President Recep Tayyip Erdoğan did not spare any criticism towards a wide variety of institutions, events and concepts after boasting of his government’s achievements while speaking at a High Advisory Council meeting of the Turkish Industrialists’ and Businessmen’s Association (TÜSİAD) in İstanbul on Friday.
Among his targets were The New York Times, the Gezi events of 2013, credit rating agencies, the Hizmet movement, the Koç family and high interest rates.
Beginning his speech, Erdoğan said the most important item on his agenda during his tenure as prime minister, between 2003 and 2014, was the economy. He said the primary reason for the hard-hitting financial crisis of 2001 was that the country had been turned upside down by years of political instability.
“There is this cycle that has been consolidated in Turkey that whenever business is good, a coup happens,” said Erdoğan, referring to the three military coups that took place between 1960 and 1980. He said the progress ushered in by former (and Turkey’s first democratically elected) Prime Minister Adnan Menderes had been squandered by the 1960 coup, and that the reforms implemented by former President and Prime Minister Turgut Özal beginning in the 1980s were cut short by the 1997 intervention.
The president emphasized the focus that his government held on developing. “When we came to power we worked to break this cycle. We said ‘everyone will win.’ Our most important goal was to bring development together with justice. There were abandoned, forgotten regions. It became our goal to rejuvenate a 780,000 square-kilometer area. We lowered interest rates for farmers and small businessmen,” he said, recalling that Turkey’s overall growth rate between 2003-2013 was five percent.
He said the Gezi protests of last summer resembled recent unrest that shook Ukraine, Syria and Egypt, insinuating that the protests amounted to a coup attempt. He also took aim at a recent report in The New York Times about the Hacıbayram neighborhood of Ankara, which has allegedly been a source of recruits to the terrorist Islamic State of Iraq and the Levant (ISIL). The report featured a photo of Erdoğan and Prime Minister Ahmet Davutoğlu exiting a mosque in Hacıbayram, prompting pro-government media outlets to claim that the NYT report was implying that Ankara supports ISIL.
NYT journalist Ceylan Yeğinsu has come under attack by pro-government media for the report, who have published her photo. However, Yeğinsu tweeted on Wednesday that she was not responsible for the photo or its accompanying caption.
Recalling leaked recorded phone conversations allegedly of prominent businessman Mustafa Koç, Erdoğan said those who have been criticizing the Justice and Development Party (AK Party) government have not even said a single word about “the pineapple issue.” Erdoğan also added that those who have been criticizing the government do not comment on “the rosary and refinery issues,” a comment ostensibly directed at Koç.
In one of the illegally recorded phone conversations, Mustafa Günay, the secretary-general of the Turkish Confederation of Businessmen and Industrialists (TUSKON), is heard telling Fethullah Gülen that he had sent Ugandan pineapples to businessmen, including Koç, as gifts. Günay was also consulting Gülen about a tender for a refinery in that country, saying a Turkish company — Koç Holding, if possible — should enter it.
Erdoğan also criticized credit rating agencies over their assessments of economies, saying those agencies have been carrying out a perception operation. He stated that the rating agencies have been evaluating countries for political reasons. Mentioning the growth rate of Germany, Erdoğan said the Turkish economy has grown by 2 percent this year, a rate that is significantly higher than Germany’s rate of 0.8 percent.
He claimed that the Organization for Economic Cooperation and Development (OECD) secretary-general told him not to consider the agency’s ratings. Instead, Erdoğan added, Turkey needs to take notice of the OECD’s assessments. Erdoğan also said whatever the agencies have said so far, Turkey has already implemented. He also underlined the importance of the rule of law for an economy, saying investors do not have any interest in a country where the law does not dispense justice.
TÜSİAD Chairman Haluk Dinçer’s speech mainly stayed on the topic of the perils of rising polarization in Turkish society. He called on Erdoğan to step up and contribute to cooling down social tensions.
“The polarization that we are in [the midst of] now must never reach the point where it will render the policy suggestions I shared with you in my speech meaningless, positive expectations and development policies [nor should it] constrain areas of reform or damage fraternity and feelings of safety in society,” he said. He added that without getting rid of this polarization, it will be impossible to take any strides on the path to crucial reforms, such as the settlement process and drafting a new constitution.
What especially must stop are groundless rumors, which may create distrust in the banking business, he said. His assertion was followed by an assault by Erdoğan, in the same meeting where he called Bank Asya “an already failed bank.”
TÜSİAD High Consultation Council (YİK) President Erkut Yücaoğlu also delivered a speech, underlining the need to consider the freedoms of expression and faith while drafting a new constitution and adding that freedom must be at the core of all legislative activities. He also emphasized the imperative of neutrality and independence in the justice system.
“As a prerequisite for a country under the rule of law, every organ at present must be open to judicial review in their activities. Likewise, the state must provide assurances to individuals concerning the law. A failure to settle the norms of the rule of law may cause a lot of ongoing suffering in the state as well as in society,” he said.
Yücaoğlu argued that a parallel structure in the judiciary is unacceptable and that the state administration must be completely free of the influence of any kind of tutelage, referring to Erdoğan’s accusation that the Hizmet movement had been creating a parallel state. Hizmet clearly rejects such assertions and defends the idea that such formations of “state within state” must not be allowed.
He also declared TÜSİAD’s support for the government’s initiative in the settlement process with the Kurdish population in eastern Anatolia. “We are ready to contribute to the regional development aspect of the process [of the settlement],” he added.
Yücaoğlu warned about deterioration in macroeconomic indicators as well. “This year, the production and growth figures are displaying a performance below expectations. The growth rate [of the gross domestic product (GDP)] is expected to be around 3 percent [for 2014]. It must seriously be considered to increase industry’s share of the GDP,” he argued.
Koç Holding Chairman Mustafa Koç, who is also a prominent member of TÜSİAD, voiced similar concerns about the sluggish performance of the economy this past weekend during a breakfast with several business editors of Turkish newspapers. “It is not rocket science to see that a 2.1 percent [GDP growth rate for the second quarter] is not enough to reach long-term targets.”
Erdoğan, who has led a relentless defamation campaign against Bank Asya, Turkey’s largest Islamic lender and one of the strongest in terms of capital adequacy, ratcheted up his attacks on Thursday by falsely claiming the bank has already failed.
“It’s being said there are efforts being made to sink a bank. There is no work being done to sink a bank. This bank has already failed. But they are trying to keep it afloat with a few buckets of water,” Erdoğan said in a meeting with the Turkish Industrialists and Businessmen’s Association (TÜSİAD) in İstanbul.
Erdoğan’s unwarranted attacks against Bank Asya drew a wave of criticism from many circles including the opposition parties, which warned the government about triggering a financial and banking crisis in Turkey. Erdoğan’s battle with Bank Asya also widened cracks between the president and the government whose leading figures including the prime minister seem to have recently distanced themselves from Erdoğan’s irresponsible behavior.
Bank Asya, the target of a 10-month defamation campaign led by Erdoğan and his associates, has now turned into the single most important economic issue for the Turkish banking and finance industries, which are already under pressure from weakening home sales and rising unemployment as well as the US Federal Reserve’s tapering of the bond buying stimulus program.
“You are responsible for a new crisis that might be sparked in the banking industry,” the main opposition Republican People’s Party (CHP) leader, Kemal Kılıçdaroğlu, wrote to Davutoğlu on Wednesday, lambasting him for being silent in the face of Erdoğan’s clear attacks on the bank.
Drawing attention to the prime minister’s responsibility to protect banks, Kılıçdaroğlu said, “Nobody has the right to reward or punish a bank because of its shareholders, credit customers or accounts.”
The main opposition leader’s letter was sent right after Erdoğan told journalists that the Banking Regulation and Supervision Agency (BDDK), the regulatory body, would be held “responsible” if it failed to act against Bank Asya. He has effectively ordered regulators to seize the bank when not warranted, prompting a series of rebukes from the opposition, economists, experts and civil society groups.
Instead of responding to serious warnings on the Turkish economy, Davutoğlu preferred to question Kılıçdaroğlu’s writing style in the letter, and criticized the main opposition leader’s description of Erdoğan.
He said the statements addressing the president in the letter are shameful.
Davutoğlu accused the CHP leader of openly betraying the Turkish economy and stability in Turkey by trying to portray the country as having an economic crisis. “To whom is he reporting?” he asked, accusing the opposition leader of making irresponsible statements based on manipulative reports on the Turkish economy during a very critical period in the world economy.
Kılıçdaroğlu responded to Davutoğlu on Thursday, saying the president’s comments are harming the banking industry as a whole. Stressing that the content of the letter is very clear and the banking business is a very sensitive matter for the economy, the main opposition leader said Erdoğan’s statements are in violation of banking laws.
“Turkey paid a big price in the past for similar behavior. I simply asked the prime minister to fulfill his duties as the prime minister of this country. No bank can be forced into bankruptcy by an official, the prime minister or the president. It’s as simple as that. I’m waiting. We will see whether he fulfills his duty or not,” he stated.
Concerned that the smear campaign may negatively affect the nation’s financial and banking industry, Davutoğlu said earlier this week said the speculation about the bank is ill-intentioned. He also said the rules and regulations in the banking industry are very clear and that the banking system in Turkey can withstand any crisis.
He underlined that those who comply with the rules have nothing to fear because Turkey is a country that respects the rule of law.
Deputy Prime Minister Ali Babacan, who is Turkey’s economy czar, has asked citizens not to pay any attention to statements other than those issued by regulators or authorities.
The deputy prime minister defended the finance industry saying that the Turkish financial system is very strong. “Rules are clear,” he said, underlining that the rules will be applied to everybody in a similar manner without any discrimination.
However, Twitter user @fuatavni, a government whistleblower who writes under the pseudonym of Fuat Avni and is believed to be a senior government official, recently revealed that eight banks are being closely monitored by the BDDK, as they are about to go bankrupt.
He said Bank Asya is in a financially solid position despite pressure from the government and illegal procedures the bank has been faced with, but @fuatavni gave the names of eight banks that are in trouble. He said in total 10 banks are under the BDDK’s surveillance, threatening that he may post hard evidence to back up his claims as well. He added that Erdoğan and leading government officials in charge of the economy have been informed about the issue.
The whistleblower’s account of Bank Asya was verified by the bank’s CEO, Ahmet Beyaz, on Tuesday night in an interview during which the CEO said the bank is one of the three strongest banks in Turkey, with its capital adequacy ratio at about 20 percent, dismissing a 10-month-long smear campaign targeting the bank by Erdoğan and his associates.
Beyaz said: “The average ratio of all banks is around 14 to 15 percent. Bank Asya’s capital adequacy ratio is about 20 percent.” He added that the regulators determined a threshold of 12 percent for the capital adequacy requirement for all banks in Turkey.
On Tuesday the board of directors of Bank Asya raised its total capital by TL 225 million in cash to TL 1.12 billion to help further boost its capital adequacy ratio. The Bank Asya CEO said the bank is the 13th largest among 51 banks in Turkey, noting that it has more than 1 million account holders. “We contributed more than $30 billion to the Turkish economy last year,” he underlined.
Beyaz said both the bank and its shareholders have filed about 300 lawsuits against media outlets for libel as well as for criminal prosecution, seeking justice in court. On Wednesday, the bank also filed a criminal complaint against those who have been conducting “an organized and systematic defamation campaign” targeting the Islamic lender.
In the meantime, the development fund Saudi Export Program (SEP) renewed its credit agreement with Bank Asya on Thursday, raising the credit-export limit with the bank by 50 percent from $40 million to $60 million.
Bank Asya has been targeted by Erdoğan because it is affiliated with the Hizmet movement, which is inspired by Fethullah Gülen, a Turkish Islamic scholar. Following two graft probes that went public in December of last year, Erdoğan accused Hizmet of being behind the investigations and claimed that the probes were a coup attempt against the government. Four government ministers had to resign as part of the probe.
In what appears to be part of a personal vendetta by Erdoğan against Gülen, many government-controlled media outlets have run a relentless smear campaign against the bank to damage its reputation and discredit the bank.
Without naming the whistleblower in the press conference on Wednesday, Davutoğlu said the information is speculative and the finance system is not in trouble.
Turkish laws on banking and capital markets are very strict and bars anybody including government officials and press from making statements that may harm the reputation of banks. Article 74 of the Banking Law says anybody who issues a statement targeting banks can be sentenced to up to three years in prison, and that sentence cannot be commuted.
Regulators at the BDDK are tasked with overseeing that banks are independent of any branches of the government and protecting the reputation of banking and financial institutions.
Bank Asya said it lamented the lack of action from the regulators in most of the 10-month-long campaign targeting the bank, saying the BDDK statement warning about speculative news came very late. The bank has filed a criminal complaint against the regulators for failing to perform their task as defined under the banking laws.
Reactions against Erdoğan’s attacks and the government’s lackluster response on protecting the reputation of a leading bank continue to draw criticism on Thursday.
CHP İzmir deputy Aytun Çıray suggested that Davutoğlu pay attention to what Kılıçdaroğlu said in his letter and not to succumb to the president’s wishes to see the bank go bankrupt.
In a written statement issued on Thursday, Çıray said Davutoğlu must make a clear statement to allay concerns in the Turkish markets, adding that the prime minister must stop Erdoğan’s attacks, which may lead the country to a financial and economic crisis.
“Mr. Davutoğlu, do not behave as if you’re a staff member of the president. Do not let the president govern you and, by extension, rule the country,” Çıray said, warning Davutoğlu not to risk Turkey’s future. Çıray said the prime minister should focus on the substance of the letter sent by Kılıçdaroğlu rather than its style.