Coronavirus to multiply cost of Turkey’s public-private partnership model

The Turkish government’s development model of building vast infrastructure projects, including hospitals, airports and transport links, was fuelled for nearly two decades by a public-private partnership (PPP) model that gave private companies a Treasury-guaranteed income from the projects.

With the arrival of the coronavirus pandemic, that model is set to wipe out Turkey’s budget and bring the country’s economy to the point of collapse.

An official strategy and budget report for President Recep Tayyip Erdoğan on the PPP model says the Treasury’s guaranteed foreign currency payments to investors in PPP projects over the next 20 years will reach $71.5 billion.

If the state had undertaken the same projects itself, the report says, it could have completed them at a cost of $67.5 billion. Instead, construction companies with close ties to the government will be paid $71.5 billion over two decades.

The majority of this - $41 billion - has been pledged to companies that undertook transport projects, like the giant Istanbul Airport that fully opened last year. Some $11.5 billion of the guarantees are for giant “city” hospitals, 20 of which have gone into operation so far. These huge hospital complexes get their name not just from their location in Turkish cities – the massive structures sprawled over large areas actually resemble cities in themselves.

In the PPP model, the guaranteed income for transport projects like airports, bridges and motorways is calculated per passenger or vehicle, with the Treasury paying the difference if operators do not receive a certain amount of traffic per year. 

As for the hospitals, the guarantee is based on the number of patients. Each of the new hospitals has at least 3,000 beds, a capacity so high that, in many cities, older hospitals have been closed down. Thirteen hospitals in Ankara alone were shut to make way for the new projects.

But an attack by Syrian government forces that killed dozens of Turkish troops and left many wounded in Idlib, northwest Syria, on Feb. 27, and the arrival of the coronavirus in Turkey this month, have raised new arguments over these hospitals.

The hospitals have not only replaced older state hospitals, but also the military hospitals that were closed in the wake of the failed military coup on July 15, 2016. But serious questions have been raised about their ability to operate in the case of wars or epidemics.

Fikret Şahin, a doctor and lawmaker for the main opposition Republican People’s Party, says that the Idlib attack and coronavirus pandemic have shown the risks of having a single medical facility to handle potentially thousands of infected patients or wounded soldiers.

For one thing, Şahin said, the distance between buildings on opposite ends of the massive complexes could sometimes reach kilometres, while the hospitals themselves are often built on campuses far from city centres. 

“In the field of health, where even seconds can be a matter of life and death, the difficulty in reaching the hospitals built kilometres away from cities makes life-saving interventions more difficult and heightens the risks of losing patients,” he said.

“We’ve said since the beginning that this model was wrong, that it turned hospitals into commercial centres and patients into Treasury-guaranteed customers,” he said. “Now the latest events that have rocked the country have shown, in the most painful way, that we were right.”

The most dangerous of those events for the 83 million people of Turkey is the spread of the coronavirus, which quickly grew to 359 cases by the Health Ministry’s figures by Thursday night after beginning with a small handful of diagnosed infections last week. 

The Turkish Medical Association (TTB) called the government’s figures into question earlier this week, saying it had tested far too few people compared to the number of suspected cases. Pro-government columnists reacted with fury to this statement, as well as TTB criticism of the lack of protective equipment for health workers. Some of them even called for the word “Turkish” to be removed from the association’s title.

Among the gravest of the warnings from the association’s members came from Professor Özlem Azap, a specialist in infections who said the scale of the city hospitals would make it extremely difficult to use them as centres to fight the coronavirus infection.

The doctor noted that disinfecting such massive complexes and keeping them clean was a difficult task in itself, and added that, despite the focus on the hospitals’ total number of beds, the key issue in an outbreak was the capacity of its intensive care unit.

Moreover, the TTB said in a report on city hospitals that came out long before the coronavirus outbreak, the concentration of a large population’s health facilities in a single campus raised great risks in the event of an outbreak since it could make the hospitals no-go areas for patients with other ailments.

But there is a separate risk posed by these hospitals and the PPP model more broadly that the COVID-19 pandemic has brought to light. As the government began taking the same measures as countries around the world, closing airports and businesses and telling citizens to stay at home, the infrastructure built according to this model are largely out of use, meaning that the costs to the Treasury from the foreign currency-indexed guaranteed passenger and customer numbers are racking up. 

The government set aside 18.8 billion liras ($3.1 billion) in the budget for these guaranteed payments in 2020. But with the dollar and euro rising sharply against the lira, and airports, bridges and roads empty across the country, the Treasury will be liable to pay many times that amount.