Islamists have bought Turkey....

Michael Rubin follow the trail of money...

Turkey’s Islamic revolution began on November 3, 2002, when Erdogan’s Justice and Reconciliation Party (AKP) swept to power in Turkey’s elections. Through a lucky quirk of the Turkish election system, the AKP’s 34 percent total in the popular vote translated into 66 percent of the Parliament’s seats, giving the party absolute control.

Initially, Erdogan kept his ambition in check. He understood the lessons to be learned from the undoing of his mentor, Necmettin Erbakan, the first Islamist to become prime minister. After taking the reins of power in 1996 with far less power in Parliament, Erdogan’s predecessor sought to shake up the system—to support religious schools at home and to reorient Turkey’s foreign policy away from Europe and toward Libya and Iran. This became too much for the military, which exercised its power as guardians of the constitution and demanded Erbakan’s resignation. Afterward, Turkey’s Constitutional Court banned the party to which Erdogan belonged because of its threats to secular rule.

Erdogan himself had been banned from politics because of a 1998 conviction for religious incitement. And so he initially managed the newly created AKP from the sidelines only, working through Abdullah Gul, the lieutenant who served as caretaker prime minister after the party’s 2002 victory. Gul pushed through a law to overturn the ban against Erdogan, and the latter became prime minister in March 2003. Learning the lessons of Islamist failures of the past, Erdogan sought to calm Turks who feared the AKP would dilute Turkey’s separation of mosque and state. As mayor of Istanbul, Erdogan described himself as a “servant of Sharia,” or Islamic canon law. But after his party’s 2002 victory, he declared that “secularism is the protector of all beliefs and religions. We are the guarantors of this secularism, and our management will clearly prove that.” He took pains to eschew the Islamist label and instead described his party as little more than the Muslim equivalent of the Christian Democrats in Europe—that is, all democracy and religious in name only.

Both Turks and Westerners can be forgiven for taking Erdogan at his word. He had cultivated an image of probity as a local official that stood in sharp contrast with the corruption of many incumbent Turkish politicians. Rather than upend the system or pursue a divisive social platform, as prime minister Erdogan first sought to repair the Turkish economy. This was an attractive prospect for Turks across the political spectrum, since in the five years prior, the Turkish lira had declined in value eight-fold, from 200,000 to 1.7 million to the dollar, leading to a ruinous banking crisis in 2001. A Coca-Cola cost millions. Erdogan stabilized the currency and implemented other popular reforms. He cut income taxes, slashed the value-added tax, and used state coffers to subsidize gasoline prices. The Turkish electorate rewarded his party for its efforts. The AKP won 42 percent of the vote in the March 2004 municipal elections and placed mayors in four of Turkey’s five largest cities. In July 2007, it increased its share of the popular vote to 47 percent.

But there was far less here than met the eye. Rather than base economic reform on sound, long-term policies, Erdogan instead relied on sleight of hand. He incurred crippling debt and, in effect, mortgaged long-term financial security of the republic for his own short-term political gain. Deniz Baykal, the former leader of the main opposition party, has said that the state debt accrued during Erdogan’s first three years in power surpassed Turkey’s total accumulated debt in the three decades prior.

And that was only official debt. Outside of public view, Erdogan and Gul, now his foreign minister, presided over an influx of so-called Green Money—capital from Saudi Arabia and the oil-rich Persian Gulf emirates, much of which ended up in party coffers rather than in the public treasury.

And here begins the tale of the interweaving of Turkey’s destiny with the nations to its east and south, and to the Muslim world rather than with the West.

Between 2002 and 2003, the Turkish Central Bank’s summary balance of “payments for net error and omission”—which is to say, money that appeared in the nation’s financial system for which government reporting cannot account—increased from approximately $200 million to more than $4 billion. By 2006, Turkish economists estimated the Green Money infusion into the Turkish economy to be between $6 billion and $12 billion, and given the ability of the government to hide some of these revenues by assigning them to tourism, that is probably a wild underestimation. Some Turkish intelligence officials privately suggest that the nation of Qatar is today the source of most subsidies for the AKP and its projects.

Thus, if Iran’s Islamic revolution was spontaneous, Turkey’s was anything but: it was bought and paid for by wealthy Islamists.

AKP officials are well-placed to manage the Green Money influx. Throughout much of the 1980s, Erdogan’s sidekick, Gul, worked as a specialist at Saudi Arabia’s Islamic Development Bank. Before the 2002 victory, he criticized existing state scrutiny of Islamist enterprises. Senior AKP advisers made their fortunes in Islamic banking and investment. Korkut Ozal, for example, is the leading Turkish shareholder in al--Baraka Turk, Turkey’s leading Islamic bank, as well as in Faisal Finans, which also has its roots in Saudi Arabia.

Erdogan has systematically placed Islamist bankers in key economic positions. He appointed Kemal Unakitan, a former board member at both al--Baraka and Eski Finans, as finance minister and moved at least seven other al-Baraka officials—one of whom had served as an imam in an illegal commando camp—to key positions within Turkey’s banking regulatory agency.

Erdogan also reoriented Turkey’s official foreign trade. In 2002, bilateral trade between Turkey and the United Arab Emirates hovered at just over half a billion dollars. By 2005, it had grown to almost $2 billion. That same year, Kursad Tuzmen, the state minister for foreign trade, announced that United Arab Emirates ruler Sheik Khalifa bin Zayid al-Nuhayyan would invest $100 billion in Turkish companies. Not to be outdone, Saudi Arabia’s finance minister announced earlier this year that Saudi Arabia would invest $400 billion in Turkey over the next four years. In contrast, in 2001, Turkish-Saudi trade amounted to just over $1 billion. When Turkish-Iranian trade surpassed $10 billion in 2009, Erdogan announced a goal to increase it to $30 billion. Whether or not Turkey and its Persian Gulf allies are exaggerating their figures, the trajectory of trade is clear.