Turkish Awakening

by Alev Scott

  The Koç and Sabancı families have had several decades to accumulate and consolidate their financial and social power. Families who came later to the game are not so fortunate, and very few family-based companies are allowed to achieve such influence these days. The Doğan family, who founded their media and food company in 1980, are rumoured to have fallen foul of the government in the late 1990s and were fined 3.3 billion Turkish lira (£1 billion) for tax ‘irregularity’. This is the standard accusation levelled by Turkish authorities at individuals or organisations that are in disgrace for something else, and is a convenient way of financially hobbling an overly successful company. In the case of Doğan, the perceived reason was that their media channels did not depict the government favourably. Now, after the protests of 2013, Koç Holdings’ taxes are being investigated, predictably enough, following the family’s support of protesters and perceived animosity to the government.

  For the past few years Turkey has been universally described as an ‘emerging economy’, and its natural entrepreneurial spirit has thrived – most visitors notice this buzz as soon as they arrive in Istanbul. Everyone wants an empire of their own, in some shape or form. From small kebab joints to massive banking syndicates, there is an energy and drive to business life here that is comparatively lacking further West. Turkey is a massive country, more used than most European countries to economic crises, and Turks have buckled down where others have whinged and rioted. Mass production in particular is thriving, though this has dwindled slightly from its heyday ten years ago as wages have risen. It is a very young country – sixty per cent of the population are under thirty, and they are busy getting married, raising families and spending money on a far greater scale than the older populations of Europe.

  This unprecedented level of spending is partly due to concerted efforts to lower interest rates – at the time of writing the interest rate stands at around six per cent, an all-time low. The current government has worked hard to achieve this, and is very sensitive to perceived threats. AKP ministers have repeatedly claimed – as during the Gezi protests of 2013 – that an ‘interest rate lobby’ is jealous of Turkey’s economic growth and seeks to drive up interest rates to cripple the Turkish economy.

  While the six per cent interest rate is still high compared to the UK, for example, it is low for Turkey, so people are borrowing freely. Banks encourage this, pushing credit cards relentlessly onto a people who are not traditionally comfortable with owing large amounts of money. They are also not conventional savers, which is equally problematic for banks. Turks are hoarders, specifically of gold. The government is currently encouraging families to collect the vast quantities of gold hidden away under mattresses all over the country, and bank it for the good of the economy. The total amount is estimated at $302 billion (more than Ireland’s gross domestic product) and comes from a tradition of storing tangible capital, which can be transferred into cash in an emergency. It is a habit fuelled by mistrust of conventional banking after decades of economic unpredictability due to hyperinflation and political drama, a mistrust which peaked in 2001 when the inflation rate rose to seventy per cent. More importantly, gold is a big part of Turkish culture – at weddings, births and circumcision ceremonies, gifts are always given in the form of gold coins or jewellery, and stored for future family life.

  I found out the importance of gold by bitter experience, turning up to a traditional Turkish wedding with a generic wedding present instead of the requisite gold coin. To my horror, the bride and groom stood by the door as guests left the reception, holding a large bag to collect the coins as they wished everyone goodbye with beatific smiles. With my wretched photograph frame in hand, I could not bear to join the queue; instead I found myself in a glass elevator escaping to the staff parking lot upstairs, probably seen by all the guests queuing below me.

  The government is desperate for this stash of gold to ease the nation’s current-account deficit of $60 billion. Foreign creditors are waiting, and the nascent boom must be sustained. The extent to which the Turkish economy is dependent on foreign investment and tourism was brought dramatically to light during the Gezi protests, when the lira fell every time Erdoğan talked about how negotiation with protesters was out of the question; as a consequence, the government was forced to sell nearly US$3 billion to keep the lira afloat. Hotels were left empty as tourists avoided a country which suddenly began to look more like its beleaguered neighbours, Syria and Egypt, and the government had to reimburse local businesses affected by the protests to the tune of fifty million lira. The protests exposed a more fragile economy than many people had thought, and the protesters’ surprisingly successful boycotting movement threatened it even more. Major businesses like Garanti Bank and restaurants in the Doğuş Holding Group were boycotted because they were deemed to have links to people in government; Garanti alone lost a reputed $10 billion in the first few days of unrest.

  Many Turks are pessimistic about the future and the protests have swelled speculation about an imminent crash. Having said that, the Turkish economy has been doing well for years and Turks are slowly altering their spending habits, giving momentum to growth. Banks advertise their credit cards like sweets – delicious, harmless and readily available – and many people go for the bait. The average Turk has a clutch of credit cards which they flash impressively as they open their wallet to pay for their friend’s lunch – a selection of cards still suggests wealth rather than debt. The proud owner won’t use all of them, but the option to spend is always there. In fact, so great is the proliferation of credit cards that the government has had to step in to stop banks advertising them so aggressively. In July 2013, Erdoğan delivered words of wisdom: ‘Those credit cards, don’t have them. If everybody spends as much as they [the banks] want, they would not even be able to earn that income. They could never be satiated.’

  Turks are being offered more and more ways to pay for previously unrealisable dreams. Everything for sale, bar groceries, is available via monthly or even quarterly instalments. Since I have been living here, there has been a noticeable increase in the number of men undergoing hair transplants – they generally go in pairs, and I often see them wandering around on major shopping streets with matching hats or post-op headbands. Intrigued, I went online and discovered most clinics offering credit options for treatment, with links to specific Lebanese and Swiss banks in partnership with the clinics in question. I am sure there are two-for-one deals too, which would explain the pairings more satisfactorily than mere moral support. After a little more research, I found that certain companies offer special package deals to overseas clients which include the transplant procedure with short tourist trips. Medical tourism is a huge business in Turkey, attracting Arabs in particular to come for cosmetic surgery, combining their visit with a skiing holiday or a few days wandering around the Blue Mosque and Aya Sofya. The most intriguing cosmetic speciality in Turkey is moustache transplant surgery, for men who want a more virile-looking moustache. Arabs are particular fans, probably inspired by the well-endowed upper lips of celebrities like İbrahim Tatlıses.

  Despite the overenthusiasm of banks to give out loans, many Turks don’t seem to have bank accounts, especially small business owners. Traders in particular always want cash, and do not declare their earnings unless absolutely necessary. It is the same with my landlord, who claims not to have a bank account, so I give him wads of cash every month like a drug dealer, to ensure that he avoids paying tax on the rent he earns. This has been a huge problem for Turkish governments past and present, so they build in tax to necessities like petrol – which costs five lira (£1.70) a litre, the highest price in Europe – so that people have no choice but to pay it. If a Turk does pay tax legitimately, he is effectively double-taxed when he fills up the car with extortionate petrol.

  Turkish consumerism is changing swiftly in big cities, but there is still a culture of face-to-face business that persists, especially in less developed areas. Despite the encroachment of bank loans, on
line shopping and malls, there is plenty of old-fashioned salesmanship on street corners, and an entrepreneurial energy as obstinate as the hawkers that I have already described. In the UK, the individual salesman spirit has declined almost to extinction. Everything is done via registered companies, and you can price-match online and deliberate as much as you like before parting with your money. In Turkey, a carpe diem attitude prevails, encouraging impulse purchases, and more importantly the chance to sell anything if you have enough enthusiasm and persuasive power to grab people’s attention and credulity. Certainly, people shop online, but Turks enjoy living in the moment. More than that, they are comfortable with down-to-earth human interaction in a way that Western Europeans often are not.

  One hot Sunday in September, I was on an oppressively crowded ferry to the Prince’s Islands from mainland Istanbul, watching a man trying to sell metal spouts (‘patented juice extractors’) to an audience of grumpy, sweaty Arab tourists. Remarkably, the initially sceptical crowd showed interest and he had sold at least three spouts that I witnessed by the time we reached land. What I admired about this man was that, faced with the prospect of a potential customer base, albeit on a Sunday, albeit among tourists who probably had no interest in random kitchen apparatus, he seized the opportunity to work the crowd and, against all odds, managed to win himself some customers. In Britain, an embarrassed and cold reception would have awaited him, because it is just not the done thing to buy unorthodox juice extractors from strange men on ferries. Where’s the warranty? Where’s the instruction manual, where’s the receipt?

  There is a noticeably laissez-faire attitude to business here, despite all the hustle and bustle. A thin line separates friends and business associates, and there is a great deal of nepotism, which is an alternative way of looking at the culture of sustaining family businesses. Most annoyingly, lax payment is totally normal, although this has become less common since the days of sky-high interest rates and the corresponding profit one could make simply from sitting on cash for as long as possible. The Russian great-grandfather of a Turkish friend of mine was the tsar’s pastry chef in the early twentieth century; he emigrated to Turkey and set up a successful wholesale bakery which, until the 1990s, used to supply some of the main supermarkets in Turkey. Eventually, the family business was sold because they could not cope with the cash-flow problems caused by late payments. Their debtors were companies with multimillion-lira turnovers, but they operated in the same way as any other opportunistic enterprise.

  On the upside, Turkish business is very direct. If you want to trade with a Turk, you ring him up or walk into his shop and pitch an offer. My boyfriend sells British fabric to Turkish tailors and it is all very straightforward on the Turkish side – what really matters is money, so the conversation gets straight down to business. When my boyfriend deals with British companies, he must ring the purchasing manager at a certain time on a certain day of the week and an order will depend on the decision of this manager’s regional manager. The whole process takes weeks. In Turkey, the same decision would be made within a single conversation, which makes business far more flexible. The lack of protocol can sometimes be a problem, but single traders and small businesses find it liberating.

  I do not think it is a coincidence that Italian companies do very well in Turkey, with their Mediterranean adaptability. They manage to win huge contracts here, for example the £1.6 billion third Bosphorus bridge project, which is being carried out by an Italian company called Astaldi who also built the second bridge and the metro system in Istanbul; in addition Astaldi is beginning work on an enormous hospital complex in Ankara. Turks traditionally see eye to eye with Middle Eastern companies, as is evident from the current shift in business away from the EU and towards the Middle East and North Africa. Turkish construction companies secure multi-billion-dollar projects in countries like Qatar and Saudi Arabia, while these countries are rumoured to invest heavily in Turkey. Rightly or wrongly, people assume that there are important political reasons for this shift, which has been happening over the last ten years or so of AKP rule. Certainly, the AKP are overtly Islamic, and so are the governments of these countries. Commonalities like this do not automatically lead to strong business ties, but they suggest a closeness which in this case is complemented by Turkey’s increasing disillusionment with the EU.

  Turkey is popular among Arabs for all the reasons I explained in the previous chapter, and Turkish–Arab business is going well. Turks understand the way business is done in the region, so much so that British and American companies are seeking their help when trying to win contracts in the Middle East. I talked to a lady working at the UK Trade and Investment department in the British Consulate whose main mission is to ensure that British and Turkish companies work together in countries like Libya, Iraq, and Turkmenistan to get deals with local businesses.

  As she described it, Brits and Turks have complementary strengths and weaknesses. Brits have their global reputations to prop them up; once an agreement is in place, the company and local authorities in, say, Iraq, will honour it because they respect the aegis of the United Kingdom. But Brits do not understand the way business works in Iraq and rarely get the deal in the first place if left to their own devices. At a meeting with a junior associate of the target company, the British delegation will politely state their terms for the deal, send a follow-up email, and then complain that no email has been sent in return. ‘They haven’t responded to our offer. The ball is in their court.’ Turks have no such hands-off approach. They wait in person, for hours if necessary, to see the director of the company they are petitioning for the deal. They cajole, persuade, harass. If they are bidding for a construction project and the CEO wants lighting design and landscape gardening thrown into the bargain, the Turks agree without hesitation and make it happen. They are quintessential yes men, impressing their partners with apparent omnipotence, building bridges for future work. The trouble is that Turkey does not have the international political clout that Britain does, and the Iraqi or Turkmen authorities will not treat a Turkish contract with the respect they would afford a British one. To make the most of the strengths of both Turkish and British companies, the British Consulate has started this new initiative to supervise collaborations between the two.

  It is less risky for Turks to exploit the Middle Eastern affinity with Turkey on home ground, and the tourism sector has been very responsive to the recent influx of Arabs. Increasing year by year, these tourists come in their millions and head straight to historic sites and museums which celebrate Turkey’s romantic Ottoman heritage. In 2012, one opportunistic Turkish entrepreneur decided to test just how keen these tourists were, so he offered them something a bit special: air. They loved it. In fifty-six museums across the country, proudly branded Turkish and Anatolian air is on sale in tiny cans for sixteen lira (about £5) a pop, and these are now one of the top souvenirs sold in museum shops.

  The visionary behind Airstock is a man called Halim Karslı, who obtained separate patents for Turkish and Anatolian air in 2011. He has marketed his air as something between a health product and a nationalist commodity – ‘Whatever happens to the air of the world, let the air of Turkey remain good!’ reads the blithe slogan on the can. Having travelled all the way from Morocco or Oman, Arab tourists no doubt feel that they should take home something unique, a physicalised portion of the hallowed atmosphere of Turkey. In shops in Istanbul, there is another product for sale – Istanbul Air, which presumably holds the patent for the polluted air of the sixteen million-strong metropolis. Airstock and Istanbul Air struck me as wonderful evidence for the apparently infinite capacity of the Turkish business mind to make something out of nothing. The sale of air has more than a whiff of the Emperor’s New Clothes about it, but that is what makes it so commercially brilliant.

  Turks are very skilled advertisers. The zeal of the individual salesman is carried over to the commercial sector, and to less mainstream avenues of marketing. In particular, the Turkish market is
remarkably good at adapting to restrictions placed on it by the government, mostly in the forms of taxes or censored advertising. Put simply, Turks can sell anything, no matter what the obstacles.

  As I’ve explained, the mainstream advertising of both alcohol and tobacco has been steadily prohibited throughout the AKP’s decade in power. Combined with increases in taxes that have made cigarettes and alcohol considerably more expensive, the result has been the growth of a hugely successful underground promotion scene in Istanbul in particular. A few years ago, in an attempt to overcome ‘regulatory challenges’, alcohol and tobacco brands started approaching individuals on the arts scene in Istanbul to host private parties, sponsored by the brand. These parties target a prime audience of young professionals far more effectively than mainstream advertising. Despite the obvious nature of the sponsoring, the parties still manage to retain an exclusive, glamorous atmosphere, as though the guests are lucky to count themselves part of what is essentially a giant advert – this is mainly down to the genius of the Turkish promoters who organise them.

  Zeren Aslan was the particular mastermind of the ‘guerrilla’ party I attended. One of the top promoters and social sultans of Istanbul, his parties are legendary. Unusual venue choices like car parks, cellars and rooftops, multimedia entertainment and a network of the best contacts in Istanbul make him a far more valuable asset than any billboard space for clients like Absolut and Jameson Whiskey. Aslan is well aware that the exclusive nature of his parties encourages the elitist image the foreign brands are trying to promote, and we had a frank discussion about his methods in his sleek downtown office. ‘I invite my guests personally by text message, and send out the details of the event only a week before. They are flattered. The party is not to be missed.’ It is the sense of modern-day Prohibition-style secrecy, with an added dash of sophistication, that makes the parties so attractive. There is also no doubt that the relationship between Aslan and the brands is mutually beneficial. He used to earn €35,000 from selling the front cover of his monthly listings magazine to alcohol companies. As this is now illegal, he asks guests at his parties to design their own, which his staff then subtly seed with alcohol or cigarette branding. This scheme both pays for the party and creates the artistic factor that appeals to the typical ‘guerrilla’ partygoer, who likes to feel part of a creative community while secretly being rather thrilled at the element of free alcohol.