The AKP shoots its goose
The government’s vindictiveness has no bounds. It is going after Turkey’s largest and oldest holding company, the Koç Group, now because of the refuge given to Gezi Park demonstrators by the Divan Hotel in Istanbul as they fled police brutality. The hotel is owned by the Koç group, of course.
The group’s energy suppliers Tüpraş and Aygaz were raided last Wednesday (July 24) by tax auditors in what the government is trying to present as a routine audit that has nothing to do with the Gezi Park demonstrations. Minister for Energy Taner Yıldız is on record saying that just because a company is among the largest tax payers in the country it does not mean it is immune from financial scrutiny.
Rumors are also circulation that the raid was the result of an insider whistleblower. Even if this is true the government refused to exercise any discretion, given that the “informer,” if indeed he or she exists, could be acting on a grudge. It means it wasted no time to avail of a tipoff despite knowing full well how such an inspection would be construed at a delicate time like this.
We are, however, talking about a business group which has contributed much to the modernization of Turkish industry, and which today exports its products, from television sets to automobiles, to every part of the globe, including Europe. Not surprisingly Tüpraş shares fell by 5 percent and Aygaz shares by 6 percent the day after the raid.
Wringing their hands in glee, as no doubt some government officials and supporters of the Justice and Development Party (AKP) are doing, these losses are peanuts for the massive group, which has concerns in just about every sector of the manufacturing and service industries. The whole incident has nevertheless sent shock waves through the business community, both domestic and foreign.
It is, after all, not the first time the government has used the tax weapon against perceived enemies. Daily Hürriyet on Monday (July 29) quoted İsmet Demirkol, an economist from Bahçeşehir University, saying that this development will have an adverse effect on the economy in the middle term and act as deterrence for foreign investors.
International rating agencies, so hated by Prime Minister Erdoğan, will undoubtedly also take note of a development that is akin to going after the jugular vein of the economy, a fact that is bound to shake confidence in Turkey. Given this gloomy picture, and its potentially dire consequences, one has to seriously question the competence of a government that is prepared to shoot the country in the foot in order to satiate its ire against perceived enemies.
The fact that the AKP was elected by 50 percent of the vote obviously does not mean that it is incapable of mismanagement or bad governance. Clearly, whatever the sense of “mission” Erdoğan and his party are imbued with may be, they take this seriously enough to risk tampering with the economy in order to get at what they see as their enemies.
It seems, however, that their axe may have hit a hard rock this time, to quote a Turkish saying. The Koç group’s sheer size means it can sustain serious blows, even though this will come at the cost of layoffs, which in turn is bound to increase anti-government sentiments among an increasingly wary public.
A significant portion of the support for the AKP comes from the fact that it kept the economy on track and growing, a fact that Erdoğan and his ministers boast about at every occasion. Now, however, it is going after the goose that laid golden eggs for it.
Despite all this, the best advice from a market expert commenting on TV recently was for investors to buy as many Tüpraş and Aygaz shares as possible while prices have fallen, because they are bound to rise again. Meanwhile the AKP will learn that some things are simply beyond its reach.