Sunday, November 23, 2008

Pashas in Toyland

After my recent post, "Obama and the Endless Quarrel," a reader wrote to inquire about the Turkish Armed Forces (TSK), and specifically my assertion that with their acronymous companies, OYAK and TSKGV, they comprise the "third largest" capitalist entity in Turkey. He wanted to know more, an admirable desire in a world where Turkey is becoming an increasingly important nation. In fact, the TSK's "third largest" ranking is really an informed guess based on the assessments of other people. No one is quite sure of the exact rank of the two funds' holdings. Like the tides of finance, they ebb and flow, claiming new divisions while leaving others behind. Oyak Bank, for example, was recently sold to ING of the Netherlands, while they have made other moves with their steel operations. But there is little doubt, as the excerpt I am about to quote will make clear, that together they occupy a place in the very top echelon of Turkish corporations.

Any reader can find out more from this article in Fortune, or simply by Googling "OYAK Group" and scrolling through the vast hit list. OYAK (an acronym for Army Pension Institution) makes steel; it makes cars, roads, and buildings out of that steel; it makes portland cement for concrete, uses that concrete (and of course their own steel) to build hotels and businesses, runs the businesses themselves to make more money, uses their own banks to fund more businesses, builds golf courses, apartment blocks, and vacation villages for retired military officers, sells insurance to those businesses, builds and runs supermarkets, grows food for those markets, makes pesticides for the crops that it makes into food that it sells in its supermarkets--have you heard enough? They even own professional soccer and basketball teams. Oh, and all of their profits are tax-free.

Here, for example, is a snippet from the Istanbul daily Hurriyet, of September 13. "Oyak Cement Increases its Sales Revenue by 20%" reads the headline. Oyak sold, it reports, 2.9 million tons of cement domestically and 1.2 million tons abroad in the first quarter of 2008, giving them a 14-15% share of Turkey's cement production. "Abroad", remember, includes northern Iraq, where Oyak is a major player in the massive development activity now going on in Iraqi Kurdistan. ("In Iraq, OYAK is becoming a monopoly" reads a headline in one paper. Another, from Zaman says, "OYAK rides the gravy train in Northern Iraq." Thus we have the spectacle of the pashas' pension fund selling cement and construction services (hotels, airports, roads) to the Kurds of northern Iraq while, in the mountains, their F-16s are pounding the bejezus out of Kurdish villages and flocks--and the very rare PKK guerrilla.

TSKGV, the Turkish Armed Forces Foundation, is a bit less of an octopus, though not by much. They concentrate on arms manufacturing, including joint ventures with foreign firms. The generals love new weapons, of course, so every two years TSKGV sponsors IDEF, an international defense industry fair. The next one, IDEF09, is coming in April. As with OYAK, TSKGV's profits are tax-free.

Here's Eric Rouleau, former French Ambassador to Turkey in the 1990s, to give us a more complete rundown. This is an excerpt from his article, "Turkey's Modern Pashas," published in Le Monde Diplomatique, September 2000. See also this excerpt from another article by Rouleau, which is equally informative.

Power of the pashas

The constitution grants the armed forces a degree of autonomy that no
democratic state would tolerate. The chief of general staff takes
precedence over the ministry of defence and all the other members of the government. The prime minister comes first in order of protocol but wields less real authority in the most sensitive areas. Amongst other things, the chief of general staff decides appointments and promotions within the armed forces, supervises internal and external security, decides defence policy, and manages the production and purchase of arms, the cost of which does not appear in the state budget.

It was quite by chance, for instance, that we learnt from Defense Week of 14 February 2000 that modernisation of the armed forces would cost about $70bn over the next 15 years. Traditionally the budget for the army's running expenses (alluded to very briefly, despite the fact that it accounts for one third, or more, of state revenue) is approved without debate, by acclamation. The entire assembly [Turkish Parliament] then addresses its "congratulations" and "good wishes" to the head of general staff.

The constitution, and the corresponding laws, give the general staff direct or indirect control over higher education and most of the judiciary. Misdemeanours and crimes against the state are handled by the state security courts, with high-ranking military on the bench until recently. Legislators, university rectors, public prosecutors and judges are required to comply with the limited definition of freedom that appears in the preamble to the constitution: "no protection shall be afforded to thoughts or opinions contrary to Turkish national interests, [...] Turkish historical and moral values, [...] the principles, reforms and modernism of Atatürk."

Article 13 provides a more detailed definition of these values: "The
indivisible integrity of the State with its territory and nation, national sovereignty, the Republic, national security, public order, general peace, the public interest, public morals and public health". Article 14 goes one step further, "None of the rights and freedoms embodied in the Constitution shall be exercised with the aim of violating the indivisible integrity of the State with its territory and nation." The courts will not only punish acts, but also reprehensible "thoughts or opinions". Article 130 goes so far as to stipulate that "scientific research and publication" may be banned by university deans if contrary to the values quoted above. The electoral law, promulgated just after the 1982 constitution, and all the laws covering political parties, professional bodies and unions, contain restrictions that supposedly comply with Kemalist dogma.

The political power of the pashas would not be so deeply rooted if it did not also draw on substantial economic and financial resources. The army owns a vast holding, called Oyak, consisting of about 30 large companies involved in manufacturing, distribution and exports in sectors as varied as cars, cement, food, pesticides, oil, tourism, insurance, banking, property, supermarkets and high technology. These companies employ about 30,000 people directly, as well as giving work to partner companies. One of the group's star performers, Oyak-Renault, boasts an annual production capacity of 160,000 cars.

Oyak, which is one of the top three or four holdings in Turkey, is
generously funded. It takes a mandatory 10% of the salary of all members of the armed forces and reaps the profits from its own companies, reputed to be some of the most profitable in the country. This is hardly surprising for Oyak is exempted from all taxes and duties, a privilege that other organisations in the private sector no doubt view as unfair competition.

Major companies have, however, learnt to live with this arrangement, for Oyak has involved them in its activities, by interest and design. Taha Parla, a professor at Bosphorus University, has studied the subject and identified several powerful holdings among Oyak partners, including those belonging to the Koç and Sabanci families, known as the "emperors" of industry and trade, and the Taskent family, the "barons" of merchant banking. Private companies also give retired senior officers management jobs, as a reward for past services and a way of maintaining connections with officers in the regular army. In this way an tripartite alliance has been sealed between the military elite, big business (in Turkey and abroad) and state bureaucracy.

The TSKGV (Turkish Armed Forces Foundation), which also belongs to the
army, is Oyak's sister organisation. It comprises about 30 industrial
companies that enjoy the same privileges as Oyak. The foundation
concentrates exclusively on arms production, employs roughly 20,000 people and provides work for tens of thousands of other workers in subcontracting companies. Over 80% of revenue is paid into a fund thought to amount to several tens of billions of dollars. As Parla points out, this is an original way of accumulating (military) capital other than what is accrued by the (civilian) private sector.

The triumvirate formed by the army, big business and state bureaucracy is protected by a battery of constitutional and legal provisions. Its influence increases when the balance of political power leans in its favour, when opposition in society declines, or when - as has been the case in recent years - politicians are increasingly discredited. Under these circumstances the political parties, parliament, government and media merely acquiesce when the military disregard the rule of law.

They made no objection, for instance, when the pashas refused to show
parliament the texts of agreements with Israel. Nor did they react when
Turkish forces launched a massive incursion - without informing the
government - into northern Iraq to fight Kurdish nationalists belonging to the PKK (Kurdistan Workers' Party). [Note: This was in the '90s. -g.t.] Nothing was said when the pashas vetoed a postponement of the elections, despite the support of a majority of members of parliament. Similarly, the military met no opposition when they halted attempts to suppress articles in the penal code contrary to human rights or blocked enquiries into scandals (notably into particularly repugnant aspects of the fight against the Kurds) that might have tarnished the reputation of the armed forces. Appearances are saved, for these injunctions generally take the form of "views" or "wishes" expressed by a member of the general staff, which of course does not preclude less subtle forms of pressure behind the scenes.
Rouleau's entire article should be required reading for everyone in Washington. Note the opening sentence: "a degree of autonomy which no democratic state would tolerate." In fact, it's very hard to see why Turkey bothers to keep a Defense Minister. He has no power over the military: no power at all, really, other than the ability to shuffle people around within his own bureaucracy. Things have changed somewhat in recent years (see this article from Zaman); however, despite cosmetic changes made for the EU's benefit, the essentials remain. With this kind of arrangement obviously we are through the looking glass, down the rabbit hole, and into Neverland. Turkey, as Rouleau describes it, is a dreamworld for tin soldiers; a paradise of "Mercantile Militarism," in the phrase of Prof. Taha Parla. It's also very obviously something else. I'm not a believer in the over-use of extreme labels; however, I fail to see that the essence of this situation is anything but capital-f Fascist.

Why is this important? Only because as human beings we are supposed to value truth. (OK, just a little bit, maybe?) Truth is not served by asserting, as does the U.S. Government, that Turkey is a "democracy" for other nations in the region to emulate. Nor is it helped by the bland hypocrisies of such as Faruk Logoglu (pron. Lo-oh-loo), former Turkish Ambassador to the United States, who, in a recent article in Hurriyet, gave advice to President-elect Obama and spoke of our two countries' "common values," such as, "Democracy, the rule of law, human rights, fundamental freedoms and market economy." No one, of course, with the slightest knowledge of modern Turkey gives any credence to such nonsense. (How many journalists can you throw in jail, how many people can you torture and kill before the world starts to take notice?) And truth is especially not served when Americans like Rahm Emmanuel give their unqualified support to Turkey's accession to the EU. As I wrote last May:
Turkey is not, cannot, will not be a truly viable candidate for membership in the EU as long as its government continues in its present form.
Unless the EU radically changes its Copenhagen criteria for entry, I see no reason why that assessment will change anytime soon. You might as well wait for the Blue Mosque to turn green.


Anonymous Anonymous said...

I immediately emailed this post to some friends, and my father, as this article answered the big questions that have come up so often in conversations I have had with them about Turkey.
To the best of my knowledge no one talks about this stuff besides you and the former french ambassador you referred to, Eric Rouleau.
It seems that as it is with "secularism" it is with the military. That is, contrary to widespread rumor, Turkey is so far from being secular that the government actually runs all of the mosques(and builds some new ones in Germany). Similarly, contrary to being a stalwart ally against communism, the military state truly controls major industries in Turkey.
Alas, all is not what it seems. Except for one thing, which is your excellent blog! I only wish we can get Obama to read it.

November 27, 2008 at 2:40 PM  
Blogger Wladimir van Wilgenburg said...

But Ocalan says the army is 'more sensitive than the most seemingly democratic parties. It bears in mind standards of democracy.'

November 27, 2008 at 4:25 PM  
Blogger Gordon Taylor said...


Thanks for the note. I don't know much; I just re-package stuff that is lying in plain sight.


Thanks for writing. This is a hard question to answer. I'm not sure what Apo's words mean, because I haven't seen the context. I know very little about Ocalan's writings. I went to the link, but it is such a LONG piece that I couldn't find the sentences you quoted. Here's a guess about the quote:

Apo may be saying that the Army is more 'democratic'--that is, representative of all classes and geographical areas--than other pseudo-democratic parties. (That's what "seemingly democractic" means.) That is true. The political parties of Turkey, in general, are not democratic at all. They are like little kingdoms, where the leader never is challenged and rules like a dictator. The exception, of course, is the DTP, where the parliamentary reps (Ahmet Turk, Aysel Tugluk, Emine Ayna, Sebahat Tuncel, etc.) are all prominent. The Army, however, is at least a meritocracy--of sorts. Meritocracies have a long history in Turkey. The Ottoman Sultans looked for talent from all social classes, ethnic groups, localities, etc. The same applies today. Abdullah Ocalan himself, when he was about 12 years old, took the test to go the military academy of the Turkish Officer Corps. He failed the test; now think what might have happened if he had passed! So they want bright students wherever they can find them. But to get ahead in the Army, the Courts, or anywhere in the state security apparatus--the Kemalist, etatist elite--you have to toe the line, drink the Kool-Aid, etc., and Never, Ever think for yourself.

As to the second sentence, "It bears in mind standards of democracy," I have no idea what it means. It's probably a bad translation into English.

November 27, 2008 at 10:28 PM  
Blogger Wladimir van Wilgenburg said...

Just use 'ctrl + f' and search for the word 'army'. Funny PKK fights an army, which 'bears the standards of democracy'.... One conclusion: Ocalan is an asslicker and has some of psychological crisis. The translation is very good.

November 28, 2008 at 3:31 PM  
Anonymous Anonymous said...

Dear Wladimir van Wilgenburg,
Although I am sure you are not one, you display the thinking of a typical Turkish nationalist; anyone says anything negative about the military, and the first response is something negative about Ocalan.
This is strange. How did the military and Ocalan get looped together in your head? I think you should ease up on reading Hurriet and Today's Zaman, find some other steady source of fiction to keep yourself entertained.
Oswald Veblen

November 29, 2008 at 4:32 AM  
Anonymous Anonymous said...

Excuse-me dear Gordon, but I'm going to thank you again.
Your article is too good. And the major reason is that it describes the fundamental problem of Turkey and thus of Kurds: the Fascist essence of Turkish state.

Dear Oswald, I know the problem of Wladimir-"Welatêmîr". As you say, he "displays the thinking of a typical Turkish nationalist", but not by being a Turkish nationalist, rather by being supporter of another Kurdish faction.
He's just anti-PKK and anti-Ocalan.
Sadly, his hatred makes him blind.

Elîshêr, from France

December 3, 2008 at 3:27 AM  
Anonymous Anonymous said...

Gelek Sipas for you comment Elîshêr,

December 3, 2008 at 2:18 PM  
Blogger Wladimir van Wilgenburg said...

I don't support any Kurdish political party. But just for your information, you can read the statements in Turkish of Ocalan in the various PKK newspapers. Here you can read his positive ideas about Ataturk, the idea that Kurdish nationalism is founded by jews, revival of the Missak Milli pact, etc.

Dusenmek taraf olmamaktir.

December 13, 2008 at 5:58 PM  
Anonymous Anonymous said...

I read the statements of Ocalan in his books, not in the newspapers.

January 5, 2009 at 8:26 AM  
Anonymous Anonymous said...

I just wanted to correct something about the tax exemptions of OYAK that you mentioned. OYAK enjoys tax exemptions only at the level of the Foundation, not at the level of affiliated companies.In other words, all of OYAK’s affiliated companies pay their regular taxes, whereas OYAK as “a holding company” is exempt from taxes. However, given that the holding companies are also exempt from most of taxes, the impact of tax exemptions of OYAK is open to contestation.

January 9, 2009 at 10:36 AM  
Blogger Unknown said...

Similarly, contrary to being a stalwart ally against communism, the military state truly controls major industries in Turkey.
And this is exactly what I experienced in Turkey where I'm living for 7 years now.
I was once invited to a New Years party by a well known consultancy firm. The floor was filled with retired generals aka businessmen.
Don't ask me in what physical condition they were at the end of the evening...
interesting blog btw.
Dutch in Istanbul

January 16, 2009 at 10:20 AM  

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