Turkey is continuing its campaign against exiled cleric Fethullah Gulen: Media outlets and even banking intuitions seen as sympathetic have been raided and face liquidation.
The focus of President Recep Tayyip Erdogan’s government on Gulen—as well as expanding presidential powers—makes it seem that badly needed reforms won’t be done, argues Teneo Intelligence’s Wolfango Piccoli.
Family-owned Boydak Holding, active in multiple sectors, saw two brothers at its head arrested this weekend, Piccoli believes because the company was one of the main sponsors of the Gulen Movement’s NGOs, particularly those involved in education. This comes after the court’s seizure of the Zaman newspaper, which had already been raided several times in the past, the latest symptom of a crackdown on dissent that has seen more than 30 journalist jailed and hundreds more under investigation.
Yet Turkey is seen by a key ally by the U.S. and the E.U. as they seek to fight ISIS and stem the tide of Syrian migrants, so Erdogan’s actions have drawn little criticism from these quarters, Piccoli writes. However, investors shouldn’t gloss over the implications, he warns:
Nevertheless, the apparently arbitrary nature of the raids has reinforced concerns about the politicization of the Turkish judicial system and the vulnerability of investments in the country. More companies regarded as being associated with Gulen are expected to be targeted over the months ahead. They potentially include TUSKON, which was established by pro-Gulen businesses in 2005 and currently serves as an umbrella organization for seven business federations, 211 business associations and more than 55,000 individual businesspeople.Published on Barron's, 8 March 2016, Tuesday
Even short of further raids, the latest developments serve as a stark reminder of the sustained level of political risk in Turkey. The onslaught on the Gulen movement shows no sign of abating and Erdogan remains focused on his project of constitutional change to increase his presidential powers. As a result, the outlook for badly-needed economic reforms remains extremely dim.