Gaddafi’s Wealth Fund

The Turkish Government, in an unprecedented decree, announced the transfer of its most valuable financial and real assets into a wealth fund on Jan. 5. For any ordinary Turkish citizen, the “transfer of assets into a fund” sounds a bit shady. From Turkish Airlines to TPAO, from Ziraat Bank to touristic real estate in Bodrum and Antalya, assets worth of hundreds of millions of dollars have been dumped into a bag overnight. The justification: Protecting them from possible hostile attacks.

Others see a different proposition. The ruling Justice and Development Party (AK Party) is having a very hard time finding funds to supply even the most basic transactions. Instead of telling the public that this will be a rough year and people should watch their finances more carefully, it is almost begging consumers to buy even more. The Jan. 3 announcement that taxes on many goods had been suspended for three months - coinciding with the upcoming constitutional referendum - is just one loud statement of that. The new Sovereign Wealth Fund is another initiative cutting against the logic of the economic reality of the day.

Let’s get some perspective. Remember what Muammar Gaddafi did when he established the Libyan Sovereign Wealth Fund and what happened afterwards.

Created in 2006, largely from the assets of the old Libyan Arab Foreign Investment Company, the Libyan Investment Authority was aimed at attracting foreign investment to Libya. The Gaddafi government signed up to IMF regulatory guidelines that intended to promote transparency. But according to experts and journalists these guidelines only allowed politicians to gain influence.

When I visited Tripoli during the final years of Gaddafi’s reign, I saw how Turkish construction companies had benefited from the flush of cash by getting tenders to build university complexes, hospitals, hotels, etc. But just as the money was mismanaged, so was the country. The Lion of Africa had some pretty bad moneymen and yes-men that drove him and his nation into tragedy.

The Telegraph’s Andrew Critchlow wrote this on June 2015, with respect to the Goldman Sachs and Societe General’s bitter court case against the Libyan Investment Authority: 

“The case lifts the lid on how the regime of the late dictator Col Muammar Gaddafi mismanaged the billions of dollars in oil revenues it stored away overseas despite years of sanctions and isolation from the West. This included a complex network of investments and other holdings spread across more than 500 companies and assets that are estimated in total to be worth $60bn. For the last five years, these assets have been frozen after the international community moved swiftly to prevent the remnants of the Gaddafi family and its henchmen from disappearing with billions.”

Gaddafi was a patriot and truly had great ideas and aspirations to pull Africa from poverty. The Libyan Wealth Fund could have been the leverage of his legitimacy in the world and the financial guarantee of an entire continent’s investments. Instead it became the factor that accelerated the dissolution of Libya as a republic.

Now in Turkey we are simply asking: Why now? And for what?