Turkey's Volkswagen scandal

Volkswagen's investment plan in Turkey is a scandal. It is no less than an attempt to rescue a drowning company ensnared in corruption. While the Turkish public will bear the economic costs of this plan, environmental damage will also be caused.

In the past few weeks, Turkey was marked by two scandals related to Volkswagen. While the first one had to with diesel cars, the second was related to a plan by the company to invest in the city of Manisa.

As the details of the investment were being negotiated, real subjects were absent from the negotiation table. Economic aspects were discussed, the possibility of buildings factories on farm land were considered. The consequences for climate change were also brought up. Yet local and national politicians always shun environmental implications.

CEMENT CARBON EMISSIONS

As Europe's cement factories became homeless after environmental standards and policies were implemented there, Turkey offered its land and soil to these companies. As a result, half of Turkey's cement industry is made up of foreign companies. Amongst them are the French group Lafarge, the Italian group Italcementi and the German group Heidelberg. Turkey has become such a hub for cement production that companies from Greece and Brazil have also started operating there.

What attracted these companies was Turkey's low environmental standards. Just like cement companies, it is the lack of regulations that is bringing automobile manufacturers such as VW. While factories are being shut down in Germany, they are being moved to Turkey. The city of Hamburg has made its objective to ban cars by 2025. What about the global debate on ending the sale of fuel oil-reliant cars by 2023? Does that not apply to Turkey?

THE VOLKSWAGEN EMISSION SCANDAL

When it came out that Volkswagen had been meeting environmental standards thanks to cheating on results regarding diesel cars, emission scandal unfolded concerning 8.5 million cars in Europe and 600 thousand cars in the U.S. Investigations began. In the U.S., the company had to pay a 4.3 billion dollars fine. in 2017. Germany fined the company 1 billion euros. Investigations spread to other countries and brands as well. Brands like Audi and Porsche had to pay fines for similar reasons. Mercedes-Benz, Fiat Chrysler and Opel were also embroiled in such scandals.

In total, Volkswagen had to pay a bill of over 30 billion dollars as a result of fines and repurchasing cars it had sold. Others dodged the situation with fines worth hundreds of millions of dollars. Some executives even went to jail.

The U.S., regarded as the "most polluting country in the world" has higher emission standards than Europe. Needless to say Europe has much higher standards than Turkey. Still, these countries' governments ignore the situation.

AN INVESTMENT LIE!

As Volkswagen began its investment process, Turkey failed to carry out a thorough examination, instead welcoming the company with open arms. In fact what will happen is that the company will do little less than move its current factory, the Turkish public dealing with the investment.

Thanks to investment incentives, the company will pay close to no taxes. But if Volkswagen doesn't pay taxes, who will? So much is being provided with incentives that the company has become spoiled. It even asked for the municipality to build social and education buildings as well as housing. This means Turkey alone will implement the investment operation using public funds.

What is more, talks are ongoing regarding a state guarantee to purchase 40 thousand cars. Also, no tariff car imports are allowed for Volkswagen. Over 100 thousand brand new Volkswagen cars that were withdrawn from the American market have been sitting idly in the California desert, the Baltimore docks, the Silverdome Stadium in Detroit and in a field near a nuclear plant in Seattle. Turkey might be the next destination for these cars.

So as the world punished a company that was concealing its excessive use of gas, Turkey offered it incentives. As if that wasn't enough, it provided it with a guarantee to buy 40 thousand cars. Added to that, it agreed to abolish tariff imports and an opportunity arose to bring in withdrawn cars from America.

The prospect of selling withdrawn emission scandal cars in Turkey may leave one skeptical. Also, how can a car that was withdraw back in 2017 be "unused"?

A SCANDAL WORTH 3.5 BILLION

The company's diesel cars are sold at about 25 thousand dollars a car in America. Based on that number, one can expect Turkey to pay the company about 1 billion dollars in its purchase of 40 thousand cars. If it imports the idle cars from the U.S., that will be another 2.5 billion dollars for VW. A total of 3.5 billion dollars from public funding will go to the company. Of course, Turkey will gain some MTV (motor vehicle tax), ÖTV (special consumption tax) plus the KDV (added value tax) and ÖTV from fuel sales.

It is an investment strategy aimed at saving a drowning company ensnared in corruption. And while the Turkish public will bear the economic costs of this plan the planet will endure its environmental cost. This is no profitable economic investment plan. It is a scandal.