ISTANBUL // The arrest of dozens of serving and former officers of Turkey's armed forces in recent days may have weakened a hitherto powerful institution widely seen as being opposed to political change. But as rifts between opposing political forces appear to be deeper than ever, the country's politicians are unlikely to agree on further democratic reforms to strengthen Turkey's EU bid.
After the arrests, a top business representative warned of a "serious polarisation" in the political scene. Umit Boyner, the head of the Turkish Industrialists' and Businessmen's Association, or Tusiad, the country's most powerful business lobby, said in a statement following meetings with political leaders in Ankara that "the polarisation and atmosphere of strife that affects different levels of society" had to be overcome.
In two countrywide police sweeps last week, about 70 active and retired military officers were arrested, and 35 of them, including generals and admirals, have been charged with having plotted to bring down the elected government by force. Their suspected coup plan, codenamed "Sledgehammer", included the bombing of mosques and the provocation of new tensions with Greece in an effort to pave the way for a military intervention, the prosecution says.
Former top commanders, including the former heads of the country's air force and navy as well as a former deputy chief of general staff, were released after being questioned, but are still regarded as suspects. If convicted, they could face life in prison. Other officers have been standing trial as suspected members of a nationalist organisation called Ergenekon that is also accused of having plotted a coup. The development is unprecedented for Turkey, a country where the military has been both highly regarded and politically powerful.
And the bad news just keeps coming for the generals.
The military's embarrassment deepened late Monday when the general staff was forced to admit after a forensic investigation that another suspected coup plan, uncovered last year, may have been signed by a colonel serving at the armed forces headquarters. Civilian prosecutors had the colonel arrested twice, but Gen Ilker Basbug, the chief of general staff, played down the alleged coup plot as just "a piece of paper". Now Gen Basbug's military prosecutors are investigating the case.
The events have left the military's reputation in tatters and have been hailed as a breakthrough for democracy by some. "The issue is not just taking people to account for actions in the past," Cengiz Candar, a columnist, wrote about the arrests and the coup plans in the Radikal newspaper. "The issue is safeguarding Turkey's democratic future."
But others say they fear Turkey is in fact becoming less democratic. They accuse the religiously conservative government or Islamic brotherhoods of being behind a smear campaign designed to undermine the strictly secular armed forces. "This is not a legal process, this is a political settling of accounts," said Deniz Baykal, the opposition leader in Ankara.
The gulf between the government and those accusing it of undermining the republic means that reforms considered to be essential for progress in Turkey's troubled candidacy for membership in the European Union may have to wait, even if everyone agrees there are issues that should be tackled.
A first test of the willingness of both sides to work together will come this month, and the first political skirmishes indicate that not too much can be expected on that front.
Recep Tayyip Erdogan, the prime minister, said on the weekend that his government is working on a reform to overhaul the judicial system and wants to table the plan, which includes changes to the constitution, in parliament at the end of March. The move follows a heated debate about a decision by a judicial body opposed to the government to remove a special prosecutor from office after he had had another prosecutor arrested under suspicion of belonging to Ergenekon.
The prime minister said the government was taking European standards for the judiciary as an example and wanted to do "what is done in the 27 members of the EU". Brussels has long called for a comprehensive reform of the Turkish judiciary.
But Mr Baykal, the leader of the opposition Republican People's Party, or CHP, the biggest opposition party in parliament, made it clear that Mr Erdogan should not expect broad support. "Of course changes to the constitution will be on Turkey's agenda," Mr Baykal said in a reply to Mr Erdogan's announcement. "But it will be a new and fresh government" after the next elections, to be held by the summer of 2011.
Turkey's bar association, known for its anti-government stance, also spoke out against the government's plans. "The reform cannot be tackled in today's atmosphere of conflict," it said this week.
Mr Erdogan's ruling Justice and Development Party, or AKP, commands the most seats in parliament, but does not have enough deputies for the two-thirds majority needed to change the constitution. The prime minister has said that if there were no consensus on the changes between parties in parliament, he would take the issue to a referendum, which could take place in May.
Other reform plans by the governments are also likely to stir controversy. According to media reports, the government wants to stage a new effort to strengthen the oversight of the civilian judiciary over members of the military, although the constitutional court, acting after a CHP complaint, threw out an earlier version of that reform. The AKP, which narrowly escaped being shut down by the constitutional court two years ago, also wants to make it harder for the judiciary to ban political parties.
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At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
