Xavier Palacios
Jun 20 2019

Why the AKP fears the loss of Istanbul?

The Justice and Development Party (AKP) is using all its political resources to reverse its defeat in polls to elect a mayor of Istanbul on March 31. The prospect of losing the municipality to the secular opposition’s rising star, Ekrem Imamoglu, set off alarm bells at AKP headquarters. 

Republican People’s Party (CHP) candidate Imamoglu was declared winner of the mayoral election by a small 13,000-margin, but the electoral authority ordered a June 23 rerun after the AKP launched an objection, citing what it said were ballot box irregularities.

Since then, the AKP political machine has been working to delegitimise the March 31 results in Istanbul, accusing Imamoglu of having connections with the outlawed Kurdistan Workers’ Party (PKK). Pro-government media have also accused Imamoglu of having Greek roots, therefore of not being a true Turk, and of being part of an international plot to topple President Recep Tayyip Erdogan from power.

Why have Erdogan and the AKP pushed so hard not to lose the municipality of Istanbul? Besides the emotional shock, losing control of Istanbul goes beyond local politics to the national level.

Previous analyses have shown that municipalities play a key role in the AKP’s political, economic and energy policy, but the management and control of municipality-owned companies is also important to the party machine.

Major municipalities have used utilities companies they control as political tools. These public-private entities, despite being legally exposed to the Court of Accounts, are in practice exempt from accountability, mostly due to the opaque political environment. Most of these municipality companies are governed by boards of directors that are appointed by municipal bodies, in which mayors have an influential voice. 

These companies do not make a profit from their services, instead, several studies demonstrate their role as an informal political tool, by providing job opportunities, including during election campaigns in areas where the ruling party believes it can secure more votes. The Istanbul municipality has also run up large debts to these entities. 

Municipalities are the most active bidders in Public Procurement Projects (PPP). Municipality firms, alongside State Owned Enterprises and the Ministry of Health, represent more than 50 percent of all PPPs awarded in Turkey. For example, in 2018, the total value of PPPs in Turkey was around 202 billion lira (around £26 billion).

The blurred lines between local politics and business leads to politically connected firms winning as much as 70 percent of municipality contracts. “The contract-awarding and the contract-awarded figures are actually the same bodies, academic Esra Gürakar said in her book “Politics of Favouritism in Public Procurement in Turkey”.

If the AKP loses the rerun vote in Istanbul, together with other major municipalities it lost in the March 31 ballots, it would leave cities that account for 64 percent of Turkey’s GDP in opposition hands.

The AKP could thus lose its status of being the party in charge of providing key services to citizens and voters, a large blow since the party has built part of its political legitimacy on providing welfare state services to poor urban areas. 

The loss could also alter relations between the AKP and businesses that have profited from municipal contracts.

Erdogan has already his supporters of the consequences. Before the elections, the president said: “If we stumble in Istanbul, we will lose our footing in Turkey.”

In the event the AKP does lose the Istanbul election, the party could use other sources to try to offset the impact of losing control of the largest municipality-owned companies.

But Erdogan and the AKP will have to be very careful when taking decisions to disempower these companies as the economy is already in a fragile state.

The president could opt to starve opposition-controlled municipalities by withdrawing municipality funds that are now tied to two ministries under his direct control. The presidential system, in place since for a year, could provide the easiest answer to the local election defeat.

Other mechanisms to dry up municipal budgets can be found in public construction companies, such as the Housing Development Administration Fund (TOKİ), or state-owned banks.

TOKİ’s public housing projects have varied according to local electoral results, with sharp drops recorded municipalities lost by the AKP.

Most of the municipalities’ debts are to a state-owned bank that falls under ministerial, and ultimately presidential, control. Finally, the Strategy and Budget Directorate, also under the president’s control, is legally empowered to transfer resources to preferred municipalities. 

But Erdogan will have to be careful not to hurt Turkey’s already damaged Turkish economy.