Turks Doubling Money Under Erdogan Means Graft No Vote-Loser

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A street trader deals with a customer at a market stall in Istanbul, Turkey. Close

A street trader deals with a customer at a market stall in Istanbul, Turkey.

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Photographer: Kerem Uzel/Bloomberg

A street trader deals with a customer at a market stall in Istanbul, Turkey.

Bussing tables at a busy Ankara kebab restaurant, Yunus Mutevelli says Turks are more concerned with the money going into their own wallets than those of ministers caught up in corruption scandals.

While a daily deluge of leaked wiretaps over the past three months sought to portray Prime Minister Recep Tayyip Erdogan as a micro-managing kleptocrat, voters credit him with improving their quality of life. The result: his Justice and Development Party, or AKP, trounced the opposition in local elections to extend its 12-year undefeated streak at the polls.

“We owe a debt of gratitude to Erdogan, and we try to pay back that debt with our votes,” Mutevelli, 27, said in the Turkish capital a day after casting his ballot. “As long as the services continue, our votes will continue going to Erdogan,” he added, citing handouts of food and coal to the poor by the Ankara municipality.

Turkey's Political Divide

If local elections are typically a chance for voters to show their disenchantment with parties in power, politicians in Turkey turned them into a de facto referendum on Erdogan after a nationwide probe into bribery and contracts for favored businessman rocked the country since December.

The view that Erdogan, 60, is responsible for improved financial well-being was echoed in interviews across the country before and after the March 30 vote.

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Supporters of the ruling Justice and Development Party (AKP) celebrate the results of local elections in Istanbul. Close

Supporters of the ruling Justice and Development Party (AKP) celebrate the results of... Read More

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Photographer: MIRA/AFP via Getty Images

Supporters of the ruling Justice and Development Party (AKP) celebrate the results of local elections in Istanbul.

Forgotten Corruption

It was also echoed at the polls, with AKP receiving 44 percent of the votes compared with 26 percent for the main opposition party, according to preliminary results from the state-run Anadolu news agency.

“Without a major economic downturn -- a financial crisis, massive unemployment, a debt crisis -- the Turkish people will not give up their attachment to AKP,” Omer Taspinar, a senior fellow at the Washington-based Brookings Institution, said by e-mail on March 30. “Forget corruption, ‘it’s the economy, stupid,’ sums it all.”

Turkey’s gross domestic product per person adjusted for cost of living doubled to about $15,000 since Erdogan took power in 2003, according to the International Monetary Fund. Inflation slowed to about 8 percent from 30 percent and interest rates plunged. The government extended health care provision and improved transportation networks.

While the Borsa Istanbul 100 stock index has declined 11 percent since the corruption probe broke on Dec. 17, it’s up more than 420 percent in dollar terms during Erdogan’s tenure. More than 91 percent of AKP supporters said the economy was being managed well, according to a poll by CNN-Turk and Ipsos after the vote.

Turkish Pride

A master orator, Erdogan’s rallies in the run-up to elections consisted largely of a laundry list of statistics, from the balance sheets of state-run banks to investments in roads and schools. He uses old lira denominations, adding six zeroes, for investment figures.

Each number, compared with another from 2002, would be greeted by applause from tens of thousands of supporters and chants of “Turkey is proud of you!”

At nearly every stop, Erdogan would dismiss the corruption allegations with the question: “Would it have been possible to do all this if there’s corruption?”

Hundreds of pages of prosecutor records and wiretapped conversations suggest that it is. The recordings, which couldn’t be independently verified, were leaked online after parliament passed new laws and thousands of police and prosecutors were removed to stall the investigation.

They show businessmen close to Erdogan negotiating billions of dollars in contracts with officials, an Iranian gold trader bribing three members of cabinet and state-run banks scrambling to provide loans to clients allegedly chosen by Erdogan for deals. In the most damning, Erdogan and his son Bilal can be heard discussing hiding 10s of millions of dollars in cash after the corruption probe became public.

Victory Salute

Erdogan dismissed that recording as a “montage,” meaning it was cut and reassembled to give the wrong impression, while not disowning the voices themselves. In his first speech after the vote in Ankara, Erdogan took the stage hand-in-hand with Bilal and raised their arms in a victory salute.

The prime minister owned up to some of the leaked recordings, including several showing him intervening in news reports that he found overly critical.

In the week before the vote, he banned both Google Inc.’s YouTube and Twitter, earning Turkey howls of disapproval from the European Union, the White House and Internet-savvy Turks, though not from Erdogan’s supporters.

“He took the right step in blocking access to social media,” said Pinar Ates, 32, an accountant in Ankara who agreed with the defense that the tapes were a “treacherous conspiracy” seeking to overthrow him. “The support given to Erdogan shows that people who think like me are the majority.”

Tipping Point

The tipping point for that unwavering support will come only when Turkish consumers start to feel the effects of a surge in debt that fueled growth, according to Fadi Hakura, a London-based associate fellow at Chatham House.

Turkey’s economy grew 4 percent last year, down from an average of 9 percent in 2010 and 2011, when a consumer lending boom helped give the country an expansion rate rivaling China’s. Corporate and consumer borrowing jumped to 67 percent of gross domestic product in 2013 from 33 percent in 2008.

“Corruption is not a burning issue in Turkey unless there’s a dramatic slowdown in the economy, and Turkey is experiencing an economic stagnation and not an economic meltdown,” Hakura said by telephone on March 31. “It has not slowed down to such an extent as to fully impact the individual incomes of the average Turkish voter.”

Plunging Currency

The lira, which has lost 16 percent of its value in the past 12 months, plunged to a record low of 2.39 per dollar in January before the central bank intervened with an emergency rate increase. Yields on 10-year bonds rising to 10.2 percent as of yesterday from a low of 6.1 percent on May 2 last year.

CNN-Turk’s post-election poll confirmed that allegations of corruption didn’t matter for AKP supporters. While 75 percent said the allegations had no effect, 20 percent said the claims actually strengthened their support and only 5 percent said they changed party allegiances as a result of the graft allegations.

In the AKP’s election campaign, Turkey was flooded with advertisements asking voters to “Look at the projects, not the words.” Erdogan would rattle off lists of new roads, hospitals and airports, saying his government did more in a decade than his opponents managed in 80 years.

Taking Commission

And for some voters, it’s only natural that politicians would take a kickback for their work. Cengiz Beste, a real estate agent whose entire family voted for the AKP, compared it to the commission he earns in his own job.

“You create new projects and you present them to people who need them,” said Beste, 43. “Of course there’s going to be some economic value coming from that, and it’s normal in a liberal economy to take a little commission.”

At the Ankara kebab restaurant, where students bringing their own beer munch on grilled meats wrapped in flat bread, waiter Mutevelli praised Erdogan for appointing 20,000 teachers in February. His wife was among them.

“Whatever he says he’ll do, he does,” said Mutevelli. “Unlike other politicians, he doesn’t budge.”

To contact the reporters on this story: Ali Berat Meric in Ankara at americ@bloomberg.net; Benjamin Harvey in Istanbul at bharvey11@bloomberg.net; Isobel Finkel in Istanbul at ifinkel1@bloomberg.net

To contact the editors responsible for this story: Andrew J. Barden at barden@bloomberg.net Rodney Jefferson, Ben Holland

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