Erosion of economic institutions in the age of democratic backsliding: an analysis of the Turkish case

ABSTRACT

This article examines the erosion of economic institutions against the backdrop of democratic backsliding, focusing on the Turkish case since the early 2010s. Drawing on the cases of the Central Bank of the Republic of Turkey (CBRT) and the Turkish Competition Authority (TCA), it analyses the transformation of these institutions at both de jure and de facto levels. The article identifies specific mechanisms of institutional erosion and links them to the dynamics of democratic backsliding ushered by the successive governments of the Justice and Development Party (AKP). It offers a periodization of erosion, demonstrating how the verticalization of decision-making, top-down centralization, and cooptation is reflected in the cases of CBRT and TCA. The article discusses the prevalence of continuity regarding politicization and cooptation of economic institutions in the context of the 2023 General Elections, notwithstanding some policy changes.

KEYWORDS:

• Democratic backsliding
• economic institutions
• Competition Agency
• Central Bank
• Turkey

Disclosure statement

No potential conflict of interest was reported by the author(s).

Supplemental material

Supplemental data for this article can be accessed online at https://doi.org/10.1080/14683857.2024.2350640

Notes

1. Based on the respective requests of the interviewees, the identities including the job titles/positions are kept anonymous. An anonymous list is provided in the Appendix.

2. Board appointments of the regulatory agencies are criticized in several reports of the State Auditing Board. See http://www.tcCBRT.gov.tr/ddk/ddk35.pdf and http://www.tcCBRT.gov.tr/ddk/ddk45.pdf

3. ‘The new goal of the AKP: defeating the cumbersome bureaucracy’, Vatan, 09/30/2004, http://www.gazetevatan.com/akpnin-yeni-mucadele-hedefi—hantal-burokrasi-37112-gundem/. Also see, ‘Erdoğan: In spite of all reforms we undertook in the last 15 years, the bureaucracy is still oversize’ Milliyet, 10/24/2017, http://www.milliyet.com.tr/erdogan-gectigimiz-15-yilda-yaptigimiz-ankarayerelhaber-2357613/

4. http://mevzuat.basbakanlik.gov.tr/Metin.Aspx?MevzuatKod=1.5.3046&sourceXmlSearch=&MevzuatIliski=0.

5. 3959 (mevzuat.gov.tr).

6. Interview with the Head Advisor to the President, Mehmet Uçurum. ‘Yürütme Sadeleşti, Küçüldü Etkisi Büyüdü,’ Hürriyet,07/19/2018, retrieved http://www.hurriyet.com.tr/ gundem/cumhurbaskani-basdanismani-mehmet-ucum-yeni-sistemi-hurriyete-anlatti-yurutme-sadelesti-kuculdu-etkisi-buyudu −40,901,410.

7. Those four offices are Finance Office, Human Resources Office, Digital Transformation Office and Investment Office.

8. Namely, the Council on Economic Policy, the Council on Local Government Policies, the Social Policies Council, the Healthcare and Food Policies Council, Culture and Art Policy Council, the Legal Policy Council, the Security and Foreign Policy Council, Education and Training Policy, and the Council on Science, Technology and Innovation Policy.

9. Current account balance (% of GDP) – Turkiye | Data (worldbank.org) Date of access: 6/10/2023.

10. Burhanettin Duran, ‘Faiz lobisi alkışlıyor diye karar alamazsın,’ in Sabah, March 2, 2015, http://www.sabah.com.tr/yazarlar/duran/2015/03/02/faiz-lobisi-alkisliyor-diye-karar-alamazsin (Cited in Özel 2015a).

11. ‘Erdoğan directly targeted at Babacan,’ in Cumhuriyet, March 2, 2015, http://www.cumhuriyet.com.tr/haber/ekonomi/224649/Erdogan__Babacan_i_acik_acik_hedef_aldi.html (Cited in Özel 2015a)

12. http://www.cumhuriyet.com.tr/haber/siyaset/1480427/Erdogan__Merkez_Bankasi_Baskani_talimatlara_uymadi.html 10/7/2019.

13. 2023_Para+Politikasi_ve_Liralasma_Stratejisi.pdf (tcmb.gov.tr) and the presentation by the Governor of the CBRT, 27/7/2023 SunumB27_07_2023.pdf (tcmb.gov.tr) Date of access: 2/9/2023

14. When this manuscript was revised in January 2024, the interest rate had gone up to 45% already.

15. Ibid.

16. Rekabet Kurumu – Act No: 4054.

17. Layout 1 (resmigazete.gov.tr) Date of access 17/10/2023.

18. https://www.rekabet.gov.tr/en/Guncel/the-first-example-of-the-settlement-proc-20056f201af9eb118140005056b1ce21. Date of access: 20/08/2021.

19. Rekabet Kurumu – The Study titled ‘Reflections of Digital Transformation on Competition Law’ Published (18.4.2023) Date of access: 20/06/2023.

20. According to Decree #KHK/649 (August 17, 2011), ‘the [respective] minister has the authority over all transactions and activities of the related, attached and affiliated agencies,’ which, by definition, include the IRAs. http://mevzuat.basbakanlik.gov.tr/Metin.Aspx?MevzuatKod=1.5.3046&sourceXmlSearch=&MevzuatIliski=0.

21. Fahiş fiyat artışı yapan 60 firmaya 3,1 milyon lira ceza (ticaret.gov.tr) Date of access: 5/5/ 2023.

22. Cumhurbaşkanı talimatı verdi zincir marketler indirime geçti! A101, ŞOK, MİGROS. Cumhuriyetin 100. yılına özel yüzde 50 indirim (karar.com) Date of access: 14/10/2023.

Additional information

Notes on contributors

Işik D. Özel

Işık Özel is an Associate Professor of Political Science and the Director of the Master in Sustainable Development and Global Governance at the Carlos III University of Madrid (UC3M), Spain. She holds a PhD in Political Science from the University of Washington, Seattle. Prior to joining UC3M, she was an Associate Professor at Sabancı University (Istanbul). She has also held research and teaching fellowships at the Hertie School of Governance (Berlin), Instituto de Empresa (Madrid), Freie Universität Berlin, the Barcelona Institute of International Studies (IBEI), the Center for Research and Teaching in Economics (CIDE-Mexico City), el Colegio de México (COLMEX). Broadly situated in comparative political economy, Özel’s research tackles the making, evolution and the politics of institutional change in middle-income countries and Southern Europe. She currently works on political economy of education and skills; (green) industrial policy and market regulation; and social policy in the age of populisms. Her work so far has appeared in Socio-Economic Review, South European Society and Politics, the Review of International Political Economy, the Journal of European Public Policy, Regulation & Governance and Democratization, among other outlets. Her book State-Business Alliances and Economic Development, Turkey, Mexico and North Africa came out of Routledge in 2015.