Zülfikar Doğan
Feb 21 2018

Turkish ruling party in $400 billion construction frenzy ahead of polls

In government for 15 years and controlling the Istanbul and Ankara municipalities for 24, Turkey’s Justice and Development Party (AKP) has decided to roll out a construction campaign worth $15 billion annually and $400 billion in total.

Turning Turkey into a construction zone, especially Istanbul, will be an important lifeline for the AKP as it enters its 16th year of government. Facing three important elections in 2019, it appears the AKP administration has suddenly remembered the risk of a long-overdue earthquake and plans an extensive programme of urban renewal by flushing money into the system to revive the economy, especially the construction industry. It should not surprise anyone that the overwhelming share of financial resources is likely to be poured into companies with close ties to the government.

Starting this year, 500,000 buildings will be demolished annually and in total 7.5 million will be torn down and rebuilt from scratch. This will be an important campaign strategy in the run-up to the March 2019 municipality elections, plus parliamentary and presidential polls due before November next year. The government hopes the plan will revive the economy and increase employment.

In addition, an important part of the strategy is to build new permanent housing for Syrian refugees by the Housing Department Administration (TOKI), especially in those cities where there are high number of Syrians, or just over the border in Syria.

President Recep Tayyip Erdoğan and members of the government, who have over the past few years praised the hospitality of Turkish people, have recently begun talking of placing Syrian refugees in areas of Syria cleared of Islamic State and the Syrian Kurdish YPG.  

First Lady Emine Erdoğan laid out a plan for this part of the construction frenzy in a speech at the Six Nations’ Conference on Feb. 16. Emine Erdoğan said 140,000 Syrian refugees were relocated to the Syrian town of Jarablus after Turkish troops captured the area during their 2016-7 Operation Euphrates Shield into Syria. Another 500,000 refugees are to be relocated to Afrin as soon as Turkey’s month-old offensive there is successfully completed, she said.

Since the last big earthquake, the 1999 İzmit earthquake that killed more than 17,000 people, there have been many scientific reports and proposals to better equip the country for the next one. Some examples are reports published by the Turkish parliament’s earthquake commission, by the Istanbul Municipality and by the Union of Chambers of Turkish Engineers and Architects (TMMOB). These reports predict that another earthquake expected between 2030 and 2040 could result in 80,000 to 625,000 deaths, the destruction of some 600,000 to a million buildings and financial losses of hundreds of billions of dollars.

Former Environment and Urban Planning Minister Erdoğan Bayraktar previously announced that $400 billion would be made available as part of preparations for the next big quake. He said this would be used to demolish buildings and rebuild them according to new building codes.

Such preparations have gained considerable pace in the run-up to next year’s elections. Top of the agenda is making funds available to local municipalities and making sure they spend it on the construction projects. The most important task of new Istanbul, Ankara and Bursa mayors appointed by the president after he had forced the old mayors to resign, is to steer the policy in this direction in order to win the elections.

In his recent warnings to local municipalities and his own party officials, President Erdoğan repeatedly called for a move away from vertical construction to a more lateral type, avoiding building taller than six floors. In addition, he has confessed that mayors from his party, including himself, had betrayed Istanbul’s landscape, not leaving any green areas except for cemeteries. It was during his three-and-a-half-year tenure as Istanbul mayor as well as during the terms of subsequent AKP mayors that the overwhelming majority of new housing, skyscrapers and shopping malls were built. Of the current 121 high-rise buildings in Istanbul, 117 were constructed while AKP mayors were in office.

Last November at Real Estate Summit 2017, Environment and Urban Planning Deputy Minister Mehmet Ceylan said the construction industry was seen by his government to be the locomotive of the Turkish economy. He said there was a plan to demolish and rebuild 150,000 buildings in Istanbul, 7.5 million residences and workplaces. Under this plan, at least 500,000 new residences and work places will be reconstructed in accordance with new building codes. The cost of this plan is expected to be $15 billion annually and $400 billion in total. According to the minister, it is expected to be completed by 2023. TMMOB has warned that this new plan is more about making profits than reducing earthquake damage. It points out that during the terms of AKP mayors and environment ministers in the years since the 1999 Izmit earthquake the number of evacuation zones has been reduced from 470 to 77.

Environment and Urban Planning Minister Mehmet Özhaseki has stated that in preparation for an earthquake of at least seven on the Richter scale the government is preparing a package that would give interest-free financial support for urban renewal. Özhaseki announced that Iller bank, the Treasury and TOKI are prepared to release their resources, that there is an immediate availability of zero-interest financial support from the World Bank and the Islamic Development Bank, and that people can avail themselves of these financial opportunities to demolish and rebuild their properties.  

Özhaseki hinted that there are preparations for an executive order which will enable the process to move faster and more efficiently, to remove bureaucracy so that the destruction of old buildings and reconstruction can be completed as quick as possible. In addition, he said there was a plan to relocate people in high earthquake-risk areas within Istanbul to new towns.

When a construction company with close ties to the AKP government declared bankruptcy while constructing new buildings for 1,000 people, the Environment and Urban Planning Ministry intervened to undertake the completion of the project. Pointing out that sometimes some of the urban renewal projects turn into profit-making schemes, Özhaseki said that in such cases the ministry would not shy away from becoming a construction company in order to provide citizens with their houses.  

According to the Environmental Performance Index (EPI) released by Yale University every year, due to environmental and natural habitat destruction Turkey has fallen down the rankings by 33 places during the terms of AKP governments and mayors. In the latest report of 2016, Turkey ranked 99th out of 180 countries in the general category. However, in the category of natural and wild habitat protection, Turkey was 177th. Countries close to Turkey in the rankings were Somalia, Afghanistan, Haiti, Libya, Lesotho, Barbados, Syria and Iraq.

Ali Babacan was the deputy prime minister responsible for the economy for many years and is currently a member of parliament representing Ankara. He has warned and criticised his own government many times, stating that Turkey has made its economy solely dependent on construction instead of industrial production. He has said that high-rise buildings constructed with improper paperwork were making cities ugly. Babacan has said it also raised doubts about the fair distribution of financial resources and that it provided a way of making fast and easy money.

It is expected that an executive order will be issued before the 2019 elections that will revive all of the plans that were proposed prior to the constitutional referendum of April 19, 2017. These plans included the availability of credit via public funds, tax exemptions and an increase in consumption and expenses so that a high economic growth rate can be achieved. The plan, including the annual $15 billion reconstruction of at least 500,000 buildings, is expected to pass parliament by the end of March as one of the consensus items between the AKP and its ally, the Nationalist Movement Party (MHP).