and balances on the amount of corruption possible. But now that the municipal and national governments are in the hands of the same party, it’s out of control. It can’tget worse.”

The AKP had initially been better than its predecessors, he said: “When they came to power, they were new. The truly religious elements of the party were afraid of God, so they stayed clean. But when the party gained power, the opportunists flocked to it. If you’re in the ruling party, no one will have the courage to challenge you about this.”

Mustafa X acknowledged that at first the AKP had taken action against corrupt business alliances. “When the AKP came to power,” he said, “they caught and imprisoned a handful of toughs who were alleged to have ties to the Deep State.” (It is widely believed here that a shadowy coalition called the Deep State runs the country. It is supposedly comprised of high-level figures in the military, the intelligence services, the judiciary, and organized crime. There is much evidence that it really exists.) “But each party inevitably creates its own rich men,” Mustafa X said, “and now they give the tenders to Albayrak.”

The Albayrak Group, a massive holding company, is involved in construction, garbage collection, road construction, and public buildings. The son of CEO Mustafa Albayrak, Berat Albayrak, is married to Prime Minister Erdoğan’s daughter. The media broadcast their marriage, live. “When Erdoğan was mayor [of Istanbul], he made [Mustafa] Albayrak into a rich man,” Mustafa X said. “Now the party is linked to his media conglomerate, which owns [newspaper] Yeni Şafak and [television channel] Kanal 7 …. Of course, there were conglomerates like this in the ’90s, too. Demirel had Çörtük, for example.” (Süleyman Demirel served seven times as prime minister; Kamuran Çörtük is chairman of the Bayındır group, another powerful Turkish conglomerate.) “But this level of consolidation is new.”

The AKP’s failure to transform Turkey’s culture of corruption and cronyism is massively significant. The AK Party’s name is a pun: the word ak means white—in other words, “clean.” The AKP leaders promised to stamp out corruption, and because they said they were God-fearing, people believed they might really mean it. According to Konda’s surveys, corruption is the electorate’s second-biggest concern after the economy, and the concerns are related, because a profoundly corrupt economy is an inherently uncompetitive one. Erdo?an came to power promising to end the kind of cronyism that the Demirel-Çörtük alliance represented. That was the ostensible raison d’être of the AKP.

But if four legs are good, two legs are better; and last year, the Çalık Grup, another AKP yandaş (the Turkish language is rich with synonyms for “crony”), purchased the ATV channel and Sabah newspaper. Erdoğan’s son-in-law is Çalık’s top manager. Berat Albayrak’s brother, Serhat Albayrak, is the top manager of Çalık’s media subsidiary, Turkuvaz. The transaction was financed by the state banks Halkbank and Vakıfbank.

How corrupt, I asked Mustafa X, was the AKP compared to the other parties? “The AKP isn’t the most corrupt,” he said. “The most corrupt was the DYP.” (Demirel founded the right-leaning DYP, or True Path Party, in 1983. There have been four DYP governments, one led by Demirel, the other three led by Turkey’s first woman prime minister, Tansu Çiller.) “Under their governance, during the Tansu Çiller years, control by the Deep State reached an apex. The next most corrupt is Anavatan.” Anavatan is the party founded by Turgut Özal.

The AKP’s corruption, which Mustafa X considered average by Turkish standards, does, however, come in a slightly different flavor. The other parties, for example, like flat-out bribes. “I was doing a deal in a town of about 60,000 people recently,” Mustafa X said. “The deputy mayor said to me, ‘My TV has bad reception.’ He named the brand he wanted, the size of the screen. A $2,000 TV. We got it for him, we got the contract. That’s how it normally goes.”

He sketched it out for me on a napkin. When you do business with the CHP, you generally have to pay off the following people: 10 percent to the mayor, 10 percent to the deputy mayor, 10 percent to the opener (who announces the tender), 5 percent to the controller, and possibly you need to sweeten the account manager, too. “Now,” Mustafa X said, “if you do business with AKP municipalities, the top people—the mayor and deputy mayor—will stay clean. They’re afraid of God. But if they can’t stack the government with their own people, they’ll use CHP and Anavatan deputies. They take the usual cut, and the mayor knows it, but he can’t replace them, so he tolerates it.”

If the AKP mayors and deputies don’t take bribes quite so brazenly, this doesn’t mean they’re not on the take. “Instead of asking for a television, they say, ‘I’ll give you the tender, but you need to sponsor the girls’ volleyball team.’ Their mentality is different. Their goal is less about personal enrichment, more about power: they want to gain support for the people who support them. So they get you to buy things for—or from—their supporters.”

In other words, the biggest problem with the AKP is not that it is sodifferent from the other Turkish political parties, but that it is so similar to them: short-sighted, self-aggrandizing, autocratic, and crooked. The corrupt practices Mustafa X describes, which take place at every level of government, ensure massive waste, shoddy public services, and a business climate that is severely hostile to competition, innovation, and sustainable economic growth. Obviously, it isn’t possible to say what percentage of the economy is touched by this kind of corruption, but clearly we are talking about a significant percentage.

Recently, Mustafa X claimed, a $4 billion construction budget was handed out without a public announcement. “Four billion?” I said to him. “I can’t believe that. How is that possible? How many people knew about this?”

“Everybody knew,” he said. “But nobody knows.

“The majority of tenders are just given away like that,” he added, “to relatives, friends, or a firm that supports them politically.”

I do not know if that particular story is true, but I am persuaded—based on the sheer number of stories like this I hear, from credible, first-hand witnesses with no reason to lie to me—that the story is plausible. Every sector connected to the state is affected by this kind of corruption, and the state sector in Turkey remains enormous, despite the AKP’s commitment to denationalization.

Stories such as the one related by Mustafa X raise obvious questions about that commitment to denationalization, too. To whom has the government been selling state assets, and why? Last week, it was reported in the Turkish press that the government has devised an insanely complicated scheme to sell its own offices, including the Ministry of Finance and the Ministry of Defense, to private financial institutions. The government will henceforth be a rent-paying tenant in its own buildings. The rent, obviously, will be paid from the public purse. The financial institutions will then use these assets to back the sale of loan instruments to foreign investors. After a fixed time, the government will buy back the buildings, returning to the happy financial institutions all of their initial capital outlay. Unsurprisingly, many Turks find themselves wondering just who is going to profit from deals like these. It is quite hard to see the logic in this plan unless one imagines that quite a few cash-stuffed suitcases are involved.

Although anecdotes like the ones Mustafa X told me are ubiquitous in Turkey, they are still anecdotes. They are consistent, however, with wider research: a 2006 Transparency International survey of bribery among the top 30 exporting countries ranked Turkey among the worst offenders. “It’s very frightening,” Marie Wolkers, the senior research coordinator at Transparency, remarked to Radio Free Europe/Radio Liberty, “and it is actually very consistent with the monitoring of Turkey by the OECD convention process, which produced a report on Turkey which is quite alarming, I mean it is very bad.”

The AKP prefers to give tenders to its own people. “You can do business up to a certain point with the AKP, after which you have to be one of them or have one as an intermediary,” Mustafa X said. “This isn’t true of the CHP, although it is true of the MHP. You have to be a nationalist to do business with them.” The extreme-nationalist MHP took 14.3 percent of the vote in the 2007 elections. Militias attached to this party shed a great deal of blood in the 1970s; now the MHP, like the AKP, claims to have embraced moderation.

Mustafa X appears to be successful, although he is not a member of the AKP. How did he get by in this climate, I asked? He shrugged. “I can do business with them,” he said, “because they know I’ll keep a secret.”

***

Ogün Altıparmak was born on the day Atatürk died, hence his name, o gün, which means “that day.” In his youth, he was a Turkish football hero; a street is named after him in Kadıköy, a neighborhood on the Asian side of Istanbul. In the 1980s, he was a founding member of Turgut Özal’s Anavatan Party. He has had a business career, a sports career, and a political career in Turkey. “Everything Professor Altuğ told you is true,” he said.

Altıparmak agreed with Mustafa X: the corruption in Turkey became substantially worse during the Anavatan years. “After Özal made the ‘my bureaucrats know how to do business’ comment, every last bureaucrat became a thief.”

“If you work honestly in Turkey you have no chance of getting rich,” he continued. “You can’t compete in a system like this.” You can’t become a politician, either. “Of 550 MPs, 400 come from the bureaucracy. You need 250,000 dollars to become an MP in Turkey. An average businessman can’t afford this. Even the highest-paid bureaucrats make only 8,000 lira a month. So where is this money coming from?”

Where indeed?

“Here’s how the bribery works,” Altıparmak said. “First, the whole system of property deeds is rotten. They find little old ladies who own property, haven’t given anyone power of attorney, don’t have any heirs; they transfer the deeds into their names, sell the property out from under them, then they bump them off.”

I wasn’t sure I had heard that right. “They do what? Like in ‘The Sopranos’?”

“Did that happen in ‘The Sopranos’?”

“Yeah, you know, with Paulie’s mother?”

“That’s probably where they got the idea.”

It later occurred to me that even the Sopranos hadn’t bumped the old women off. I don’t know if this story is true—although I have heard the same rumor elsewhere and read it in the Turkish press—but it is telling that a founding member of a major Turkish political party finds it perfectly credible. It suggests the extraordinary distrust that permeates the political system.

“There’s a property deed office,” Altıparmak said, “Tapu Dairesi, in each district. Each one takes in about 50,000 lira a day in bribes. The bribe you have to pay just to get a legal transaction completed in a timely fashion is 100 lira. If you multiply that by 500, you get 50,000. If you don’t pay it, you’ll wait weeks to get the documents you need to buy a home. If you need something illegal done, the price rockets in proportion to the illegality and how much work it will take to make it look legal. There are 1,000 Tapu offices in Turkey. Multiply 50,000 lira times 1,000 times 300 work days per year…. That’s just Tapu. The customs officials skim off $2.2 billion per year. What Professor Altuğ says is all true. I’m 70 years old. I’ve been in business, I’ve been in politics, I’ve been in sports—it’s all true.”

When Altıparmak helped to found Anavatan in 1983, he was responsible for bringing together the Kadıköy establishment. Kadıköy is a leftist stronghold; but because Altıparmak was a football hero, he was able to bring together people of all political orientations, people to whom everyone in Turkey could relate. “I agreed to do it because Anavatan was nationalist and conservative, but also in favor of free enterprise and social justice.”

When Anavatan took power, “One of the first items on the agenda was to build a municipal building. This guy came in and made an excellent bid, but they picked someone else. Why? Because the daughter of the prime minister was in partnership with the company. At Kalamış, in Kadıköy, they wanted to build a marina. Again, people close to the PM took the tender.”

These stories multiplied. “When I was doing business in the U.S. in the ’70s, I noticed, in Illinois, that every farmer had a silo,” said Alt?parmak. “It occurred to me that if Turkey had quality storage like this, farmers could increase their profits by 15 percent.” After Anavatan won, Altıparmak contacted a U.S. company that made storage bins. “I told the company, ‘Come up with the highest quality product at the lowest price, and I promise you, you’ll get the tender. I’m one of the founders of the party, I can guarantee this.’ They made the best bid, a little less than $28 million dollars, and guaranteed this bid would have no surcharges. But they gave the contract to someone who wanted $34.5 million. They stuck on another $3 million in surcharges. The deal was financed with a loan from the World Bank. The project in the end cost about $54 million.” Alt?parmak went to Özal and provided him with evidence of the corruption. “It turned out that Özal’s nephew—the minister of agriculture—had been in on this all along. Özal did nothing. He turned a blind eye.

“SoI started a war against them. The party entered a civil war. Özal held delegate elections, but then he had a heart attack. His wife was running the country behind the scenes. Özal’s right-hand man cancelled the elections.” When Altıparmak asked why, he was told that “Communists had invaded the party.

“I have 115 employees,” said Altıparmak, bewildered. “How can I be a Communist?”

Demoralized, Altıparmak resigned. “From then on,” he said, “everyone started robbing the country blind.”

I have visited Altıparmak’s home. It is very modest. He is not a wealthy man.

Had there been any improvement under the AKP, I asked?

“The AKP is the same as everyone else,” Altıparmak said. “There are honest people among them, but they’re few and far between. It’s a little different, because they take smaller bribes—maybe 10 percent, as opposed to 50 percent—but don’t forget that the tenders are a lot bigger, too.”

Altıparmak believes that government officials created foundations to channel these bribes. “Like Yeditepe University. The former mayor of Istanbul is the president of that university, and all the departments of the university that do trade are run by his kids. All the contracts get kicked back to that family, and if you say anything about it, they say, ‘What are you talking about? This is a government foundation.’ This is true of Bilkent University and Kadir Has University, too. Taşyapı is in a secret partnership with Erdoğan’s brother. The company controls $5 billion dollars worth of projects. In Izmir, in a CHP-controlled municipality, they put some land up for sale. One of my friends participated in the tender. To bid, you had to put up a financial guarantee. After taking everyone’s guarantee, they cancelled the tender and kept the guarantees. They did this five, six times. From Anatolia to Istanbul, you cannot build without a bribe. The former mayor of Beşiktaş owns a five-star hotel in Antalya. You can’t afford that on a mayor’s salary. Look at the assets of the heads of the labor unions. Your eyes will pop out. They’re feudal lords. Ankara has the highest per-capita wealth in the country, but why? There’s no industry or business there. But people there own more cars than in Istanbul. All the million-dollar villas in Ankara are owned by bureaucrats.”

I am reporting only about a quarter of what Altıparmaktold me, and even if it’s only a quarter true—and I suspect a good amount of it is true, because many other Turks have told me stories like these—it still represents a massive amount of corruption. “You could put everyone in jail because of it,” Altıparmak said.

And the AKP? “If they’re so afraid of God,” Altıparmak asked, “why aren’t they paying taxes? Cheating like this isn’t in the interests of God, social justice, capitalism, ethics.”

Kuva-yi Milliye, an ultra-right-wing organization named after a militia assembled by Atatürk, claims that $250 billion in siphoned money, laundered in the underground economy, is sitting in Swiss banks and offshore accounts. The group is determined to find it, bring it back, and use it to pay off the national debt. The whole Turkish budget is about $150 billion. In the wake of the 2001 financial meltdown, the International Monetary Fund arranged a $39.5 billion rescue package for Turkey. If Kuva-yi Milliye is correct, that bailout represents only a fraction of the stolen money now sitting in those Swiss banks.

Members of Kuva-yi Milliye are now in police custody, charged with plotting against the government. Perhaps they were. Turkey has a long history of plots and coups; indeed, there have been four military interventions in as many decades. But perhaps the Kuva-yi Milliye members were telling the truth, which would also explain why they’re now sitting in jail cells. There is no way for me to know, obviously. But it is a measure of the pervasive atmosphere of distrust in Turkey that it is both plausible to imagine they are making this up—to legitimize efforts to overthrow a democratically-elected government—and equally plausible to imagine they have been arrested for attempting to expose widespread government corruption.

There is something particularly tragic about these stories, because ordinary Turks are honest. Countless times I have tried to tip a cab driver or a delivery person for good service. They have misunderstood, thinking I have accidentally overpaid, and they have tracked me down—even long after I have left the cab or long after they have left my apartment—to return my change.

CONTINUED IN PART II

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