AKP stuffs Wealth Fund with choice assets, eyes securitized borrowing abroad

TURKEY - In Brief 06 Feb 2017 by Atilla Yesilada

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Starting with a State of Emergency decree on Sunday, the AKP administration began stuffing Turkey’s fledgling Sovereign Wealth Fund (SWF) with prime assets from its privatization portfolio and other state holdings. Ziraat and Halkbank, two state-owned commercial banks, Turkish Airlines, Turkish Post and Telegraph, BOTAS (the national NG pipeline operator), National Lottery and other betting franchises, 2.3 square meters of development land, as well as a minority stake in Turk Telecom lead the list of assets transferred to the SWF. The list might swell further in the coming days. The timing of the move is shrouded in the mystery, but I believe it serves two purposes. First, it allows the new management to purge remaining Gulenists in one fell swoop. Secondly, I speculate the SWF will be turned over to the discretion of President Erdogan if he wins the presidential referendum, thus giving him a huge economic lever to guide the development of the country rapidly. The presence of one of his closest advisors, Mr. Yigit Bulut at the board of SWF affirms this hypothesis. Turkey’s SWF is an oblique entity that doesn’t report to the parliament, or to the High Court of Auditors. Presumably, it will be audited by an independent firm, and its accounts and activities will be made public each year. Nevertheless, the idea of such a huge magnitude of public assets being managed outside the traditional budget channel is disturbing. It makes reading the fiscal stance even more difficult, while eroding accountability. Furthermore, while I can’t calculate the net cash flow of the entities suddenly gathered under the management of SWF, I know that Ziraat, Halkbank and National Lottery are ...