Erdoğan’s Istanbul dream may be dying
President Recep Tayyip Erdoğan has long viewed Istanbul as the crowning achievement of Turkey, a place to be gloriously built up in order to remind Turks, and Muslims everywhere, of their capacity for greatness.
“It is the city that instilled in us the feeling of mission,” Erdoğan, who came to national prominence as the city’s mayor in the 1990s, said in 2013. “Istanbul will act as a lighthouse that shows the way.”
As he sought to position Turkey as the leader of the Muslim world, Erdoğan approved $100 billion worth of megaprojects to make his lighthouse shine bright. These included the world’s largest airport, Turkey’s largest mosque, a multi-billion-dollar financial center, a third bridge over the Bosphorus, as well as railway and road tunnels underneath it, and a 30-mile shipping canal linking the Black and Marmara seas that Erdoğan himself described as crazy.
Fast forward six years, and the president’s mission seems to be teetering. The surest sign of this was his party’s loss of the Istanbul municipality to the main opposition candidate in local elections this year.
Not only has Erdoğan lost control of the municipality that his ruling Justice and Development Party (AKP) and its predecessors had run since he became mayor 25 years ago, but they have also left the city $5 billion in debt.
Turkey’s cultural and financial centre is home to 16 million people and contributes more than 30 percent of the country’s GDP. It had long served as a key patronage network and economic lifeline for the AKP. But main opposition Republican People’s Party mayor Ekrem İmamoğlu’s victory this year has deprived the ruling party of these vital resources.
The new mayor has since exposed mismanagement and corruption under the previous AKP municipality, such as the millions wasted on more than 1,200 unnecessary city vehicles which had been rented from a firm owned by a relative of Treasury and Finance Minister Berat Albayrak. İmamoğlu also showed how the AKP-run municipality had funneled millions to charities linked to the president.
An economic downturn exacerbated by a currency crisis in 2018 has devastated the construction industry, which had long been fuelled by Istanbul growth. The sector contracted nearly 13 percent in the second quarter of 2019, as construction spending dropped by a third and new building permits fell by 60 percent. Scores have firms have closed down, while some have applied for legal protection from creditors or sought to restructure debt as major projects are cancelled or suspended each year.
An article in British newspaper The Times said on Monday predicted that the massive projects that have become a trademark of Erdoğan’s rule could soon grind to a halt.
The article pointed to the government’s decision this month to publicly finance the construction of 10 new Istanbul hospitals, rather than use a public-private partnership. The move came after a main opposition parliamentarian described the previous plan under the public-private partnership model as “the biggest black hole” in the history of Turkish government budgeting, pointing out that the state would be required to pay contractors an annual $5.5 billion for 25 years.
These and similar models which have been used by the AKP in a long series of other public projects, grant contractors the licence to operate the infrastructure they build for a set number of years, during which the treasury guarantees them a minimum level of income. This is often set in foreign currencies and at unrealistically high levels.
The Times said the model had enriched Erdoğan’s allies while also allowing the president to show voters completed projects that are presented as marks of his party’s success.
However, many of Erdoğan’s megaprojects have faced considerable headwinds, including those that have reached completion. In 2017, its first full year of operation, the third Bosphorus bridge took in $135 million in revenue from tolls, less than a third of the $464 million the government promised to pay back to contractors every year.
Istanbul’s new airport, which opened in April at a cost of $12 billion, faced immediate criticism after it was forced to cancel dozens of flights due to clouds and fog. The airport is now dealing with financial difficulties, as passenger numbers are down from last year and the consortium that runs the airport is restructuring its debts. On Tuesday, private Turkish airline AtlasGlobal said it was suspending operations due to financial difficulties related to the new airport.
The $30 billion canal project was greenlit by Turkey’s planning committee more than six-and-a-half years ago, yet it remains in the planning stages, though Erdogan and other officials repeatedly vowed that project tenders would be offered in 2019. This now seems unlikely, though the Environmental Impact Assessment report is expected to be presented on Nov. 28.
The $2.6 billion Istanbul Financial Center project, which was approved in 2009 to be built on 2 million square metres of land on the city’s Asian side, is meant to be Istanbul’s challenge to regional financial powerhouses like Dubai.
But the project has seen several delays. In May, Presidency Finance Office Head Göksel Aşan vowed that it would be completed by its current 2023 deadline. He also said there had been serious investment interest from the Middle East.
This last point underscores a key difference between the secular-minded İmamoğlu and the Islamist Erdogan, with the former often turned toward the West and the latter still looking to the Muslim world. İmamoğlu said Turkey’s state banks had stopped lending to his municipality for Istanbul projects, which has prodded the mayor to ask Europe for assistance.
“I have no doubt that we will find funding from the European Union,” said the mayor, who visited the British capital earlier this month and was interviewed by London-based international affairs magazine Monocle in its latest issue. On Sunday, Istanbul secured $121 million in financing from Deutsche Bank for a metro expansion project.
Aydın Selcen, a former Turkish diplomat under the AKP, noted the contrast as Turkey’s president boarded a flight to Doha on Monday. “While Istanbul Mayor İmamoğlu tours Berlin, Paris & London to sell eurobonds to finance projects, President Erdoğan is on his way to Qatar,” Selcen tweeted. “That's what friends are for.”
This ideological divide connects to the most powerful protest movement Turkey has ever seen, which emerged in response to Erdogan’s vision for Istanbul. When in May 2013 authorities sought to replace Istanbul’s Gezi Park with an Ottoman-style barracks, a few dozen protesters gathered to halt the project.
Word of the government’s harsh crackdown soon spread and within days, millions of people across Turkey had taken to the streets. The protest movement was eventually put down by heavy police interventions, and Turkish citizens have been largely barred from protesting since, suggesting that Erdoğan’s vision for Istanbul won out.
The past year has begun to change the narrative, though Tezcan Gümüş, analyst of Turkish politics at the University of Melbourne, warned supporters of the Gezi protests not to get too excited.
A draft law prepared by the government last month would hand authority over development near the Bosporus to a new national body under the president, taking it away from the municipality.
İmamoğlu protested that control of the Bosphorus and surrounding areas belonged only to Istanbul, but Gümüş said in a recent Ahval podcast that he expected the president to make moves to whittle away the power of opposition mayors, particularly in Istanbul, in the months ahead.
“I can definitely see (Erdogan) continuing to erode the power of someone like İmamoğlu,” he said.
Earlier this week, the CHP issued a report accusing the government of blocking state funds to CHP-run municipalities and aiming to curb the independence of the elected mayors.
On Tuesday, Erdoğan accused İmamoğlu of mismanaging the resources of Turkey’s most important city. “If the weather conditions do not change, Istanbul will suffer from water shortages in three months,” he told AKP parliamentarians.