Country Risk

Turkish president's rebuke of major business lobby indicates increased risk of punitive government measures targeting opposition-aligned firms

21 May 2019

President Recep Tayyip Erdogan sits alongside key business leaders, including Rahmi Koç (L) and Güler Sabanci (R) of the Koç and Sabanci families, at the High Advisory Board Meeting of TUSIAD in Istanbul on 18 September 2014. Source: Kayhan Ozer/Anadolu Agency/Getty Images

President Recep Tayyip Erdoğan censured on 16 May Turkey's main business group, the Turkish Industry and Business Association (Türk Sanayicileri ve İş İnsanları Derneği: TUSIAD), saying that he would "hold accountable" those who "attack Turkey from within".

  • By adopting a more vocal stance, TUSIAD probably calculates that it has more to lose from the government's mismanagement of the economy than any political reprisals that it might face. Erdoğan's words came in response to a statement from TUSIAD's High Advisory Council on 15 May condemning the re-run of the Istanbul election, implying that the decision had created doubts over the AKP's deference to the ballot box. The statement also highlighted the lack of an independent judiciary and poor press freedom as key factors contributing to Turkey's economic instability. TUSIAD, which is typically managed by Turkey's secular and Westernised businesses, had long been reluctant to directly criticise the Erdoğan government. Rather than acting purely out of concern for the state of Turkish democracy, the business group now probably calculates that the risk of triggering political reprisals with a more vocal stance outweighs what it stands to lose from the government's mismanagement of the economy.
  • Punitive government measures targeting TUSIAD member firms are likely to be limited in scope, with the intention to intimidate TUSIAD members into acquiescence. The Erdoğan government's control over private-sector regulatory bodies permits it to utilise them for directing punitive measures against target companies affiliated with its domestic political rivals. Until recently, the main targets of such measures were firms with ties to the Gülen movement, a social-religious network that the government claims to have perpetrated the 15 July 2016 coup attempt. For example, in the 10 months after the coup, the government seized 942 Gülen-affiliated companies, with a combined value of USD10.5 billion, according to numbers shared by the Minister of Interior.

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