Power, Interests and Coalitions: the political economy of mass privatisation in Turkey

Abstract

Privatisation has been on the policy agenda in Turkey since the mid-1980s. Yet progress was slow throughout the first two decades of the Turkish neoliberal experiment. More recently, however, Turkey has experienced a major privatisation boom in the aftermath of the 2001 crisis. This paper tries to understand the nature of the recent privatisation boom from a political economy perspective and attempts to account for the paradox of the mass or hyper-privatisation experience of Turkey, comparable with Mexico and Argentina in the 1990s. A key concept here is the ‘pro-privatization coalition’. An attempt is made to understand how this coalition is progressively strengthened while the power of the anti-privatisation coalition has been undermined in the post-2001 era. An interesting insight in this context concerns the importance of legal and institutional changes which also help to shift the balance from the anti- to the pro-privatization coalition. The final part of the paper aims to study the changing nature of resistance to privatisation by selective references to the opposition to some of the major privatisation deals in Turkey.

Notes

1 On the Turkish neoliberal experiment, see Z Öniş, ‘Turgut Özal and his economic legacy: Turkish neo-liberalism in critical perspective’, Middle Eastern Studies, 40(4), 2004, pp 113–134; T Arıcanlı & D Rodrik (eds), The Political Economy of Turkey: Debt, Adjustment and Sustainability, London: Macmillan, 1990; and Z Öniş & F Şenses (eds), Turkey and the Global Economy: Neo-liberal Restructuring and Integration in the Post-crisis Era, London: Routledge, 2009.

2 On the Turkish privatization experience, see M Ercan & Z Öniş, ‘Turkish privatization: institutions and dilemmas’, Turkish Studies, 2(1), 2001, pp 109–134; İ Atiyas, ‘Recent privatization experience of Turkey: a reappraisal’, in Öniş & Şenses, Turkey and the Global Economy, pp 101–122; and Ç Ökten, ‘Privatization in Turkey: what has been achieved?’, in S Altuğ & A Filiztekin (eds), The Turkish Economy: The Real Economy, Corporate Governance and Reform, London: Routledge, 2006, pp 227–251. For a highly critical analysis of Turkish privatisation in terms of its mode of implementation and welfare consequences, see E Yeldan, ‘Assessing the privatization experience in Turkey: implementation, politics and performance results’, 2006, at Global Policy Network, http://www.gpn.org.

3 Latin American experiences with large-scale privatisation have been extensively studied. For a sample of key publications, see L Manzetti, Privatization South American Style, New York: Oxford University Press, 1999; Manzetti, Regulatory Policy in Latin America: Post-Privatization Realities, Miami: North–South Center Press at the University of Miami, 2000; M Llanos, Privatization and Democracy in Argentina: An Analysis of President and Congress Relations, New York: Palgrave, 2002; PK Blind, Democratic Institutions of Undemocratic Individuals: Privatizations, Labor, and Democracy in Argentina and Turkey, New York: Palgrave Macmillan, 2009; J Teichman, Privatization and Political Change in Mexico, Pittsburgh, PA: University of Pittsburgh Press, 1995; and D Macleod, Downsizing the State: Privatization and the Limits of Neo-liberal Reform in Mexico, University Park, PA: Pennsylvania State University Press, 2004.

4 See in this context W Baer & G Montes-Rojas, ‘From privatization to re-nationalization: what went wrong with privatizations in Argentina?’, Oxford Development Studies, 36(3), 2008, pp 323–337. The article illustrates the social costs of a weak regulatory environment in Argentina coupled with the significant lobbying power of newly created enterprises. The result has been re-privatisation and re-nationalisation of many services in the post-2001 era.

5 For a good analysis of how key elements of the domestic private capital become supporters of the privatisation programme, helping to swing the balance of power in favour of the pro-privatisation coalition in the process, see J Corrales, ‘Coalitions and corporate choices in Argentina, 1976–1994: the recent private sector support of privatization’, Studies in Comparative International Development, 32(4), 1998, pp 24–51.

6 This is a particularly serious problem in the context of the recent wave of privatisations involving the sale of electricity distribution networks, given the weakness of the regulatory structures in these sectors. See T Çetin & F Oğuz, ‘The politics of regulation in the Turkish electricity market’, Energy Policy, 35(3), 2007, pp 1761–1770.

7 For a comprehensive discussion of the weaknesses of the legal and institutional framework as a limiting force on Turkish privatisation, see İ Atiyas, ‘Recent privatization experience of Turkey: a reappraisal’, in Öniş & Şenses, Turkey and the Global Economy, pp 106–109.

8 Atiyas, ‘Recent privatization in Turkey’, p 107 argues that it would be wrong to blame the Constitutional Court as a key force blocking the privatisation process in Turkey. He calls for a more balanced approach that emphasises the fact that some of the concerns of the Constitutional Court were quite legitimate.

9 According to the AKP government's programme, ‘privatization is important for the creation of a more rational economic order … Privatization also aims to improve productivity and facilitate the withdrawal of the state from activities which will distort the workings of the competitive market economy’. See http://www.akparti.org.tr/3-3-ozellestirme-79.html?pID=16. For a good discussion of the AKP, including its commitment to the key elements of the neoliberal programme such as privatisation, see E Özbudun, ‘From political Islam to conservative democracy: the case of the Justice and Development Party in Turkey’, South European Society and Politics, 11(3–4), 2006, pp 543–557.

10 Petrol-İş union has produced a detailed report outlining its case against the privatisation of TÜPRAŞ. Petrol-İş, The Largest Industrial Enterprise in the Country, TÜPRAŞ , Ankara: Petrol-İş Yayını, No 98, 2005.

11 Cumhuriyet, a national daily known for its left–nationalist perspective, started a campaign in the wake of Tüpraş’ privatisation, which supported the selling of this strategic industrial complex to national capital It was ironic that left–nationalist writers like the well known Cumhuriyet columnist, Ilhan Selçuk, supported the sale of TÜPRAŞ to Koç and Shell. He wrote ‘Isn't Koç a reliable company? If we do not support the purchase of TÜPRAŞ by a national company Koç, Islamic capital will buy the company’. Cumhuriyet, 6 April 2006. In response to union attempts to force a cancellation of the sale of TÜPRAŞ to Koç and Shell, Rıfat Hisarcıklıoğlu, Chairman of the Turkish Association of Chambers and Stock Exchanges (TOBB), argued that ‘Koç is among the top 200 firms in the world. Any harm which would be inflicted on Koç would be equally damaging for the country as a whole. Koç has been successful in winning the deal. Who would now cover the costs to Koç?’. Hürriyet, 4 February 2006. This is a good illustration of the mood regarding the broad tendency in response to opposition to privatisation deals when national capital was involved.

12 ‘Turkey's Oyak secures $1.6 billion loan to buy Erdemir’, Turkish Daily News, 27 December 2005.

13 On the positive response of broad segments of public opinion and especially the labour unions to the sale of Erdemir to a component of ‘national capital’, OYAK, see ‘Erdemir'i OYAK’ın Almasından Yöneticiler de Sendikalar da Memnun’ (Both managers and labour unions are happy about the sale of Erdemir to OYAK), Referans, 6 October 2005; ‘Ne Mutlu ki Milli Sermayede Kaldı’ (It is so good that it stayed in the hands of national capital), Tercüman, 5 October 2005; and ‘İhaleden Herkes Memnun’ (Everybody is happy about the deal), Radikal, 6 October 2005.

14 On the negative social and distributional consequences of the Turkish neoliberal restructuring experience and the marginalisation of labour unions, see, among others, N Balkan & S Savran (eds), The Politics of Permanent Crisis: Class, Ideology and the State in Turkey, New York: Nova Science, 2002. For a comparative analysis of labour and unions in the context of the respective privatisation experiences of Turkey and Argentina, see Blind, Democratic Institutions of Undemocratic Individuals.

15 On the details of the strike by the former TEKEL workers and the possibility of whether this would turn into a major generalised reaction among Turkish workers, see E Yeldan, ‘2010 TEKEL workers' resistance: re-awakening of the proletariat in Turkey’, Labornet Turkey, 25 May 2010, at http://www.sendika.org/english/yazi.php?yazi_no=29021. A perceptive account is also provided by T Bora, ‘Tekel İşçileri Eylemi: Tekel'in Sesi’ (Tekel workers' strike: the voice of Tekel), Birikim, 250, February 2010, pp 6–9.