Erdoğan says Turkish wealth fund to be reorganized after head dismissed

ANKARA

President Recep Tayyip Erdoğan said on Sept. 8 Turkey would reorganize its $40 billion sovereign wealth fund after dismissing the organization’s chairman over its failure to meet targets since it was founded a year ago.

Mehmet Bostan was removed as chairman of the fund as of Sept. 7 and the head of the Borsa Istanbul stock exchange, Himmet Karadağ, was named as acting chairman, a senior official earlier told Reuters.

“The desired goals and progress were not achieved in the wealth fund,” Erdoğan told reporters ahead of a foreign trip, as quoted by Reuters. 

“We need to reorganize the wealth fund and we will take that step after the Kazakhstan visit.”

The president said he discussed the issue with Prime Minister Binali Yıldırım, who is responsible for the fund, and they “decided it could not go on this way.”

The fund was set up last year by the government to develop and increase the value of Turkey’s strategic assets and provide resources for investment. Historically, sovereign wealth funds have been set up with oil producers such as Norway or Gulf states, using money from energy exports for investment.

But Turkey imports almost all of its energy and some economists have said the government could better spend money paying down a national debt that runs at roughly 30 percent of economic output.

The government has transferred stakes worth billions of dollars of state assets, including stakes in flag carrier Turkish Airlines and fixed-line operator Türk Telekom.

Stakes in state-owned Ziraat Bank, the country’s biggest lender, the Borsa Istanbul stock exchange and state-owned pipeline operator BOTAŞ have also been transferred, according to an announcement on the Official Gazette on Feb. 5.

Other assets that were moved to the fund include stakes in oil company TPAO, the PTT post office, satellite communications company TÜRKSAT, Eti Maden mining company and tea producer ÇAYKUR.

Some 3 billion liras of funds under the control of the defense industry support fund will also be transferred, according to the Official Gazette. 

Some 2.3 million square meters of land, owned by the treasury and located in tourism sites, have also been transferred to the fund. 

The government has said it wanted the fund to manage $200 billion in assets as soon as possible. One senior official told Reuters this year that the fund could be used to secure financing for major infrastructure projects.


Akin to ‘national development bank’

Ratings agency Standard & Poor’s has said the fund was more akin to a national development bank, with its design suggesting an effort to create a funding vehicle by leveraging up assets.

Under Erdoğan, who supports using large-scale projects to bolster the construction industry and domestic demand, Turkey has built high-speed railways, suspension bridges and undersea tunnels.

Other planned mega-projects include one of the world’s biggest airports in Istanbul and a huge canal that would render a large chunk of the city an island.

Some analysts and opposition politicians have expressed concern that the fund would lead to greater political control over state assets and a decrease in outside oversight.