THE WORLDPOST
03/28/2014 06:20 pm ET Updated Mar 28, 2014

Turkish Businesses Fear Government Retaliation Ahead Of Local Elections

Anadolu Agency via Getty Images

ISTANBUL -- Prime Minister Recep Tayyip Erdogan is widely feared in Turkey’s business world. From the country’s billionaires to its bankers, people worry their political stances will draw the ire of the controversial leader and that their businesses will suffer as a result.

"We have seen growing authoritarian rule and increasingly the prime minister has become the only actor," said a source close to the industrial conglomerate Dogan Holding who requested anonymity out of fear of the government. "Even companies supporting the government are feeling the pressure."

Erdogan has a history of lashing out at businesses when they don't fully support the state. He slapped Dogan Holding, which has stakes in everything from the media to energy industries, with a nearly $4 billion tax fine in 2009 for its media coverage of a corruption scandal implicating members of the government.

As Turkey prepares for highly-anticipated municipal elections on Sunday, widely seen as a referendum on the prime minister's 11-year rule, many business owners are increasingly fearful they'll face retaliation from the state if they're deemed to be anti-government. Amid another corruption scandal and recently renewed anti-government protests, Erdogan is trying to root out any opposition to his party and maintain his grip on the state. The election is expected to set the tone for upcoming presidential elections in August (which Erdogan may enter) and parliamentary elections next year.

"There will be a witch hunt after the elections," the source said.

Erdogen claims that Fetullah Gulen, a U.S.-based Islamic preacher in exile who has become his staunch enemy in recent years, is trying to overthrow the government. He says Gulen is responsible for leaking recordings to social media that appear to tie him and the government to money laundering. Some companies say they have been labeled as Gulen supporters -- considered treasonous by Erdogan -- just because they are perceived as government opponents.

Fadi Hakura, a Turkey analyst for the international think tank Chatham House, says that businesses viewed as anti-government -- and especially pro-Gulen -- could soon come under increased pressure from the prime minister and his ruling party.

"We have seen in the past and today that the favorite method used by the government to put pressure on business opponents is via tax investigation," he said. "The Turkish state has enormous amounts of legal regulatory and political power in its hands."

"It is a highly centralized country with weak checks and balances, so businesses do not have the recourses afforded to them like in the United States to go to the courts to fight against government overreach," he continued. "Power is concentrated in the hands of the prime minister. And right now, the Gulen companies are the main companies in the firing line."

For supporters of Erdogan who still make up a sizeable portion of the population, the prime minister represents a stable leader supporting Turks who aren't well-educated, wealthy or secular, like many in the opposition parties.

"I don’t believe what he’s accused of," said Emin Uçman, who runs a vegetable stand in the prime minister's hometown, referring to the corruption scandal. "I knew him when he was a teen. I don’t believe that a person who cares so much about people would do a thing like this."

And yet many business owners disagree, as the government has continued to target companies since it lashed out at Dogan Holding in 2009.

In July of last year, tax inspectors and police raided Turkey’s only oil refinery. The refinery happened to be owned by the country's largest company, Koc Holding, which came under fire weeks earlier when one of its hotels sheltered protesters during anti-government demonstrations. Erdogan accused the hotel and Koc Holding of harboring criminals, even though he said the raid wasn’t tied to the protests.

Bank Asya, Turkey’s largest Islamic bank established by the Gulen movement, has been hit particularly hard by the Erdogan-Gulen divide. At the beginning of the year, the bank watched as more than 1 billion dollars -- 20 percent of its total deposits -- was pulled by companies affiliated with the government. According to Hakura, as well as many media outlets, Erdogan himself instructed the companies to withdraw their money. Gulen supporters quickly reacted by pouring their own money into the bank to replace the lost funds, and the bank says it's no longer at risk of going under.

In early March, Turkey passed a bill that requires private preparatory schools, known as dershanes, to be shut down -- a direct blow to the Gulen movement, which runs about a quarter of the institutions. The schools provide tutoring for difficult high school and college entrance exams and have served as a primary source of financial backing for the Gulen movement.

And on Thursday, Turkish media reported that police and financial inspectors raided a Turkish company named Kaynak that has close ties to the Gulen movement. The head of Kaynak’s executive board issued a statement saying it was merely a routine procedure, but the inspection raised questions about motives.

Mustafa Yesil, president of the Journalists and Writers Foundation, an organization founded by Gulen himself, said he lost faith in the prime minister and his political party long ago.

"The government is trying to ban civic and legal businesses and centers are being shut down,” he said, sitting in the foundation’s office in Istanbul.

"Don’t go to [Gulenist] schools. Don’t watch their TV," he continued, mimicking the way he says Erdogan preaches to his supporters. "Erdogan is employing the state power against us. But we will keep our rightful standing through legal and civic means."

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