After many violations concerning the rule of law, separation of powers and freedom of expression, President Erdoğan’s ‘New Turkey’ is now directly targeting the free market economy, free enterprise and property rights in order to silence any opposition critical of the oppressive policies. Among others, the Gülen-affiliated people and organizations are still on the first rank to be targeted. The latest decision of the Turkish banking regulatory body to seize the control of the management of Bank Asya is the most recent example of the on-going persecution of the Hizmet (Gülen) Movement which was declared a scape goat by the Turkish government after it turned out to be a vocal critique of the increasingly authoritarian policies in New Turkey.

What Happened?

On February 3, in the late hours of the evening, Turkey’s Banking Regulation and Supervision Agency (BDDK) ordered the seizure of Bank Asya, Turkey’s largest private participation bank which was founded in 1996 by some businesspeople close to Fethullah Gülen. The order for seizure was on the same day that Gulen’s op-ed appeared in the New York Times titled ‘Turkey’s Eroding Democracy’ in which he says that “Turkey has now reached a point where democracy and human rights have almost been shelved.”

After BDDK’s decision, a new Board of Directors was assigned on the grounds that the Bank did not submit on time the requested additional certificates. The former CEO has responded that they were indeed asked for lengthily documents concerning the privileged shareholders in an unreasonable time period and have nonetheless submitted about sixty percent of the requested forms on time but that the BDDK took the decision to seize control of the bank management. Funny enough, according to current banking regulation code, such failing to meet the deadline is a fine up to 15,000 TRY rather than seizure. The decision, according to experts, is hence both unlawful and completely irrational.

The BDDK’s decision does not mean that the bank is being nationalised. Had this decision led to a mass exodus of funds, then the Bank would have lost enough liquidity paving the way for its nationalisation and complete seizure. Currently, the Bank is still owned by its shareholders and the decision for seizure can be reversed by court order. Contrary to government expectation, the private account holders have been depositing and transferring savings into Bank Asya accounts to prevent the Bank’s forced bankruptcy. Many depositors yet worry that the new management, who are suspected to comprise of pro-government bureaucrats, may take some deliberate steps at the expense of the Bank’s current financial stability and reputation. Ernst & Young conducted the latest independent audit report of Bank Asya in September 2014 in which it did not state any structural irregularities and that the Bank’s liquidity was in good form while pointing out a decrease in profits. 

What Does This Mean?

This latest move against Bank Asya needs to be contextualised as this is openly a political “seizure.” In December 2013, a series of corruption investigations implicating the then Prime Minister Erdoğan and his inner circle went public as prosecutors concluded their investigations into corruption, money-laundering and bribery charges by arresting and questioning a number of suspects. As per the Gezi park protests, Erdoğan responded by claiming that these were the doing of a “coalition of foreign powers” with “domestic pawns” bent on overthrowing the government. Erdoğan claimed that the Hizmet movement was the domestic “puppets” of this “international plot”. Accordingly, he disrupted the ongoing judicial investigations by taking control of the judiciary and dismissing, demoting and reassigning hundreds of judges and prosecutors and approximately sixty thousand police officers, civil servants and other state employees. Similar onslaughts have taken place against the media and business sectors in Turkey. For instance, in last December, the Turkish police raided the headquarters of the Hizmet-affiliated media outlets and arrested many journalists and media personnel including Ekrem Dumanlı, the editor-in-chief of daily Zaman and Hidayet Karaca, the head of the Samanyolu Media Group. The latter is still behind the bars. Likewise, most recently, the Diyarbakir-based Dutch journalist Frederike Geerdink was detained and later charged on terrorism legislation. Since Bank Asya is affiliated with Hizmet, it has faced consistent and concerted attacks by the government and pro-government media, including but not limited to, the immediate withdrawal of all state and pro-government business owned deposits in Bank Asya, the cancellation of all state protocols with the Bank and Erdoğan’s statement that “that Bank has already gone bankrupt” back in September 2014 – a clear violation of banking laws criminalising any statements likely to influence public confidence in a bank. Despite all efforts and even the last decision, Bank Asya’s liquidity remains very healthy, however.

Can the EU do more?

Many in Europe expressed their concerns for the recent deterioration of Turkish democracy and rule of law under the increasingly authoritarian regime of Erdoğan’s administration. Yet, Turkey still continues to be a worse place for ordinary citizens and civil society who ask more freedom and accountability. The last decision to seize the control of Bank Asya demonstrates that what is diminishing in Turkey is not only the individual rights and freedoms but also the free enterprise, stability, transparency and competitiveness which are indispensable for a functioning market economy.

The friends of Turkey and those who support rule of law, democracy and market economy should not only raise their voices more loudly to avoid such violations but take some concrete steps to track back Turkey not to derail from the EU process. Tomorrow may be too late!

Dr. Ismail M. Sezgin – Director of Centre for Hizmet Studies