“Transformation” Deceit of AKP – The Constructor

“Transformation” Deceit of AKP – The Constructor

October 2012

“Construction” is a word that perfectly describes the Justice and Development Party (AKP) government. Their ten years in government are full of “constructions.” The former president of TOKI and the current Minister of Environment and Urban Planning, Erdogan Bayraktar, has stated that in 10 years the AKP Government has succeeded in constructing a total of 5 million buildings, 500,000 of which are government funded and 4.5 million of which are privately financed. These numbers are accurate. When you look back on these years, you can see hardly any newly established industrial compounds, but you can count a quite number of shopping malls, private residences, hotels, and large condominiums. Just like industrial compounds, when we take a closer look at public banks, we see that there is no government investment on energy, but we can see investments on constructing highways, airports, public offices, etc.

“Construction” based growth paves way for the growth of the current account deficit “Construction” here is a word that actually stands for the kind of capitalism that the AKP leans on the shoulder of. In this regard, it would not be inaccurate to say that the AKP has worked with “conservative” constructors. In particular, you cannot look to “construction” as a reliable indicator of growth, or the labor force. However, if you look at construction as the main sector of the economy, you can easily see that the growth in the last 10-15 years is based on the construction industry. Construction can also be considered the main sector that carries the growth of “sub-industries” such as the cement industry, metals, heating, chemicals, ceramics and lighting. It also leads to the growth of industries such as home electronics, home textiles, and transportation.

The current growth that is based on construction is totally diverted to the local market and encourages the export of equipment such as construction vehicles, which in turn increases the current account deficit. Real estate and construction are the main two sectors where loans are often used. It is well known that in the Stock Exchange market, foreign capital always makes investments in real estate. Hence, local growth in the sector has increased around 6-7 percent in the last 10 years, due to the support of public spending, foreign capital, and housing loans. Of course, there was always the potential to prepare the demand for this. The increase in the population and the migration from rural to urban areas has created a great demand on housing, especially in Istanbul. Thus, the debate on annuity starts.

And then? What will happen next? Will the dynamics change? We must clearly indicate that the emphasis on the local crisis should be on “construction.” Words like “industry” or “export” do not seem to have any function in this regard, since the word “industry” has been overlooked over the years and Asian countries have started to dominate the local market.

Therefore, new construction terminology has settled in our language: “urban transformation,” (although the word must have different meaning since we live on an earthquake zone). The legislative act on the transformation of urban areas that are on earthquake zones has become the new way of carrying the construction sector forward. As part of the act, risky areas will be determined and “renewed.” Thus, the “owners” of the affected buildings will be forced to “buy” their buildings again. If the owners have the necessary money, they will be able to buy, otherwise they will be forced to take out loans. It is estimated that in 15 years, a total of 7 million residences will be built, which comes to 500 billion U.S. dollars worth of potential work.

“Transformation” will force mostly middle-class householders to spend extra money and thus built new areas of annuity. But, as stated above, this new establishment once again has its hands on foreign capital. Also, it is not “social” as it does not give any priority to the public, which is mostly just a “lease holder.” On the contrary, the “land owner” will have new opportunities, especially in cities like Istanbul where urban annuity is high. Thus, the new law gives far too many privileges to the ministry, and almost no rights to the victimized lease holders. In fact, it cuts off the latter’s defense mechanisms.

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