Anatolian tigers battle to reassert their dominance in Turkey


To the casual visitor, the city of Kayseri might appear as it has always been. Mount Erciyes, cloaked in snow, looms over the tower blocks, minarets and a sixth-century fortress. The vast industrial zones on the outskirts of the city thrum with the whirr and thump of the machinery that turned Kayseri into one of the so-called “Anatolian Tigers” that helped the Turkish economy to grow by as much as 9 per cent in the mid-2000s.

But the city has undergone an extraordinary upheaval after last July’s attempted coup: its chamber of commerce estimates that about 150 businessmen have been arrested; a string of schools and study centres have been closed; a university and a hospital have been taken over by the state. Boydak Holding, one of Turkey’s top 500 companies, has also been seized.

After a bumpy year, Kayseri’s business class say the worst is over. They are eager to reclaim their city’s image as a thriving business centre. Despite this, turmoil still bubbles under the surface.

Kayseri is in the centre of the country, on the route of the ancient Silk Road. Thanks to rapid urbanisation, economic liberalisation and political changes, by the mid-1990s Turkish analysts had begun to describe it as a boom town. It became famous for mass-produced furniture and textiles.

A 2005 report by the European Stability Initiative (ESI), said Kayseri was part of an “economic miracle.” At its peak in 2011, the province’s GDP reached 13.4 per cent, compared to 10.7 per cent for the country as a whole.

As a city renowned for social and religious conservatism, Kayseri was also a natural bed of support for President Recep Tayyip Erdogan’s Justice and Development party (AKP), which first came to power in 2002. AKP’s co-founder and former Turkish president, Abdullah Gul, was born in the city. Close ties were forged between politicians and prominent businessmen there.

President Erdogan delivers a speech in Kayseri in December 2016 © Getty

Kayseri also became known as a stronghold of followers of Fethullah Gulen, the exiled Islamic cleric accused by Mr Erdogan of orchestrating last year’s coup attempt. The movement had followers in the police, the judiciary and the civil service throughout the country and Gulenists were a strong presence in the business community, forming a network of trade associations and co-operatives.

For years, the Gulenists enjoyed a close political alliance with the AKP. In 2013, however, the relationship imploded and Mr Erdogan’s government launched a wave of retribution. When the failed coup was blamed on Gulenists within the armed forces, the crackdown went into overdrive.

In Kayseri, the most high-profile target was Boydak Holding, a conglomerate that counts Istikbal and Bellona — two of Turkey’s best-known furniture chains — among its brands. The group, which has interests with interests in sectors including furniture, textiles, energy and steel, and posted revenues of $2.3bn in 2015, was accused of channelling funds to the Gulen movement.

Senior members of the management were arrested. The company was seized and its ownership transferred to a fund that last month held around $11bn of confiscated Turkish assets. The Boydak family has said it will use all possible legal means to challenge the decision.

The city of Kayseri © Laura Pitel

The company’s new management declined a request for an interview and a tour of one of its plants, but production there continues. In the city’s western industrial zone, at one of Boydak’s textiles producers, forklift trucks could be seen ferrying spools of colourful thread around the shop floor. Across the road at the Istikbal factory, lorries with the brand’s yellow logo trundled through the gates. Workers said that, from their point of view, nothing had changed. They had even received a pay rise.

For smaller entities, life has become a struggle. Speaking on condition of anonymity, one businessman being prosecuted on charges of supporting the Gulenists, says the past year had been tough for his medium-sized company.

In the early days after his arrest last summer, his clients were frightened to be seen trading with his firm, he says. There were problems with payments and cash flow while he was detained — in a cell with more than 30 other accused businessmen, sharing just one toilet and shower. After his release on bail he was able to go back to work.

Things are going better now, although he has put all expansion plans on hold. “Why would I make new investments in the business right now?” he says. “It could be seized tomorrow.”

Mahmut Hicyilmaz, head of Kayseri’s Chamber of Commerce © Laura Pitel

Mahmut Hicyilmaz, head of Kayseri’s Chamber of Commerce, is positive: “I cannot say that there was no impact at all, but we picked ourselves up.”

The chamber’s figures show Kayseri province’s exports up 2.2 per cent in the first quarter of 2017, compared to the previous year — lagging behind the national figure of 12 per cent for the same period, but an improvement on last year’s contraction of 4.5 per cent.

Mr Hicyilmaz sees potential for expansion, especially in the steel sector, in home appliances and technology. He dismisses the notion that foreign investors might have concerns over political instability or the rule of law.

But Mr Hicyilmaz himself is awaiting trial, accused of being a supporter of the Gulenists. He says that he only ever gave small charity donations to the movement, although he admits he and some friends once visited Mr Gulen in his mountain retreat in Pennsylvania, where he has lived in self-imposed exile since 1999.

He is eager to present the continuing post-coup investigations as normal. “Of course if a country faces an event like 15 July, questions will be asked,” he says. “It was an event that attacked our democracy and the national will.”

Yet a year from now he and 70 other prominent businessmen, whose joint trial began in June, could face jail if convicted. The indictment in the case is full of denunciations and accusations between people who were once allies.

Gerald Knaus, chairman of the ESI, says that one of the most striking observations of the think-tank’s 2005 report was the high level of co-operation and trust between businessmen. “With all those arrests and all those recriminations, I cannot see how the basic foundation for the Kayseri growth model cannot be affected,” he says.

The resilience of Turkey’s economy has repeatedly confounded expectations. But some observers wonder if the damage from the purge may become apparent over the longer term. “The biggest shocks have occurred not to the business sector, but to the judiciary, education, and government in general,” says Timur Kuran, a professor of economics at Duke University in the US.

“If you’re closing down universities, throwing out thousands of professors, it will not affect the growth rate immediately, but it affects the quality of education that today’s students are receiving. It affects the research. The effects will be felt in years to come.”

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