Analysis

Turkey’s National Purse Just Became Erdogan's Family Affair

Erdogan’s son-in-law Berat Albayrak was appointed to be finance minister ■ new health minister owns a chain of pharmacies, education minister owns a private college, tourism minister owns a successful travel agency

Turkey's President Erdogan with his son-in-law Berat Albayrak (left) during an election rally in Istanbul, Tuesday, May 29, 2018
Emrah Gurel/AP

The premiership in Turkey was officially abolished this week. In a ceremony in which President Recep Tayyip Erdogan awarded a certificate of appreciation to outgoing Prime Minister Binali Yildirim, he congratulated the latter on his appointment as speaker of the parliament, an appointment decided, of course, by Erdogan. From now on, Erdogan will rule as president with expanded powers greater even than those of the U.S. president. Erdogan wasted no time, and has already presented his new government, all of whom are his close associates.

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Some are businessmen who were appointed to lead ministries that may serve their business interests. For example, the health minister owns a chain of pharmacies, the education minister owns a private college, the environmental affairs minister owns a large real estate company and the tourism minister owns a successful travel agency.

Three ministers are to remain at their post from the previous government – the ministers of the interior, foreign affairs and justice. The new defense minister is an old acquaintance, Hulusi Akar, who until recently was commander in chief of the Turkish army.

But it seems that the most important person in the new government is the new finance minister, Berat Albayrak, who not by coincidence is also Erdogan’s son-in-law. His ministry will unify the former finance ministry with the economy ministry. Albayrak will be in charge of fiscal and monetary policy and of the banking system, along with the ongoing management of the Turkish economy. Since Erdogan has sole authority to appoint the governor of the central bank, Turkey’s national purse will now become a family affair, almost without oversight, certainly not by the parliament, in which Erdogan has an absolute majority.

Albayrak, who is the son of a journalist and author of some 40 books, is a former member of the Welfare Party, the parent party of Erdogan’s Justice and Development party, and was energy minister in the outgoing government. Like his boss, he supports lowering interest rates to spur growth and opposes the central bank’s policy that calls for raising interest to fight inflation.

Albayrak has a Ph.D. from the University of Istanbul and an M.A. in business administration from Pace University in New York. He is no stranger to family businesses. In 2007 he was appointed CEO of the global construction and tourism giant Calik Holding. The company is owned by Ahmet Calik, who in 2008 also managed to take control of the major media corporation Sabah ATV in exchange for $1.1 billion.

At the time, Calik was short about $750 million to make that purchase, and the banks refused to lend it to him or act as guarantor. He asked Erdogan to intercede and the latter asked two government banks (whose board of directors are government-appointed) to obtain the loan for Calik from a Qatari bank.

Five years later, Calik sold Sabah-ATV to the Kalyon Group owned by Omer Kalyoncu, another of Erdogan’s close friends, who not by coincidence has won huge government contracts such as for construction of Istanbul’s third airport. Kalyon is, among other things, the owner of the media company Turkavez, in which Serhat Albayrak, the new finance minister’s brother, has a 1-percent interest. Incidentally, until Albayrak was appointed energy minister, while he was CEO of Calik, his brother was CEO of Calik’s media company. The loving family saw to it of course that the sale of the media companies in the corporations where they worked were to Erdogan’s friends, as part of a strategy of taking over all media outlets in Turkey.

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Three years after this big sale, Albayrak’s name burst onto the public scene when Wikileaks connected him to oil deals with ISIS. According to reports, Albayrak was close to the Turkish company Powertrans, which holds a monopoly over the transport of oil to Turkey from the Kurdish region, among other places. It is not entirely clear who owns Powertrans; according to reports in Turkey, the Calik corporation is behind it, or in front of it.

What is clearer is the Wikileaks connection of the company and its CEO, Albayrak, to the purchase of oil from ISIS. The company denied it, Albayrak denied it, and the CIA, in an official statement, said there was no truth to reports of Turkish involvement in oil purchases from ISIS. It was Russian President Vladimir Putin, who was in a deep rift with Erdogan following the downing of a Russian plane over Turkish airspace, who insisted that Turkey and Erdogan’s family had been involved in an oil deal with ISIS.

Incidentally, Powertrans mediated Kurdish oil purchases by Israeli companies, and some of the oil arrived in Israel in tankers belonging to a company owned by Erdogan’s son. But that’s another story.

The financial history that has made Albayrak one of the richest people in Turkey did not especially help Turkey when Erdogan announced his appointment as finance minister. The Turkish lira fell by 3 percent and Fitch Ratings downgraded Turkey’s debt rating to BB. Now, with total control of Turkey’s economy in his hands and the hands of his son-in-law, Erdogan can’t blame any other element, domestic or foreign, for the economic crisis. He will have to prove that only he can continue making the same economic magic that he has done for more than 15 years.