Analysis: Erdogan may prevail at high cost in Turkey's political civil war

ISTANBUL Mon Jan 13, 2014 1:41pm EST

A woman walks past by billboards with pictures of Turkish Prime Minister Tayyip Erdogan, in Istanbul January 13, 2014. REUTERS/Murad Sezer

A woman walks past by billboards with pictures of Turkish Prime Minister Tayyip Erdogan, in Istanbul January 13, 2014.

Credit: Reuters/Murad Sezer

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ISTANBUL (Reuters) - Prime Minister Tayyip Erdogan looks to have the upper hand in a civil war rocking Turkey's political establishment, but his bid to break the influence of a potent Islamic cleric could roll back reforms and undermine hard-won business confidence.

What erupted a month ago as a damaging inquiry into alleged government corruption has spiraled into a battle over the judiciary with potentially much further-reaching consequences for the country's international image and Erdogan's own future.

"There is considerable risk of Turkey losing the gains in credibility and investment it has won in the past decade," a senior Turkish banker said, declining to be named for fear of repercussions for publicly criticizing the government.

Despite fist fights in parliament, the opposition looks unable to prevent Erdogan's plan to put the appointment of judges, held to be under the sway of U.S.-based cleric Fethullah Gulen, more under government control.

In power since 2003, Erdogan has led what Ankara, the United States and Europe long held up as a potential model for Islamic democracy and stability for Arab states.

But a crackdown in June on anti-government protests and his response to the graft inquiry, his critics say, has betrayed increasingly authoritarian tendencies.

"Everyone knows that this plan to keep the judiciary under political control is not constitutional and is not democratic," said Koray Caliskan, an associate political science professor at Istanbul's Bogazici University.

The premier says the graft inquiry is an attempted "judicial coup" by a "parallel state", a thinly veiled reference to Gulen's influence in the judiciary and police, and has purged hundreds of police officers deemed loyal to the cleric, whose followers see him as more progressive and pro-Western.

But while new police officers and judges may slow the graft inquiries, the shakeup could fuel opposition to Erdogan and lead Gulen - a former ally who helped Erdogan's AK Party rise to power - to tacitly side with his opponents in an Istanbul election in March, a key test of the government's popularity.

Details of the corruption allegations have not been made public, but are believed to relate to construction and real estate projects and Turkey's gold trade with Iran, according to Turkish newspaper reports, citing prosecutors' documents.

The government has cast them as a smear campaign but damage has already been done.

"If a perception takes hold that you can't do business in Turkey without bribing, foreign investors may avoid privatization tenders," said Huseyin Gurer, managing partner in Turkey for Deloitte.

"Investors may also start worrying about the legal system and may start questioning whether their rights will be preserved before the law," he told Reuters. "The government should take immediate steps to correct that perception."

PYRRHIC VICTORY?

Erdogan has overseen strong economic growth in Turkey since coming to power in 2002, transforming its reputation after a series of unstable coalition governments in the 1990s ran into repeated balance of payments problems and economic crises.

But its external financing needs are considerable - Barclays estimates them at $217 billion this year, more than five times the central bank's net forex reserves - and maintaining access to international capital markets at reasonable costs is vital.

"Countries where the executive is at odds with or dominates the judiciary find it hard to gain access to foreign financing," the banker said.

"Turkey is shooting itself in the foot."

Erdogan shows no sign of backing down in a struggle his supporters view as an opportunity to break the influence of Gulen's Hizmet ("Service") movement, which they see as an unaccountable force guiding democracy from behind the scenes.

President Abdullah Gul, a co-founder with Erdogan of the AK Party who has largely stayed out of the furor in recent weeks, has to ratify the judiciary bill, but has rarely used his powers to veto legislation and is broadly seen as unlikely to do so this time.

Gul nonetheless met the leaders of Turkey's three biggest opposition parties on Monday in an apparent effort to broker a last-minute reconciliation. Parliament's justice commission, dominated by the AK Party, is still reviewing the draft bill and it was unclear when it would be put to a vote in the assembly.

Erdogan said on Sunday that the opposition could challenge the changes at the constitutional court, but his critics say that would take time and come too late.

As soon as the law is ratified, the justice ministry could immediately make its own appointments at the top of the judiciary, said Idris Bal, a former AK Party deputy who quit the ruling party last year.

The corruption investigation is still ongoing but tighter control over the judiciary could help the government avoid more damaging allegations in a scandal that has already brought the resignation of three ministers before local elections in March.

But it is also likely to consolidate opposition to Erdogan's perceived authoritarianism, with talk of Gulen's movement, known as the "cemaat", tacitly backing the opposition Republican People's Party (CHP) in the key Istanbul mayoral race.

"The new generation in both the cemaat and the CHP are global-looking, pro-European Union, pro-democratization, they know that they can work together," Caliskan said.

"I don't know if this will translate into votes, but I'm sure the cemaat will never vote for the AK Party in the next local elections."

The proposed bill would roll back some of the steps taken in a 2010 referendum on constitutional reform, a package meant to bolster the independence of the judiciary and championed by the European Union, of which Turkey aspires to be a member.

EU enlargement commissioner Stefan Fule said on Twitter late on Sunday that he had asked Turkey's authorities to ensure the changes were "in line with the principles of EU legislation".

A senior executive who advises foreign firms investing in Turkey said over the last decade it had considerably improved as a place to do business and had cut down bureaucracy.

"But it hasn't achieved the same success in terms of transparency," he said. "Foreign investors who were previously mulling coming to Turkey are now in a wait-and-see mood."

(Additional reporting by Daren Butler in Istanbul; writing by Nick Tattersall; editing by Philippa Fletcher)

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Comments (3)
rmustapha87 wrote:
Can someone please explain what the scandal is about? Every article I read goes on and on about the damage to Erdogan’s administration, but cites very few specifics concerning the controversy.

Jan 14, 2014 2:21am EST  --  Report as abuse
SamPalmer wrote:
I am amazed at the exaggeration that takes place in some these articles. Erdogan is finished! Turkey is will lose all its gains in the last 10 years! Etc. etc.I follow Turkish press pretty closely. I have friends who run businesses in Turkey. Just yesterday I read about the new public opinion surveys that came out. There is no indication that Erdogan is going anywhere! Yes, there may be a few percentage of voters shifting here and there but by-and-large the defectors have been replaced by new arrivals, both from Kurdish voters and other segments of the population, including liberals.

That being the case, one wonders why Reuters, BBC, Financial Times, Wall Street Journal and others keep misinforming us. Why don’t you guys do your journalistic duties and inform us with numbers? For weeks you have been talking about collapse of the Turkish Currency, collapse of the Stock Market, fleeing capital, stalling exports, etc.

We like numbers in America! Why don’t you put these in numbers and graphs so that we know what you are talking about? Could it be because there is nothing much to show to justify the rhetoric! Get real folks! Stop insulting our intelligence!

Jan 14, 2014 3:59am EST  --  Report as abuse
objektin wrote:
rmustapha87: the scandal is that 3 ministers and their sons were involved in high level corruption. They were getting paid by an Iranian businessman, who was circumventing the sacntions against Iran by transporting gold bullions.

$4.5 million cash was confiscated by the police at the home of the CEO of Halkbank who was involved in the affair.

Ali Agaoglu (who is like the Turkish Donald Trump) was questioned, because his newly built “tower” didn’t have permits to allow him to build as many floors as he built. Apparently he talked personally to the prime minister, and the issue was “resolved” (unlawfully that is, against the decision of the local committee etc.)

The government reacted by sacking the police chiefs and the prosecutors (instead of supporting the investigation).

Erdogan assigned people whose sole credentials were loyalty to himself as police chiefs to big cities (including Istanbul). Those police chiefs blocked the new investigations.

Prosecutors tried to bring a case against these police chiefs, which were blocked by the minister of justice. So right now, the police does not listen to court orders in Turkey.

For instance Erdogan’s son, Bilal, was involved in high level corruption involving the transfer of a valuable property (which was a police college) to his charity. The prosecutor wanted him questioned. The police didn’t listen to the prosecutor, and effectively he can not be questioned (because his father is protecting him with all the power of the state).

So we do not exactly know every detail of the scandal. But what we know is already HUGE.

But people suspect event this is just the tip of the iceberg.

Jan 17, 2014 8:52pm EST  --  Report as abuse
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