BACKGROUND: As a rule, construction represents a significant share of the economy in countries undergoing rapid urbanization. A well-known example is China, where the real estate and construction sector accounts for nearly a third of the economy. Turkey is another example. In Turkey, construction is estimated to account for between 5 and 9 percent of Gross domestic production (GDP). But together with sub-sectors such as cement and furniture, its total share rises to 35 percent.
In Turkey's recent history, many if not most of the successful business owners have made their fortunes in the construction and real estate sectors. They have benefited from close ties to the ruling Justice and Development Party (AKP), but fundamentally, the growth of the construction sector is related to the deeper economic change that Turkey has undergone since the 1980s.
In 1980, Turkey abandoned its longstanding growth model of import substitution, with companies being encouraged to reorient production from the domestic market to exports. Starting from the second half of the 1980s, factories established for export across Anatolia began production for world markets, notably taking advantage of cheap labor costs. These companies came to be known as the "Anatolian Tigers,” and their rise and empowerment subsequently contributed to the founding of the AKP. Their owners held religiously conservative views, but as participants in the global economy they no longer had any interest in the anti-Western ideology of the Islamist movement to which they adhered. It was this change that underlay the split in the Islamist movement in the late 1990s, when pro-Western reformists, led by Erdoğan, who favored good relations with Western powers and capital, left and set up a new party, the AKP. With a few exceptions, the AKP has carried the municipal elections during the last two decades in all of these, recently industrialized and globally connected Anatolian cities.
In the span of a quarter century, the urban landscape of these medium-sized but globalized cities in Anatolia changed beyond recognition, with an astonishing number of new buildings rising to the sky. This new urban landscape bore testimony to the export-fuelled growth insofar as it spoke of the rise of a globally connected entrepreneurial class. This new bourgeoisie called for a modern environment befitting its prosperity. The AKP government answered to this demand, making large public investments in these cities, equipping them with state of the art airports and city hospitals that the opposition parties claimed were election-oriented “show investments.”
But the main factor that changed the face of these cities was new and – in comparison with the past – flashy, modern residential areas built by local contractors. The two cataclysmic earthquakes of magnitude 7.7 and 7.4 that destroyed eleven cities in southern Turkey on February 6, 2023 revealed this material progress to have been illusory. While officially nearly fifty thousand lives were lost, the real number of fatalities could in fact number several hundred thousand. While any earthquake – and in this case there were two on the same day in the same region – of such magnitude is bound to be catastrophically devastating, it is also painfully clear that the poor quality of construction and criminal disregard for safety regulations vastly exacerbated the human consequences of the disaster.
IMPLICATIONS: It was no secret that a huge rent and bribery network had been established in real estate projects. What the February 6 earthquakes revealed was that close relations with the government and municipal authorities had enabled contractors to blatantly ignore regulations that would have saved tens of thousands of lives if they had been respected. This, though, is no surprise.
Large infrastructure projects in Turkey have, as a rule, been awarded to companies close to the government through non-transparent tenders. The AKP government has amended the Public Procurement Law 191 times in order to award public tenders to companies close to it. Indeed, many of the giant public tenders in recent years, such as Istanbul airport, were awarded to five big contracting firms, which Kemal Kılıçdaroğlu, the leader of the opposition Republican People's Party (CHP) and the presidential candidate of the Nation alliance, has referred to as the "gang of five". Meanwhile, the residential construction companies as well depend on political good-will since the municipal authorities determine where and under what conditions building projects can be realized. This means that the locally ruling party – in most cases the AKP – has ultimately decided which individual contractors would prosper.
However, the opposition parties, too, maintain the same unhealthy relations in many places where they run the municipalities. Hatay, a city which suffered near-total destruction in the earthquake, offers a striking example. The main opposition CHP has been running the municipality in Hatay – where half of the houses were destroyed or damaged in the earthquake – since 2014. Among the destroyed buildings in the city, there are many that were built during the last ten years. It is clear that the municipality has failed in its duty to ensure that safety regulations were respected by the constructors. Rönesans Residence, one of the most luxurious buildings in Hatay, which was supposed to be earthquake-proof, was totally destroyed in the earthquake. Its constructor, Mehmet Yaşar Çoşkun, who is also a former chairman of the chamber of architects in Hatay, was arrested at Istanbul airport as he was attempting to leave Turkey shortly after the earthquake. Çoşkun enjoyed a close relation with the CHP run municipality. The mayor of Hatay, Lütfü Savaş, defended Coşkun, assuring that "this friend of ours is a true idealist. He built the destroyed building in good faith and in accordance with earthquake regulations.” In Ataşehir Municipality, which is part of the CHP run Istanbul Metropolitan Municipality, a criminal investigation has been launched against three CHP deputy mayors who have been charged with “tender rigging.” All three were detained in February 2023.
While the February 6 earthquakes has revealed the collusion between political power and business interests, and a number of businessmen and a few public office-holders face criminal charges in their wake, it is nonetheless unlikely that the system itself will be overhauled, regardless of who wins the upcoming presidential and parliamentary elections.
CHP leader Kemal Kılıçdaroğlu has brought together an alliance of six parties that beside his own social democratic party includes one right wing nationalist, three conservative and one Islamist party. Kılıçdaroğlu also enjoys the tacit support of the left-wing Labor and Freedom Alliance of the pro-Kurdish Peoples’ Democracy Party (HDP) and three socialist parties. Yet while Kılıçdaroğlu proposes to end the “one man rule” of Erdoğan, he falls short of promising any deeper, structural changes.
For sure, Kılıçdaroğlu’s vow to nationalize the public private partnership projects of the five major contracting firms – “the gang of five” – that the Erdoğan regime has privileged is reminiscent of CHP’s wow in the 1970s to change the economic system, which energized the popular classes who rallied to the CHP. However, the economic program of the Nation alliance fails to address Turkey’s glaring social and economic inequality and is conspicuously mute about the concerns of labor. Unsurprisingly, the program has not elicited any popular enthusiasm. It is telling that while the Nation alliance promises to restore the independence of the Central Bank, it does not propose to restore trade union rights that have been severely circumscribed during the AKP era. Neither does the main opposition alliance raise the issue of a wealth tax to address social inequality, or land reform.
Admittedly, these omissions speak of the political necessity to keep the Nation alliance, numerically dominated by five right-wing parties, united. But that is not the only explanation. The economic policies of the CHP also reflect the changed class basis of the party. Since the 1970s, the CHP has moved away from the popular classes and acquired a new base among the urban, well-educated middle classes. It is no surprise that Istanbul’s high-income districts – Beşiktaş, Kadıköy, Bakırköy, Şişli, Ataşehir – have for years all been ruled by the CHP. These districts used to be the strongholds of the center-right. But as the center-right has disappeared during the AKP era, its supporters have found a new home in the social democratic CHP. While the AKP, at least in electoral terms, remains the party of the Turkish working class (the Kurdish part of Turkey’s working class rally to the HDP), the middle class and the rich support the CHP. And while those with the lowest education support the AKP, the CHP ranks first among university graduates. The question, though, is if the opposition can prevail against Erdoğan if it neglects to address the concerns of the poorer classes.
CONCLUSIONS: While the disaster that struck Turkey on February 6 has brought attention to the collusion between political power and construction companies, the fact that the opposition maintains the same unhealthy relations with business where it is in charge and its reluctance to identify with the interests of the poorer classes preclude deeper, systemic changes if it wins the election. But without holding out the prospect of major social and economic reform, it remains to be seen whether the opposition succeeds in beating Erdoğan.
Barış Soydan is a Turkish journalist specializing on economic issues
