Introduction

At the beginning of the years 2000s, Turkish government was formed by a coalition of
three leading parties that had enjoyed popularity for a long time: Democratic Left Party
(Demokratik Sol Parti – DSP), the Nationalist Action Party (Milliyetçi Hareket Partisi – MHP),
and the Motherland Party (Anavatan Partisi - ANAP). On the other hand, Justice and
Development Party or the AKP originated as a separation from the Virtue Party (Fazilet Partisi -
FP), which was a political party that emerged from Islamic movement in Turkey and faced
official ban in June 2001. It was rather surprising that such a new party drawing appeal from
religious fundamentalism in a secular political context as the AKP could manage to defeat the
existing prominent parties, not to mention by a large margin by popular votes. On the surface, it
seems that the main reason for the AKP’s electoral triumph in 2002 is the 2000-2001 financial
crises for which the coalition government was held responsible. As the AKP took charge, Turkey
overcome the recession period and started making progress just within a few years. It appears
that no doubt should be raised about the AKP’s competence at this point. However, looking at
the pre-crisis economic reforms made by the AKP in comparison with the coalition government,
the AKP actually did not make any imperative innovation. Arguably, it is rather the AKP’s
ability to direct popular opinions that can explain their impact. When looking at the performance
of AKP over the years, it becomes clear that their strength is populism, and they were
particularly successful at incorporating it to economics.

In order to prove that public manipulation is the main cause of economic success for the
AKP since 2002, this research proposes the hypothesis “In the long term AKP contributed to the
recovery of Turkish Economy by effectively mobilizing masses as applying neoliberal
principles.” in order to answer the question: “Did the ideological doctrine of AKP concentrate
on mass mobilization in order to conduct its own economic principles?”. Two qualitative
methods will be used in this research: one is comparative historical analysis with a view to
developing an insight in the economic crises 2000-2001 and AKP’s policies since they started
running the government. The other is case study, with a comparison between the coalition
government and the AKP in economic reforms after crises. In the end, there will be an evaluation
on the overall strategies of the AKP.

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AKP’s Success Over The Coalition Government In Responding To Economic Crises 2000-
2001

The year 1999 saw the formation of a coalition government by the Democratic Left Party
(DSP) led by Bülent Ecevit), the Nationalist Action Party (MHP) led by Devlet Bahçeli, and the
Motherland Party (ANAP) led by Mesut Yilmaz, with the clear aim at economic reforms.
Ironically, in the two consecutive years following their succession, Turkey was hit by deep
banking and currency crises. Although this was not the responsibility of coalition government
alone and they did play a vital role in reviving the economy, their mistakes still cost them
popular trust and support to the newly emerged AKP. In other words, this critical recession was
the turning point that led to the fall of preceding leading parties and the rise of AKP. It is still
controversial among economists about which government had better policies. Here, the argument
of this research is drawn from Mükerrem, Öniş, Yeldan and Ünüvar, that the coalition
government actually put more effort in their reforms, but it is the AKP is the one enjoying the
praise.

Turkish Financial Troubles In 2000-2001

Turkish economy had been inherently unstable since the 1990s. Years of changing
governments and inconsistent policies left a growing concern about the nation’s sustainability,
alongside the fact that Turkey was not prepared well enough for financial globalization. The neo-
liberal reforms allowed the public sector to borrow from domestic capital markets, resulting in
excessive domestic debt, increased interest rates and especially overwhelming public deficit. The
higher deficit went, the more government had to borrow, thus drawing commercial banks
attention to invest on government bonds. Risk started to appear when the banks opened a range
of short-term borrowings from abroad to buy long-term Turkish government bonds, which was
encouraged by the state protection for all bank deposits, causing the high possibility of maturity
and currency mismatches. Severe corruptions as previous partisans and bankers established
secret connections also made it difficult to have efficient accountability. Therefore, the banking
sector became so vulnerable that it was expected to collapse any time as soon as some financial
insecurity was to happen (Öniş, 2003).

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 When the coalition government stepped in with the promise to solve all Turkish
economic problems, there was a real spark of optimism that any chance of crisis would likely to
be avoided. Reforms were implemented immediately with a view to accelerating privatization,
encouraging foreign investments, standardizing public sector employment, taxing interest
income, reducing agricultural subsidies, and amending Banking Law. Following this, a stand-by
agreement with the IMF was signed, and an exchange-rate-based stabilization program was
adopted to tackle inflation. Accordingly, a floating exchange rate system was applied together
with rigid fiscal and monetary policy in the hope that public deficit would decline (Mükerrem &
Gencer, 2009). However, the program soon backfired owing to several miscalculations. First, in
the context of critical banking fragility and economic uncertainty, the government was
incompetent in predicting the shortcomings of their decisions, such as the sudden fall in interest
rates actually deepened the vulnerability of the banking sector, or the anchor exchange rate were
not capable enough to bring equilibrium as the inflation rate and foreign exchange rate were too
high. Additionally, while pressuring Turkish government to make reforms and facilitate foreign
trade, the IMF provided neither detailed instructions on how to carry out exchange rate system
efficiently, nor immediate financial support for Turkey to cope with deficit and inflation, as
opposed to what IMF was supposed to do. Such half-hearted effort from both the government
and the IMF surely could not make any significant difference. The banking system was still
fragile and soon took the path of a “self-fulfilling prophecy”, when creditors, upon predicting a
recession in 2000 and 2001, decided to withdraw all the loans altogether, triggering a domino
effect towards a currency crisis and created exactly the deterioration that was predicted (Öniş,
2003).

The November 2000 incident was the first prophecy to be fulfilled itself, as rising
uncertainty caused the interbank credit flows to be interrupted while foreign investors to take
back their funds, and the banks began facing the consequences. The private mid-sized
Demirbank was the first to have their funding frozen and had to sell off government bonds. Soon,
all the banks followed and plunged into liquidity crisis. At the end of November, the interbank
rate reached 873% after the Central Bank stopped lending emergency credits. By the time the
crisis was halted thanks to the aid of $10.5 billion from the IMF, the Central Bank had already
lost 25% of exchange reserves. The situation was calmed down until February 2001 when
another triggering event took place, this time politically induced. The meeting of the National

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Security Council on February 19th unexpectedly saw President Ahmet Necdet Sezer openly
confront Prime Minister Bülent Ecevit with corruption issue, which in turn led to another
economic insecurity. Again foreign and domestic investors’ suspicion led to another enormous
growth in interbank rates from 50% to 8,000%. Crisis only ended when the government removed
the currency peg on February 22th (Brinke, 2013).

The impact of the 2000-2001 crises was dire for Turkish socio-economy as a whole. At
the end of 2001, per capita GDP dropped by 6.5%, whereas per capita income dropped by over
$800. Public debt went from 38% to 74% of GDP within a single year between 2000 and 2001
(Brinke, 2013). It was announced by the Ministry of Labor in 2002 that, approximately 600,000
enterprises had gone into bankruptcy and nearly 2.3 million workers had become unemployed
(Öniş, 2003, p. 98). Poverty rate saw a sharp increase accordingly. As an unavoidable result, the
coalition government started losing their appeal and credibility. On a more positive note, the
crises did help accelerate Turkish economic reformation, especially in the banking system.
Relations with the EU also evolved as the IMF gained extensive influence throughout the years
(Öniş, 2003).

Short-Term Response from The Coalition Government

The coalition government was obviously responsible for letting two crises take its course
without any effective reaction, apart from the abolishment of fixed exchange rate regime at
towards the end of February 2001. Yet right after this, on March 1st, 2001, the government finally
took the first step to the real reforms. A new Minister of Economic Affairs, Kemal Derviş, was
appointed and quickly played a key role with his “Transition to a new economy” program.
Within 15 days, he passed up to 15 new laws to enhance the previously adopted stabilization
program. Concentration was placed on the banking system, with a thorough restructuring plan
undertaken by the Banking Regulation and Supervision Agency (BRSA). Full autonomy was
given to the Central Bank for monetary policy under the supervision of a “Monetary Policy
Committee” as an attempt to have a managing institution for this sector. Public banks were either
consolidated by merging to larger ones (Emlak Bankası was transferred to Agricultural Bank) or
slated to be privatized (Agricultural Bank). Private banks were also given more attention. At the
same time, privatization happened to state companies as well such as Telecom and Turkish

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Airlines. Plus, Turkish Airlines no longer had the privilege over private airlines in price
competition (Mükerrem & Gencer, 2009).

It is undeniable that after the 2001 crisis, the coalition government’s reform program
worked surprisingly well and generally efficient. Despite the great burden of the 2000-2001
inflation, Turkish economy quickly recovered in the next year with positive GNP growth by
7.9%, which was rather incredible (Mükerrem & Gencer, 2009). Restructuring of privatization
failed to make profound changes, but restructuring of banking sector obtained quite good results.
It was implied by Mükerrem that the coalition government could be capable of more remarkable
achievements, yet they were held back by the systemic hollows left by previous governments,
alongside their reluctance to make emergency response (2009). Unfortunately, they did not have
enough time to show more than this short-term performance. Based on the fact that they shared
the blame on 2000-2001 crises and the unemployment issue was not solved even when the
economy had been revived, it is understandable that the people no longer wanted them in power.

Long-Term Advantage For The AKP

As expected from the dramatic decline in legitimacy of the coalition government, the
November 2002 election witnessed the victory of the AKP or Justice and Development Party, led
by Recep Tayyip Erdoğan. The shift from multiple to dominant party system might have been
essential for a developing country like Turkey at the time to bring about a more consistent and
efficient leadership. Indeed, many referred to AKP as the savior for Turkish economy who lifted
the country out of the depth of crisis. The first term of AKP administration saw an annual growth
of more or less 6% and 7% respectively in GDP and national income. Meanwhile, inflation rate
decreased from 55% in 2001 to less than 8% in 2005. Public debt dropped from 78% in 2002 to
41% in 2007. Stability can be found in increased investments and consumer spending, steady
primary surplus, as well as overall improved living quality (Zurcher, 2017). This success is one
of the main reasons for AKP’s long-lasting prestige for almost two decades now. It would be too
early, however, to conclude right here that Turkish amazing economic recovery was all thanks to
the brilliance of AKP alone.

Despite appearing as a replacement for the failing coalition government, AKP in the
initial years did not come up with any policies different from their predecessor. In fact, their

THE RISE TO POLITICAL DOMINATION OF AKP | 5

emphasis on reliance on EU and IMF, tight fiscal and monetary policies, reformation and
stabilization programs, along with independence for the Central Bank was almost a repetition
from Kemal Derviş’s ideas. It can be said that, the coalition government was the one that set the
basis of restructuring and reforming, while the AKP government took advantage to accelerate
further and attained ultimate results from it. Yet because of the circumstances, the AKP was able
to receive all the credits. What is more, in order to strengthen the relations between Turkey and
EU, the AKP government agreed to comply with Copenhagen criteria and IMF conditionality,
which means most of their macroeconomic decision makings actually came from the framework
designed by the IMF. Achievements such as increased foreign inflows, positive growth rates or
reduced inflation relied considerably on the support of the IMF, which had been more generous
compared to the pre-crisis period (Yeldan & Ünüvar, 2016)..

Economically, the AKP’s performance should even raise more doubts than trust. The
existing policies made by the coalition government were not without flaws, yet as a successor,
the AKP did little to address the problems. Current account deficit and declined national saving
rate which were crucial factors leading to the previous two crises continued to be overlooked.
Exceeding real interest rates for disinflation, which was suggested by the IMF but later
intensified by the AKP, caused the potential of TL overvaluation and burden on state expenditure
in the long run. Heavy dependence on imports led to double deficit of the trade balance and
balance of payments. Lastly, unemployment still remained a severe problem. These failures had
been ignored entirely by the AKP so that only their overall attainments were observed.
Nonetheless, in later years when they tried to draft their own economic assessment without the
IMF consultancy, their incompetence has become apparent. For example, they kept relying on
income tax to meet the primary surplus requirement despite all the warnings that Turkey might
fall under another crisis (Yeldan & Ünüvar, 2016).. To justify this prediction, recently as Turkey
move away from the EU and the AKP became immune to external influence, Turkey has been
facing currency crises and inflation on a more regular basis than before.

On the other hand, admittedly, it would be unfair to say the AKP did not have any role to
play in the revival of Turkish economy. Continuous failures of one coalition government after
another proved that Turkey tends to face gridlock on exposure to too much democracy, which is
the generic problem of most developing countries, not just Turkey alone. And the AKP did make

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more progress in reformation and privatization as the coalition government wasted too much
time being indecisive. Perhaps a dominant party to have full control over fiscal and monetary
discipline was actually needed for the reforms to work. At the same time, during the first term of
AKP administration, it was still unrealistic to break away from the IMF, thus it was justifiable
that the AKP maintained the close commitment with IMF conditionality rather than being
innovative. However, it is still evident that the AKP is not indispensable for Turkish post-crisis
recovery. They just enjoy a long-term effect from the legacy of the previous government.

AKP’s Neo-Populism and Conservative Democracy To Mobilize Support For Its Agenda

Justice and Development Party (Adalet ve Kalkınma Partisi) was founded on 14 August
2001 by Recep Tayyip Erdogan. Since 2002 elections, AKP has been ruling the Turkish state and
politics without a need to form coalitions unlike its predecessors. In this part, it will be illustrated
that although AKP adopted neoliberal austerity measures which affect mostly the unemployed
and working class, it managed to appeal to the masses thanks to neoliberal populism,
conservative democracy and new nation/state definition. In the 1990s, Turkish politics had been
suffering from the maladministration of these coalitions which were changing continuously and
which in turn paved the way for inconsistent and inefficient policy measures in economics.
Coalition governments could not manage to overcome budget deficits and they printed money
which caused high inflation of 75 per cent in average. Namely, Turkey’s privatization and open
market economy intended by Özal and continued by coalition governments had not brought
growth but crisis which initially started in 1994 and severed in 1999.

Then, Turkey knocked the door of IMF in order to take financial assistance and loans. In
fact, all of these economic conditions of 1990s were preparing the end of coalitions and the
hegemony of the ‘centre’ parties. Before touching upon 2002 elections and conservative
democracy of the AKP, it is necessary to mention about 28 February 1997 process. Jerusalem
Night which was organized by Sincar mayor resulted in the intervention of the military to
prevent the importation of Islamic regime to Turkey and the military declared political Islam as
the biggest threat to national security and secular Kemalist system. As a result, Welfare Party
was banned and removed from Turkish politics and modernists, such as Erdogan, changed their
attitude and interests in order to be compatible with this secular system (Turunc, 2007, p. 81).
This process clearly signed the rupture between Erdogan and the ‘National Outlook’ of Erbakan.

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AKP distanced itself from traditional Islamist perspective and refrained from anti-Western and
anti-capitalist discourse as trying to integrate itself with the neoliberal economic system
(Saracoglu & Demirkol, 2015, p. 307-308). AKP from the very beginning of its existence
embraced conservative democracy and defended conservative multiculturalism by tolerating
religious differences, it put an emphasis on the rule of law, human rights, secularism, free market
economy, democracy, social peace and justice so as to appeal different layers of Turkish society,
and AKP defined Kemalist modernization as social engineering, top-down and despotic (Kaya,
2015, p. 53-55). When the 2002 elections approached, neither politicians nor people were
expecting AKP to win this election.

However, AKP’s success in 2002 elections can be attributed to the people’s desire to
punish the established parties, Erdogan’s charismatic leadership and rhetoric, his growing up in a
poor neighbourhood, Kasimpasa, and a religious poem which caused his imprisonment all
together increased the popularity of both Erdogan and AKP and enabled the latter’s victory in
2002 (Zürcher, 2017, p. 339). AKP succeeded in becoming a reconciliatory power between the
centre and periphery (Akdogan, 2006, p. 60-61). In fact, the ‘centre’ failed to meet the demands
of the periphery, it misconducted the politics and engaged in corruption. Together with
inefficiency of the centre, AKP successfully distanced itself from using ethnicity and religion in
its politics and was able to take the support of non-Muslims, secular liberals, businessmen,
young, women, unemployed and working class since it prioritized ‘service’ in its electoral
campaign. Erdogan strongly pushed for Turkey’s accession to the EU in order to decrease the
influence of Kemalist in the military, legal system and the judiciary and to show himself as the
supporter of democracy (Akcay, 2018, p. 6). AKP wanted to integrate Turkey with the West and
took the support of the U.S. for its own agenda. Erdogan was loyal to the West and desired for
ruling Turkey with moderate Islam and integrate it with capitalist world (Özsel, Öztürk & İnce,
2013, p. 560-561). He wanted to bring economic and political reforms to Turkey by adopting
Copenhagen Criteria (Yesilada & Rubin, 2013, p. 1).

AKP was successful in articulating the interests of devout bourgeoisie and helped enrich
their wealth as adopting neoliberal principles. It is really interesting that although it applied
austerity measures, as cutting government expenditures and jobs, privatizing state-owned
economic enterprises and withdrawing its subsidies to farmers, it managed to receive the support

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of the periphery. In addition to its conservative globalism/democracy principles that enabled it to
gain the support of different segments of society including the business groups and the support of
the West, its success to take the support of the masses can be explained in two ways: AKP’s
adoption of three ideologies and its neo-populist discourse with social assistance and security
programs. AKP benefitted from conservatism, nationalism and Islamism in order to consolidate
its power and appeal to the masses. Before going into details of how AKP made use of these
ideologies, it is necessary to touch on hegemony concept of Gramsci and the concept of
populism to be able to understand AKP’s success in a better way. Gramsci claims that powerful
actors shape people’s conceptions of the world and permit people to act in certain ways and
render other behaviours as unthinkable (Jones, 2007, p. 9).

Populism, on the other hand, can be defined as emotional discourse to appeal to people’s
gut feelings and it can be regarded as buying the support of the people by giving them financial
support or lowering the taxes before the elections (Mudde, 2004, 542). As being an anti-elitist
and charismatic leader, Erdogan was successful in appealing the masses as providing social
assistance to them and he was able to create hegemony of the AKP’s power bloc over Turkish
society by creating new understanding of nation and state and establishing a common sense in
the country. Conservatism was utilized by the AKP to protect long-established values and
institutions such as family. It embraced Sunni-Islam as the most important determinant of
Turkish conservatism (Bozkurt, 2013, p. 382). For AKP, religion, family and Islamic charity
organizations were important to provide unity and to find solutions to common problems such as
unemployment and poverty. Nationalism enabled AKP to establish ties between party, state and
nation (Saracoglu & Demirkol, 2015, p. 306). Common Muslim cultural values defined what
nation is and nation was regarded as a family in order to achieve cohesion and unity within
society, which in turn consolidated hegemony of AKP. Ottoman heritage was determined as
Turkey’s civilizational and cultural identity and class differences tried to be overcome by
stressing on common religious values (Bozkurt, 2013, p. 383).

AKP’s nationalism rejected ethnic differences and this party tolerated all ethnicities of
Turkey namely Kurd, Turks, Laz, Circassian, Arab were all embraced by Erdogan and we
witnessed this identification of nation in the speeches of him because he was adept at mobilizing
the masses and he knew that he necessitated the support of different ethnic groups so as to

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achieve economic and political stability. Finally, Islamization was applied by AKP to consolidate
its power and transform the society in its favour. Although it declared itself as secular state and
distanced itself from promoting religious politics in order not to face with the opposition of the
army, it embraced Islamic values as abovementioned and many of its politicians were from
Nationalist Outlook and Welfare Party. AKP in its electoral campaigns sought to remove the ban
of headscarf and equate Imam Hatip, religious schools, with secular degrees in order to enable
students of religious schools to have education in secular degrees in universities. AKP aimed at
including elective Qur’an courses in the curriculum of the schools and Erdogan wanted to raise a
religious generation stated in his speeches. Furthermore, Erdogan supported flourishing of
devout and Islamist bourgeoisie and he gave freedom of action to Islamic charities to help people
and increase their influence on the public. That all these policies clearly signify AKP’s
enthusiasm and zeal to establish Islamic nation state. Through these ideologies AKP not only
gained the support of the Sunni majority but also the secular groups, moderates, nationalists,
unemployed people, youngsters, women and different ethnic groups as promising interests to all
under its government.

As far as neo-populism of AKP is concerned, we can precisely argue that it used neo-
populism in order to alleviate the impact of neoliberal policies. It integrated privatization policies
with quasi-welfarism as giving easier credits and income support to poor people (Akcay, 2018, p.
5). AKP increased the number of social assistance programs and anti-poverty strategies so that it
could appeal to the masses and showed itself as the party of the poor, and people started to have
access to the private hospitals with the help of the government which in turn increased the
party’s popularity (Eder, 2013, p. 214). Municipalities were important actors in these social
assistance programs as they provided soup kitchens, enabled iftar tents in Ramadan, they gave
Ramadan packages including food, they distributed rent aids, clothing, coal and fuel.
Interestingly, the funding of these assistances was mostly coming from charities and private
donators rather than from municipalities’ budget. For example, government with the
philanthropic groups engaged in Project Rainbow to include the disabled people into labour
markets (Eder, 2013, p. 213). It can be clearly seen that the government subcontracted some
welfare provisions to the private sphere so as to reduce its expenditures and to prevent the
disenchantment of the population. In fact, this policy of remedy to neoliberalist policies was the
trend of the world at that time and regulatory and social neo-liberalism supported by IMF and

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WB was adopted at the global level (Öniş, 2012, p. 142). AKP in its party manifesto announced
that there was a need for social state which should take care for the poor, needy, unemployed,
handicapped and ill and AKP equated the service to people to the service to God (Akan, 2011, p.
373). In the new welfare regime, previously excluded people who were working in the
agricultural and informal sector, and some of whom are unemployed started to benefit from
material benefits that state provided. Previously, only workers working in formal industrial
sector and civil servants were benefitting from retirement, health and insurance benefits. But,
with the AKP government coming to power, the coverage was extended and included formerly
excluded sectors of society which in turn increased AKP’s electoral success. With an aim to
achieve universal health care system, AKP increased the number of Green Card holders in
Turkey in order to provide health assistance to the poor which can’t afford to benefit from these
services. Its coverage was extended by the AKP and Green Card started to cover all-health
related services from which ten million people benefitted by 2010 (Akcay, 2018, p. 10-11).

Green Card was given to people whose monthly income was less than one third of the
minimum wage of Turkey and this system really increased the electoral support of the AKP as
the periphery started to benefit from health services without any cost. AKP gathered three social
insurance institutions, SSK, Emekli Sandigi and Bag-Kur, under a single roof, Social Security
Institution (SGK), and enabled everyone to be covered by this system. However, people whose
income is more than the third of the minimum wage had to make contributions in the amount of
12,5% of her/his income. Another social assistance program was Conditional Cash Transfer
which was implemented by General Directorate of Social Assistance and Solidarity and through
which AKP government provided monetary subsidies to those who live in extreme destituteness
on condition that families must send their children to school and enable them to participate
periodic health care activities. By 2012, 2,9 million children were included in the program whose
cost for the government reached to approximately $390 million per year (Aytaç, 2014, p. 1218).
AKP’s new welfare regime also comprised of the desire to include the working class into the
financialization of the economy and credit cards and loans were given to poor households lest
consumption decreases.

AKP was able to both slow down the wage growth and maintain the consumption of the
working class. AKP created the Integrated Social Assistance Services Information System,

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SOYBIS, to reach poor people in Turkey so as to provide assistance to them and AKP’s mayors,
civil society organizations and religious leaders attended assistance programs to establish loyalty
and affiliation of the periphery (Özdemir, 2015, p. 23). Moreover, General Directorate of Social
Assistance and Solidarity (SYDGM), resembling the Ottoman vaqfs, mostly supported religious
civil society organizations and secured help with its local organs that provided employment, cash
transfer and in-kind assistances for the poor households (Özdemir, 2015, p. 22). To sum all up,
AKP with its conservatism, nationalism and Islamism defined new nation/state relations in its
favour so that it found the chance to appeal to larger constituency and with neo-populist
discourse and social assistance programs it managed to appeal to the masses and alleviate the
deteriorating effects of neoliberal policies in Turkey. Suffice it to say that, Erdogan’s charisma
and rhetoric smoothed the way for applying neoliberal austerity measures and maintaining the
support of the periphery in Turkey.

Erdogan successfully decreased the power of the military with the help of Copenhagen
Criteria which demanded the exclusion of military influence from civilian rule and 28 February
Process as well caused in people’s decreasing support to the military which adopted some
measures that are against the interests of the Sunni majority. Also, he with conservative
democracy was able to gain the votes of different groups in Turkey and his desire to ameliorate
the living conditions of the masses was crucial point for him and his party’s success in
consecutive elections.

AKP Rules: Creating Loyal Businessmen Group

Turkey is now an economy based on exports from industrialization model

inward.   (Rodrik, 1990) But this policy has no legal and institutional reform processes.   On the
contrary, the Prime Minister at that time was Turgut   Özal, Turkey gives a decision to provide
support to the economy that leads government policies and participates in optional
expenditures.   low income voters. (Ozal, 2004, p.113-134) Strict political tension in the late 90s
prompted uninterrupted governments to participate in electoral also political uplifting public
protection.   expenditure to a higher level.   Ruling parties, public debt generated, liberalization
of the Turkish banking system is currently governed by float Calculating 1989. Turkey in
contradiction of the background of early exposure to monetary globalization, the double
problems of open high inflation and the budget of three economic crises - 1994, 2000 and 2001 -

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crisis in a shorter period of time (Cangas, 2009 s.409-432) in 2001, this crisis has created a
favorable environment for local actors who supported it to contrivance monitoring reforms that
would ensure macroeconomic steadiness of international financial institutions (Burn, 2010, p.77-
106).

In discussion happened within the International Monetary Fund (IMF) and the World
Bank, strengthens state regulatory agencies, and the Central Bank guarantees World Bank
independence and economic and other management reforms done by coalition governments
(Ganioglu, 2008, p.363-376).   His senior career was Economy Minister Kemal   Dervis. The
World Bank has created safe credibility and assistance on the international market.   (Onis,2010,
p.418) In specific, the Government presented strict regulations for the banking and public
systems.   Expenditures laid the foundation for a significant privatization plan, and the transfer of
a list of limited resource customers to the agricultural sector.   Most importantly, some regulatory
agencies limit Executive wisdom and economic governance. (Sosay, 2009, p.341-363) It is
difficult for voters to swallow the government's structural adjustment agenda;  pro-reform parties
remain in the polls.

In 2002 AKP still doing financial recovery after gaining the power. program.   and detain
the IRA to appease foreign investors. (Güven   , 2012, p. 425-449) In 2003, for example, the
AKP government issued an expanded Public Financial Management and Control Act, which
included supervision and coverage of all areas of public expenditure.   Although Erdogan
appreciated the ruling party, the government had previously rejected its reforms to secure
financial markets, pressured further reforms in the financial and tax schemes, and refused to
create an self-regulating agent for revenue agents.

Such executive policy on monetary governance has enabled the ruling party to have
significant regulator over the circulation of public resources.   Unexpectedly, the government's
choice to privatize state assets does not strengthen market players but strengthens the
government's role in managing capital accumulation.   The legal and institutional framework of
the AKP's partisan agenda in the Turkish economy is due to dilution of talent.   Through
increasing informal institutions, the AKP has taken a policy of capital accumulation that benefits
its supporters and has established a detailed reward and penalty system to build and expand loyal
business lines.   (   Bugra   , 1994) To form a pro-AKP business class, we identified three ways

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for capital buildup and transfer: public expenditure;   privatization of state-owned companies
(SEEs) and public goods;   and transfer of private capital from disadvantaged class to special
environments.

In detail AKP has setting up the high level of discretion in public procurement and
privatization in sectors such as mining, health, construction, and energy to help loyal businesses
get a greater share of public rent;   and he uses trust, debt collection and taxation obviously to
punish the oppositions and move private capital from opposition groups to AKP
entrepreneurs.   As a tandem, this strategy weakens party criticism among entrepreneurs, which
leads to the expansion of the pro-government business class. 

Ruling government aggressively made public revenues to channel capital into AKP-
supporting businesses of various scopes.   The fact is, Erdogan   expressed dissatisfaction with
the public procurement system: "The Public Procurement Law serves the benefits of 55 or 65
companies.   "I have no intention to hand over the project in construction of 15,000 kilometers of
toll roads to 50 or 60 companies." To facilitate the transfer of funds from the state to selected
businesses, the government has changed the public procurement law 32 times, which eventually
made more than 140 changes in 12 years until 2015. This legislative action has broadened its
political policies' inconsistency and limits transparency, discrimination and competitiveness to
expand key principles' (Report of the European Commission's Progress on Turkey, 2014) and is
very vulnerable and prone to corruption 'Leaving public tenders and extraordinary reductions
reflected in the practice of public procurement '.   (European Commission Progress Report on
Turkey, 2016)

The construction sector has been important for the AKP since its supporters were in the
party.   The business circle is mainly limited to S.M.Es. and newly established firms in financial
and also human capital.   (   Gürakar   , 2016, p. 76) Technical expertise, skills, human resources,
and initial capital needed for new entrepreneurs in the construction sector are very limited linked
the engineering or financial sectors.   Certainly small TOKIs in different places in the country
have established enterprises with middle and huge measure contractors, finally the membership
from Industrialists and Employers 'Associations (Separate) in various sizes with friendly
businessmen-AKP ties forming a coalition of the Employers' Association, MUSIAD) or
Confederation of Entrepreneurs Turkish and (Turkish) Entrepreneurs We have an Association of

T H E R I S E T O P O L I T I C A L D O M I N A T I O N O F A K P | 14
Entrepreneur Employers, TUSKON).   (TOKI / Tok, 2015, p.81-92) Once again, many local PPA
operators have become contractors who follow and support public projects.   the ruling party as a
way of increasing mobility.

Business Reward Returns: Keep the AKP as Strength

Savings Deposit Insurance Funds, SDIF has proven to be a large capital transfer tool in
the capitalist class if private entrepreneurs have permission to allocate public resources for debt
collection through the Savings Savings Insurance Fund.   After the 2001 financial crisis, SDIF
became a debt collection center of bankrupt banks and holding companies, and eventually
became a capital allocation instrument to increase the number of ruling party businesses.  Since
2002, SDIF has detained more than 200 companies. SDIF also seized the assets of these
companies and their major shareholders.   (Gazetevatan.com, 2015) Some of these companies
were then transferred to pro-AKP businesses under favorable conditions and limited kind means.

Businesspersons who were fed the powerful AKP responded to this with the fond to the
pro-AKP news anchors, donations to the them, AKP-supporting charitable organizations and
contribution to do campaign everywhere. In the context of increasing authoritarian competition
in Turkey is very important to invest in the media that support the government, easy access to the
media because the ruling party indeed the masts of the tilted playing ground.   SDIF operations
have become a center for increasing control of pro-AKP businesspersons over the media
aspect.  And indeed, that the media is an important part of the company seized by SDIF.   These
companies lost control of SDIF after the media company defaulted after the 2001 monetary
crisis.   As a result, SDIF took over 70 firms in favor of   Uzan Holdings, and two from Aksoy
Holdings.   (Hurriyet.com.tr) Erdogan and his government have thru great labors to substitute the
ex-media boss with their loyalist.   Therefore, some media like TV and conventional newspapers
totally under control in 2002. (Jenkins, 2008)

Because AKP government has organized loans for   Çalık   The holding of two state-
owned banks is very profitable, so the company takes over one of the massive media in
Turkey.   (Yılmaz   , 2008) Famous entrepreneurs such as Erdogan Demioran, Nihat Ozdemir,
Hasan Kalyoncu, and Akin Ipek entering the news anchor and mostly media aspect.   Records
under the December 17 scion investigation has been leaked and were allegedly not based on
political concerns determined by the AKP's commitment to economic calculations rather than

T H E R I S E T O P O L I T I C A L D O M I N A T I O N O F A K P | 15
favorable opportunities for the decision of these entrepreneurs to invest in the media.   (Freedom
House Report, 2014) For example, in an interview, a one-day purchase and the establishment of
a news broadcast station were said to support Erdogan and his government.   (Turkish
newspaper, 2013).

Conclusion

In this paper, the economic crisis of Turkey starting from the late 1990s and especially in
2000-1 period were examined, coalition government’s and AKP’s economic policies were
compared, it was illustrated that AKP was able to take the support of different sectors of society,
particularly the masses thanks to its neo-populism, conservative democracy and new nation/state
definition, and also AKP succeeded in creating a pro-AKP business class as giving privileges
and concessions to this layer of Turkish society so as to win the support of them. It maintained
good relations with TUSIAD and MUSIAD and consolidated the power of Anatolian Tiger in the
country. As far as findings of this paper are concerned, it is fair to say that although coalition
government and AKP applied same policies, neoliberal prescription of IMF and WB, the latter
benefitted from the long-term advantages of neoliberal policies due to disenchantment and
mistrust of people to the coalition governments and it is certain that AKP was able to mobilize
masses around its neoliberal agenda thanks to neo-populism and conservative
democracy/globalism.

AKP through conservative democracy took the support of different sectors of society as
refraining itself from putting Islamic values at fore and instead promoting human rights, rule of
law, ethnic tolerance, democracy, open market economy, social justice, service to people
principle. With neo-populism, AKP provided social assistance to the destitute as defining itself
as the party of the poor. For example, it enabled free health-care system and provided food,
cloth, oil, gas and other materials with the help of municipalities. That all these factors enabled
AKP to consolidate its electoral support and to alleviate the deteriorating impacts of neoliberal
economy, and Erdogan’s charisma, rhetoric and growing in a poor neighborhood made the
party’s work easier to take support for its neoliberal agenda.

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