The immense new Istanbul Airport, additional spectacular bridges over the straights, the Marmaray metro/train tunnel under the Bosporus, high-speed trains, highways, extension of the Istanbul metro network, energy projects. These were highlights in a campaign video for the Justice and Development Party (AKP) candidate Binali Yıldırım in the rerun of the Istanbul mayoral election in June. The video was made by a “social media follower” and acclaimed by Yıldırım, who shared it on his Twitter account. It was accompanied by the text “Well, who made this?”

Infrastructure has been a major selling point for the AKP regime, but this time it did not pay off. Ekrem Imamoğlu, the opposing candidate, won Istanbul in a landslide and broke the control the AKP had over the “world city” since Erdoğan had become its mayor in 1994. What happened? Apart from important dynamics in the field of politics (a broad coalition spanning a wide field from Turkish ultranationalists to the Kurdish party), and the personality and strategy of the opposition candidate himself, the electorate was concerned about the looming economic crisis, which is particularly playing out as a slump in large infrastructure projects and a standstill in the construction sector.

Why was infrastructure so central to the AKP era, and why may this now be untangling? Keywords: credit and debt.

First, infrastructure projects and housing have been the drivers of economic growth. They generated employment—directly and indirectly—and contributed to lifting many of the poor into the middle classes, providing the AKP with a loyal electoral base. Construction is a flexible and generally low-threshold employment sector that has absorbed lots of young men, also from rural areas.

Second, the massive development of new transport and energy infrastructures, together with house construction, has resulted in significant material improvement in people’s living standards. A favorite item of the AKP media is the elderly peasant who enthusiastically explains how flying had always been a dream, airplanes one only saw up in the sky. Now he flies whenever he wants to travel, against prices close to those for bus tickets to the same destination. Better infrastructure and higher income have made it possible for a large share of the population to attain new, ostensibly “modern” lifestyles—such as going by car to a shopping mall. In the 1990s, there were no shopping centers in the Black Sea region. Now, there is at least one in every major Black Sea city.

It is important to note that infrastructure projects are not only megaprojects and not only of national scale. Infrastructure is also the major concern of municipalities and villages. I have for many years followed regular and social media coverage of several small municipalities in the Black Sea region, places that I know well. Such municipalities represent themselves by images of machines making new roads, but also schools, bridges, and other public infrastructure. The degree of “service” (hizmet) an elected mayor is doing to the electorate is often measured by how much infrastructure he is able to develop. AKP mayors tend to receive more loans on more favorable conditions than their non-AKP colleagues. Further, mayors compete to attract state investments in hospitals, university campuses, harbors, public funded block of flats, and so on to their municipality. An Alevi village in the Black Sea region had consistently voted for the opposition Republican People’s Party. However, when the AKP-ruled municipality to which they belonged constructed a new concrete road through their village, they told me they might shift their vote to the AKP.

Third, infrastructure and construction has been important for the AKP elite in that it has enabled them to develop and cultivate a network of a new set of loyal capitalists. Some construction firms—such as Limak, Kolin, and Cengiz—have grown exponentially in the past 10 to 20 years, based primarily on their success in winning state tenders. In Turkey, they are known for being yandaş corporations—that is, corporations supporting the authorities. AKP and yandaş corporations have a symbiotic relationship whereby the corporations are privileged for large infrastructure projects yet are expected to remain loyal to the authorities. Yandaş corporations increasingly control the media in Turkey and ensure the editorial line is yandaş as well. A further part of the tacit deal between the authorities and the yandaş corporations are measures that ensure the corporations are not much bothered by, for example, union activities. When construction workers at the new airport protested lack of security (at least 60 workers died in work-related accidents during construction of the airport) and poor living conditions in the barracks, those leading the protests were jailed and charged with damaging public property, resisting police, possessing weapons, violating the law on public assemblies, and disrupting the freedom to work. In addition, the authorities have made life easier for construction firms by deciding that certain kinds of projects will be exempt from environmental impact assessments.

Finally, infrastructure—especially the megaprojects—feeds into a newfound national pride, which is sometimes coupled with neo-Ottoman sentiment that the AKP has actively cultivated during their time in office. New bridges have been named after Ottoman sultans, and some even believe the Prophet foresaw the Marmaray tunnel under the Bosporus. The new airport has been presented as the “envy” of Germany. While the Germans somehow have not been able to complete the new Berlin airport, construction of the new Istanbul Airport took only four years and will allegedly shatter the international traffic through German airports.

This infrastructure fetishism is well illustrated in my opening paragraph and has been prominent in AKP election campaigns. The ambition to construct an Istanbul Channel from the Sea of Marmara to the Black Sea was pivotal in Turkey to what Brian Larkin (2013) has called the “poetic” dimension of infrastructure. The vision was to create a “New Turkey” by the 2023 centennial for the founding of the republic.

The crisis is now threatening to destroy this vision. Although the Istanbul Channel has not formerly been taken off the agenda, plans and preparations seem to have ceased. Infrastructure and construction have imploded. With the lira losing half its value last year, and inflation rising above 20 percent, many businesses are affected, and unemployment has seen a steep rise. Apart from the standstill in construction, there is a significant oversupply of new houses. A canary in the wharf that signals long run trouble?

All this was driven by credit and the spread and deepening of private indebtedness. This is not obvious at first sight. Turkey came out of the deep 2001 economic crisis with record high foreign debt. Most of this debt was public, and a considerable share was owned by the IMF. The debt to the IMF was closed in 2013. This has been much touted by Erdoğan and his followers as a sign of Turkey’s regained economic independence and strength. This, however, obscures the fact that Turkey’s total foreign debt has trebled during the past two decades. While public debt (including IMF loans and Central Bank borrowings abroad) has remained stable around $100–120,000 billion, private sector debt has skyrocketed. Since 2007, it has accounted for two-thirds of total external debt (69 percent since 2014). The debt/GDP ratio is now around 54 percent. The “structure” of this debt is also critical, with significant amounts due within one year. It’s a credit “balloon.” Short-term international credits have been taken up for the typically long-run economic commitments that characterize infrastructure, commitments for which ultimately the state will be accountable. This includes especially electricity production facilities (guaranteed prices) and toll roads and bridges (guaranteed number of vehicles passing). One example: when the Akkuyu Nuclear Power Plant comes into operation in 2025, the Russian corporation constructing and running the plant will be entitled to a minimum electricity price that is three to four times the current electricity price in Turkey.

The shift of debt from state to the private corporate sector is, however, not the whole picture. Municipalities, businesses, and households have been drawn into heavy indebtedness too. After the AKP lost control over many municipalities in the most recent local elections, it has emerged that many of them had become heavily indebted in order to pay for their infrastructure projects. Most of this debt is owned by public/state institutions, such as the İller Bankası (Provinces Bank).

In the days of my long fieldwork stints in Turkey in the 1990s, people would normally not borrow much money to build their houses. Rather, they constructed their houses brick by brick, floor by floor, whenever they could spare some money. A generous share after a good season working in the fisheries would be used to start construction of a second floor of one’s house. They may buy some extra bricks or concrete later with the son’s savings from a couple of months construction work in Istanbul, and finally complete the floor after a new good season at sea, together with some credit from friends (typically patrons, e.g. boat owner) or relatives—just in time for the son’s wedding and setting up a family at the new floor above the parents. Thus, most houses seemed to be constantly evolving and never complete, half walls and steel armor sprouting out on the top.

In the early 2000s, it became increasingly common to buy key-ready flats from large developers under a scheme where down payments could extent up to three years. Households became indebted to corporations. Gradually peopled learned a new word: mortgage. Banks now regularly give mortgages up to 10 years, sometimes longer. This has been extremely attractive, and has helped fuel the construction boom. While formal credit to households was insignificant up to the early 2000s, there was an exponential increase from 2004 and it reached $170 billion in 2014.

During the 2000–2003 crisis, households were surprisingly resilient. Patrons helped clients, relatives helped each other, friends gave a helping hand to small businesses (Knudsen 2008). Credits were still embedded in networks of local, personal social relations. Now, loans are increasingly sourced from the global credit market (see Hann and Kalb, forthcoming). What might this imply for the flexibility of households? Will the bank from which you got your house mortgage be as supportive and flexible as your relatives in 2000, when international creditors are calling in the debts?

The Turkish government is presently massaging all possible economic instruments to ensure the flow of liquidity and to keep the engine running. But the crisis is already apparent. Overall, house sales dropped 27 percent in 2018.

The irony of all this is that the segment of the population that has consistently showed most support to the AKP—the rural agricultural population—has gained less from the infrastructural developments. They have primarily been mobilized by identity politics (such as the headscarf issue and tropes such as “making Turkey great,” e.g., through infrastructure megaprojects). In the province of Ordu, the AKP gained almost 70 percent of the votes. But the price of the main produce of Ordu, hazelnuts, decreased year by year. When the farmers recently intended to protest this development, a cynical Facebook comment read: “Let the hazelnut producers hold their protest on the AKP’s double highways!” It is becoming increasingly visible that infrastructure investments have come with a price. And with a debt.

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Ståle Knudsen is Professor of Social Anthropology at the University of Bergen. He has studied Turkey since the 1990s, lately in particular with a focus on questions of environment, energy, and corporate social responsibility.

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References

Hann, Chris, and Don Kalb, eds. Forthcoming. Financialization: Crises, connections, contestations. New York: Berghahn Books.

Knudsen, Ståle. 2009. Fishers and scientists in modern Turkey: The management of resources, knowledge and identity on the eastern Black Sea coast. New York: Berghahn Books.

Larkin, Brian. 2013. “The politics and poetics of infrastructure.” Annual Review of Anthropology 42: 327–343.

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Cite as: Knudsen, Ståle. 2019. “Debts and the end for infrastructure fetishism in Turkey.” FocaalBlog, 5 August. http://www.focaalblog.com/2019/08/05/stale-knudsen-debts-and-the-end-for-infrastructure-fetishism-in-turkey/