High Costs of Turkish Coup
Best described by political analysts as a bungled blunder, Turkey’s failed coup will only serve as an excuse for Turkish president Recep Tayyip Erdoğan to strengthen his already autocratic control over the country. The increasing lack of democracy that prompted the coup will be but one of many casualties on top of the over 200 people who were killed and more than 1,400 wounded. Investment in the emerging global market and tourism are also negatively impacted by the turmoil in Turkey.
Turkey’s global image as a moderate Islamic nation and its bid to join the Eurozone are also at stake as Erdogan’s government purges the people he has called “a virus” and considers reinstating the death penalty-which would cost him his bid to join the EU. Images of 27 obviously battered coup mastermind suspects as well as photos of hundreds of other suspects being detained, half-naked in a stable demonstrate some of the severe repercussions for those attempting to topple Turkey’s president.
Amid the focus on Erdoğan’s iron-fisted dealings with those who might not have had ties to the putsch, Turkey’s political laundry is soon to be aired in public. WikiLeaks has tweeted "Get ready for a fight as we release 100k+ docs on #Turkey's political power structure."
Mercilessly Purging Opposition
In reaction to Friday night’s attempted take-over by rebel soldiers, Erdoğan has swiftly sacked almost 9,000 police officers that have been accused of having ties to those involved with the coup. Turkey has reported that some 6,000 army officers and 3,000 judges have been detained. Some indicate they were already on a list of those suspected of being opposed to the president. Erdoğan and justice minister Bekir Bozdag have accused exiled Fethullah Gülen of “controlling Turkey from Pennsylvania.” The 75-year-old Turkish Islamic cleric currently lives in what is now a locked compound called The Golden Generation Worship Retreat Center.
Once friends, Erdogan gained support by his long association with Gülen who, through his millions of followers set up a vast network of Turkish financial institutions, banks, businesses, media outlets and educational institutions. When a corruption investigation scrutinised members of the president’s family, in 2013, Gülen and his followers were accused of using their influence to infiltrate and ultimately overthrow the government.
Gülen’s Global Ottoman Empire of the Mind
US government officials have been investigating Fethullah Gülen’s organisations in the US, where they operate more than 140 schools that receive approximately $150 million a year in US taxpayer funded subsidies. The cleric himself has a net worth of around $25 billion but there is no clear figure of the total assets the worldwide Gülen movement. A Virginia school board heard from a whistleblower inside the movement that a teacher employed by one of the movement’s schools felt it necessary to give 40pc of his salary to the movement.
Estimates vary between 1 and 8 million supporters of the Gülen movement who are primarily students, teachers, businessmen, academicians, journalists and other professionals. Members have founded schools, universities, an employers' association, charities, real estate trusts, student organizations, radio and television stations, and newspapers. Gülen calls his movement’s global influence "an Ottoman Empire of the Mind".
More Damage to Turkey’s Tourism Industry
During the coup, all flights to Istanbul’s Atatürk Airport- the third busiest in Europe- were stopped. Terrified tourists reported hearing explosions as the rebels attempted to take the airport. While flights have now resumed, travel warnings are likely to discourage future holidaymakers. The U.S. State Department released a statement suggesting citizens "reconsider travel to Turkey at this time." It warned those that were not deterred to "stay away from large crowds, including at popular tourist destinations" and "exercise heightened vigilance and caution when visiting public access areas."
The UK Foreign Office noted "the situation in Turkey appears to be calming", adding that the situation "remains potentially volatile." Canadians were warned to avoid all non-essential travel to Turkey noting both the dangers within the cities as well as risks associated with the Turkish/Syrian border. British travel association, Abta, stated: "Following incidents earlier this year, Istanbul’s popularity as a city-break destination has declined and there will be small numbers of British nationals in the city at this time.”
This proves damaging to a crucial source of revenue and if, as predicted, arrivals decrease by a quarter this year, the loss will be around $8 billion or, according to our calculator over £6,043,000,000. Turkey had been the 6th most popular tourist destination in the world and sought to expand its many resort attractions.
In 2012, some 42 million foreign tourists visited Turkey’s coastal resorts, cities and archeological sites. In 2012 tourism contributed 10.9% to Turkish GDP, supporting 8.3% of all jobs in the country. Political tensions with Russia and multiple terrorist attacks saw arrivals figures fall to 36.2 million in 2015.
Anticipating increases in arrivals, Turkey announced plans to build the world’s largest airport in Istanbul in 2013. The first of four phases is expected to open in 2017 and investors who have already poured some €7 billion into the project will be unlikely to add more funding given the ongoing crisis.
On June 29, 41 travellers were killed and 230 wounded when Isis terrorists attacked Atatürk Airport. Even before that incident, arrival figures for May were 35% lower than they had been the previous year.
Turkey’s Economic Woes Grow
The Turkish Lira initially fell by nearly 5pc on news of the coup. The swift failure of the rebels to take control reassured markets, allowing the currency to reclaim value as it rose by 3pc on Monday.
Shares in companies that are related to tourism lost the most value on the Istanbul National-100 stock exchange. Airport operator TAV shares fell by 11% and Turkish Airlines lost almost 8%.
The World Bank forecast that Turkey's economy will grow by 3.5% this year, a decrease from 4.5% last year. Turkey depends on imports of coal, natural gas and oil to power expanding energy demands, on which it spent some $37.8 billion last year. Turkey had a trade deficit of over $32bn (£24bn) in 2015, which is accounts for about 4.5 percent of GDP.
The country relies heavily on tourism revenues and foreign investment to balance its books. Both Moody’s and Fitch currently rate Turkey just a single point above junk status, and investor confidence in Turkey’s crucial stock and bond markets will likely decrease.
Salman Ahmed, chief global strategist at Swiss investment firm Lombard Odier, said that Turkey was already seen as vulnerable among emerging economies. "Given the sharp rise in political instability and Turkey's extremely vulnerable external profile, which is likely to worsen as tourism gets hit further, we think Turkish assets are likely to remain under pressure," he said.
The Turkish leader has banned any criticism of himself in the Turkish press and was supported by Angela Merkel when he insisted the edict be extended to Europe. Having famously written “the most offensive” poem about Erdoğan, Boris Johnson was more diplomatic in his recent statement urging Turkish “restraint” and “moderation” as he attended his first EU foreign ministers meeting in Brussels.