’60 % of the cabinet decisions in the first half of the year were about public works!

Most economists in Turkey are probably not shocked that construction projects are part of the investigation, writes Emre Deliveli in Daily News:

Even a first-time visitor to Istanbul would notice right away that the whole city looks like one huge construction site. Interestingly, I have some difficulty explaining this real estate boom to foreign economists, who point out that home prices have not risen as much as in other countries that went through bubbles, or that the share of construction in GDP is lower than in many peers.

Prices have been held relatively at bay by the astonishing rise in supply, which has been financed by a Ponzi-like scheme: Construction companies start a new project before they sell a significant part of their completed ones. They finance this spree by borrowing from banks, which get extra business by lending to homebuyers. 

And by the way, although we don’t have data on foreign currency (FX) lending by sector, my spider senses are telling me that a significant portion of the loans to construction companies are in FX. These firms would be in dire straits if the currency depreciated further, as most of their income is in liras. 

I am sure Turkey is not the first country that has gone through this path. We are even lucky that mortgages are not being packaged into derivatives and then sold and resold. We have to thank our undeveloped financial system for that. But I am not sure if there is any other country where the government is supporting this process as much.

Take TOKİ, the state-run Housing Development Administration. It only answers to the prime minister, and therefore we don’t know much about its accounts, but many construction companies partner with it. That’s the only way to get access to otherwise off-limits Treasury land. The zoning goes through the municipalities, but that is easy to take care of, as my last column illustrated. 

It is not only construction magnates who are thankful to TOKİ, which works with many subcontractors. Going through some of these firms last year, I found out that most of them were founded in the last few years. And for the really big stuff like the third airport, there is the government: 60 percent of the cabinet decisions in the first half of the year were about public works!

In fact, it is so easy to make money in construction, even without TOKİ or the government’s help, that many Turkish conglomerates have been rushing into the sector at the expense of manufacturing. When I say Zorlu, what is the first thing that comes into your mind? The Zorlu Center, which was built on the land of Department of Highways, or electronics brand Vestel? In a way, construction is Turkey’s “oil curse.”

More to read, here.


About yavuzbaydar

Yavuz Baydar has been an award-winning Turkish journalist, whose professional activity spans nearly four decades. In December 2013, Baydar co-founded the independent media platform, P24, Punto24, to monitor the media sector of Turkey, as well as organizing surveys, and training workshops. Baydar wrote opinion columns, in Turkish, liberal daily Ozgur Dusunce and news site Haberdar, and in English, daily Today's Zaman, on domestic and foreign policy issues related to Turkey, and media matters, until all had to cease publications due to growing political oppression. Currently, he writes regular chronicles for Die Süddeutsche Zeitung, and opinion columns for the Arab Weekly, as well as analysis for Index on Censorship. Baydar blogs with the Huffington Post, sharing his his analysis and views on Turkish politics, the Middle East, Balkans, Europe, U.S-Turkish relations, human rights, free speech, press freedom, history, etc. His opinion articles appeared at the New York Times, the Guardian, El Pais, Svenska Dagbladet, and Al Jazeera English online. Turkey’s first news ombudsman, beginning at Milliyet daily in 1999, Baydar worked in the same role as reader representative until 2014. His work included reader complaints with content, and commentary on media ethics. Working in a tough professional climate had its costs: he was twice forced to leave his job, after his self-critical columns on journalistic flaws and fabricated news stories. Baydar worked as producer and news presenter in Swedish Radio &TV Corp. (SR) Stockholm, Sweden between 1979-1991; as correspondent for Scandinavia and Baltics for Turkish daily Cumhuriyet between 1980-1992, and the BBC World Service, in early 1990's. Returning to Turkey in 1994, he worked as reporter and ediytor for various outlets in print, as well as hosting debate porogrammes in public and private TV channels. Baydar studied informatics, cybernetics and, later, had his journalism ediucatiob in the University of Stockholm. Baydar served as president of the U.S. based International Organizaton of News Ombudsmen (ONO) in 2003. He was a Knight-Wallace Fellow at University of Michigan in 2004. Baydar was given the Special Award of the European Press Prize (EPP), for 'excellence in journalism', along with the Guardian and Der Spiegel in 2014. He won the Umbria Journalism Award in March 2014 and Caravella/Mare Nostrum Prize in 2015; both in Italy. Baydar completed an extensive research on self-censorship, corruption in media, and growing threats over journalism in Turkey as a Shorenstein Fellow at the Kennedy School of Government at Harvard.
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