The final blow to Turkey's parliamentary system

The recent balance sheets of the state-owned tea company Çaykur testified to the government’s economic policies. Yet they also strikingly showed how Turkey was evolving into an autocracy.  

A story published by the daily newspaper Birgün last weekend reported that after Çaykur was incorporated into the Turkish Wealth Fund, which is run President Erdoğan, it suffered a loss of 1.5 billion Turkish Liras. The bank loans the establishment took out rose by 1.4 billion liras to reach 3.4 billion liras. Some 36.3 million liras were spent for advertisements. Mathematically, it is difficult to explain how a corporation that holds a monopoly in the market can go bankrupt. Does the same situation apply to the other companies in the wealth fund? 

According to 2018 audit reports, within three years, the debt of Turkish Airlines (THY) increased by 107 percent, within two years, the debt of the Post Office (PTT) rose by 21 percent, that of the Turkey Maritime Organization increased by 1,000 percent and within a year, that of the Turkish Railroads TCDD increased by 348.8 percent, whereas the debts of the Kayseri Şeker companies increased by 292.8 percent. On average, the fall in revenues amount to 50 percent. Those public companies that were incorporated into the Wealth Fund were originally worth more than 30 billion liras. 

Corruption, cronyism and the government’s arbitrary economic policies do not suffice to explain this phenomenon. This economic collapse points to a regime change, that is, a transition to an authoritarian regime. That is shown by the growing institutional power of the Wealth Fund, which is run by President Erdoğan and his son-in-law. In other words, economic management now rests in the hands of a select group. 

During the first parliamentary assembly of the Turkish Republic in 1921, the MP for Kastamonu, Abdülkadir Kemali said: “Upon founding an institution, one should be aware one is bringing a tyrant and a villain to the country.”

While Kemali criticized the arbitrariness of the state apparatus in many of his speeches, he pointed out that one of the basic ways to prevent this is through budget laws. Kemali Bey advocated that the first and foremost foundation of popular sovereignty should be “the nation’s audit and decision right on income and expenditure.”

Those were not original thoughts. The global history of parliaments, constitutions and democracies is largely the history of attempts to curb the monopoly of governments on public incomes and expenses. The Magna Carta was a charter signed in 1215 amid tax disagreements between the King of England and barons. The slogan “No taxation without representation” of the American Civil War was also milestone in the history of democracy. Likewise, there were budget debates held in the final periods of the Ottoman Empire. 

In Turkey, the destruction of the budget law began with former President Turgut Özal in the 1980s. In order to use public funds more effectively for capital formation, Özal resorted to off-budget funds. Tax income was thereby channeled to favored segments without parliamentary decisions and audit. This applied to Özal’s own family, builders, textile businesses, exporters and holdings - in short everyone but the people. 

This took place on such a scale that the resources that were channeled became untraceable. After the fall of the ANAP government, auditing councils worked for months but were unable to list assets and liabilities. In 1993, funds were transferred to the budget by a parliamentary decision.

Özal was one of the typical representatives of market despotism who disregarded the constitution, legal norms and practices and treated the parliament and the right of the people to be represented as a burden. “It’s not a big deal to violate the constitution once,’ he famously said. Özal’s legacy hung over the people like a dark cloud in the 1990s. One of the main reasons behind the then-rampant political corruption was this fund arrangement, which included gangs, murders, corruption, discretionary fund scandals and billions of liras worth of dead loans in public banks.

The budget is the legal and political manifestation of the people’s struggle to control public funds. The right of representation is only meaningful when it also to the state budget. The use of public resources is what determines the function of the parliament, its committees, auditing tools and even the spirit of the constitution.  When a government makes the spending of resources opaque, it undermines political legitimacy. 

The Wealth Fund is the symbol of a government that has monopolized the right to speak and the right to audit the budget. It has the freedom of incorporating any profiting institution without needing to be accountable to the parliament. It is free of parliament and judicial control. Moreover, with the recent sweeping law that was passed thanks to the epidemic, the government it is now pretty much exempt from all laws including trade, tax, development, human resources and the Capital Markets Board (SPK).

This clearly means that the state’s largest monopoly, the treasury, has been removed from the country’s constitutional order. It is no longer the treasury of the parliamentarian system. It is a sort of “chrematistic treasury” that Aristotle defines as “the art of obtaining wealth where a certain group monopolizes richness to enhance their political power.” 

The remaining pillar of the parliamentary regime is being dismantled brick by brick. Çaykur, in this sense, is the final nail in the coffin.