Instability risk Businesses Fret Over Turkey Vote

As Turkey prepares to hold a referendum that could see its president given sweeping new powers, German firms with interests in the country are holding their breath over the potentially tumultuous outcome.
Erdogan's supporters see him as the path to continued economic growth.

With a referendum in Turkey on presidential powers now just days away, German businessmen in the country are getting increasingly jittery about the outcome of the vote.

President Recep Tayyip Erdogan is asking voters to give him and his successors sweeping new powers that would effectively turn his office into an executive position in a country where the prime minister and government currently run the show.

Mr. Erdogan’s message on the campaign trail is that a vote for him is a vote for prosperity. Many business leaders do believe that if he wins the referendum on April 16 he will be able to streamline decision making. But many also fear the consequences of making an already authoritarian leader more powerful.

“We want to put it behind us as quickly as possible,” said the head of a German company in Istanbul, who spoke on condition of anonymity.

The businessman said he’s opposed to Mr. Erdogan’s plans for an authoritarian system of government, but a "No" vote would likely trigger more repression and political unrest. “With a Yes we’d at least know where we’re at,” said the executive

No one knows how the presidential system will work in practice. Zümrüt Imamoglu, chief economist, Tüsiad

It’s a widespread feeling. If Mr. Erdogan loses the vote, he would probably call a new parliamentary election in a bid to secure the two-thirds majority with which he could change the constitution. And a new election would deepen political divisions in Turkey and paralyze business.

The president has pledged to turn the country into one of the world’s 10 biggest economies by 2023, the 100th anniversary of the founding of the republic, and insists that a yes vote is the only way to achieve it.

“A No vote would certainly unsettle companies and financial markets,” said Gregor Holek, a fund manager at Raiffeisen Capital Management, part of Austria’s largest banking group. “A Yes would likely lead to stabilization and the political future will become more predictable for companies,” said Mr. Holek, an expert on Turkey.

Jan Nöther, managing director of the German-Turkish Chamber of Industry and Commerce in Istanbul, said companies were in wait-and-see mode and hoping for the political situation to calm down after the vote.

It remains to be seen if the changes to the presidency will bring the promised boom.

“No one knows how the presidential system will work in practice,” said  Zümrüt Imamoglu, chief economist at Turkey's main industry association, Tüsiad. She said she was particularly concerned about the impact the referendum outcome could have on Turkey’s relationship with the European Union. The country must not burn its bridges with the E.U. either economically or in terms of political values, she added. “Democracy, freedom of opinion and an independent judiciary are important foundations for the economy.”

Mr. Erdogan has nationalized more than 850 companies since a failed coup attempt last July, mainly those suspected of having links to exiled cleric Fethullah Gülen, accused by Turkey of masterminding the coup. More than 134,000 civil servants were sacked for the same reason.

His actions have alarmed the international community, not least E.U. states. Turkey has antagonized several members in recent weeks after it sent ministers to gee up the Turkish diaspora ahead of the referendum. Bans on their rallies in Germany and the Netherlands led to accusations of Nazism from Mr. Erdogan. But the E.U. knows it cannot go too far: The bloc is reliant on Turkey for the success of its plan to stem the tide of migrants coming to Europe from the Middle East and North Africa.

But there are signs that Mr. Erdogan is willing to take steps to improve relations with his European neighbors. It emerged on Monday that the Turkish government has agreed to give Germany consular access to Deniz Yücel, a German-Turkish journalist whose arrest in February led to a deterioration in already strained relations between the countries.

The German government has repeatedly called for access to Mr. Yücel, who works for the German newspaper Die Welt and who was arrested in Ankara on charges of propaganda in support of a terrorist organisation and inciting public violence. Mr. Yücel and Die Welt deny the charges.


Gerd Höhler is a Handelsblatt correspondent based in Athens, Greece. To contact the author: mailto:[email protected]