EU has sinned big over TSK economic might

I am anxiously waiting for this year’s progress report, issued annually by the European Commission in mid-October, to see whether or not it will finally tackle the economic might of the Turkish Armed Forces (TSK), which goes against best practices in the competitively structured liberal economic market of the EU.

We know the commission in the past attempted to include criticism of economic activities of the Turkish military, but the text was removed under pressure applied by some member states whose private enterprises had lucrative business deals with companies affiliated with the TSK. At the time, reports specifically singled out French carmaker Renault, which had lobbied intensively on behalf of OYAK — the TSK’s pension fund that owns equity interest in companies active in various sectors, including financial services, iron and steel, cement, energy, automotive, food processing, retail trade, logistics and technology.

This was not an unexpected development considering that OYAK holds a 49 percent interest in OYAK-Renault Otomobil Fabrikaları A.Ş, also known as Oyak Renault, which manufactures Renault brand cars in Turkey. OYAK also has a stake in another French company, Axa, which provides insurance services in Turkey. It makes perfect sense for a foreign enterprise to seek a joint venture with OYAK, one of Turkey’s five largest holdings with total assets worth over $9 billion and turnover of $13.5 billion last year. With affiliated businesses numbering around 60, the OYAK conglomerate commands economic assets amounting to $50 billion.

But from a political point of view, it becomes almost cynical for EU member states to endorse policies that contravene liberal economic practices supposedly espoused by the 27-member bloc. But when earning dividends becomes an issue, we see some EU members actively working to keep the status quo in Turkey, hoping to benefit from windfall profits generated by specially protected businesses in the EU-candidate country.

Like it or not, however, that is bound to change. With the political influence of the TSK waning rapidly in Turkey, the spotlight is gradually but surely turning on the economic activities of the military. First and foremost, new entrants in the business world, especially ones flourishing in the heartland of the country, demand a level playing field in the economic marketplace. Secondly, the special protections and privileges bestowed upon the military when dealing with business activities are open to intense debate now. The recent constitutional changes, which was approved by a landside in the public referendum, provided momentum for that lively discussion as well.

OYAK is a product of the first military coup in 1960, and its law dictates “an administratively and financially independent legal entity attached to the Ministry of Defense and subject to special legal provisions.” Though it was intended to make sure TSK members would get social security benefits, it ended up controlling a huge array of businesses with the political cover provided by the military influence over successive Turkish governments. The same law also makes OYAK assets eligible for the rights and privileges attached to state property and as such it enjoys similar protections given to state properties.

OYAK is the sole organization in Turkey that enjoys the benefits of both the private and public sectors, creating an anti-competitive environment that warrants anti-trust inquiries. There are no comparable armies in the world — with the exception of maybe the Revolutionary Guard in Iran. Even elite guard units are not active in every economic area though they own and operate more than 50 companies. In China, Honduras, El Salvador, Ecuador, Chile, Bolivia, Colombia, Guatemala, Nicaragua, Indonesia, Thailand, Egypt, Pakistan and Syria, armies are known to have economic enterprises, but none of them is as ubiquitous as OYAK in the economic field.

It is time to stop the cynical approach taken by the commission on the economic leviathan nurtured by the Turkish army. It has consistently turned a blind eye to this and caved in to pressure applied by EU member states. The comprehensive progress reports have been a guide to reforms undertaken by successive civilian governments in Turkey; it would be a shame to miss out on that opportunity by continuing to sacrifice the founding principles of the EU to the parochial economic interests of companies.

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