The Erdogan-Gulen showdown

March 18, 2014 7:56 pm
Turkey: The Erdogan-Gulen showdown
By FT reporters
FT reporters profile two men locked in conflict that threatens legitimacy of country’s government
Fethullah Gulen: the exiled preacher
At the beginning of the year the Turkish government appeared to be starting a run on the country’s biggest Islamist bank, writes Daniel Dombey Institutions such as Turkish Airlines, 49 per cent state-owned, began to withdraw their deposits from Bank Asya, founded by the followers of the preacher Fethullah Gulen
. Within days, hundreds of millions of dollars left the bank.

Such actions might seem unusual but they were far from mysterious. A political fight to the death had just broken out between Recep Tayyip Erdogan, Turkey’s prime minister, and his former allies in the movement of Mr Gulen, who has lived in self-imposed exile in the mountains of Pennsylvania for the past 15 years.
But if the government is a formidable foe, so too are its opponents. Individual savers in Bank Asya rushed to sell property so they could deposit enough funds to steady the bank. Before long, with the help of other asset sales and central bank funds, the crisis was halted: the country’s Gulenists had demonstrated their financial muscle and an equally striking devotion to their cause.
Theirs is a movement like no other. Millions of followers have been inspired by the 72-year-old Mr Gulen, a former imam in the city of Izmir who emphasises the importance of education, religious coexistence and the fight against poverty.
The Gulenists operate schools in about 140 countries. They run Tuskon, a business confederation that claims 120,000 companies under its wing and has been vital in opening up markets for Turkey, notably in Africa. They give donations to “Isn’t Anyone There?”, a charity with a TL200m ($90m) annual budget that has provided aid to more than 100 countries, including tsunami-hit Japan. Affiliated media include television channels and Zaman, which boasts it is Turkey’s largest-circulation newspaper and has an English-language version, Today’s Zaman.
There is no central holding company. The schools are privately owned and run, ploughing profits into other schools and universities. Murat Sarayli, a Gulenist businessman, recalls on a trip to Burkina Faso last year finding several Gulenist schools and a well dug by “Isn’t Anyone There?” In a recent joint effort with the UNHCR, the charity gave Bank Asya bank cards to Syrian refugees.
Ihsan Yilmaz, a “volunteer” who teaches at the Gulenist Fatih University in Istanbul and writes for Today’s Zaman, says the movement is interested in intelligent, upper-income recruits who can help it achieve its goals more quickly.
His story is typical of many Gulenist recruits: he was singled out as a bright 15-year-old and given mathematics and physics lessons, allowing him to get into a better university. Once admitted, “older brothers” within the movement asked him to stay with them. “I really thought I would enter heaven,” he said.
Today, Mr Yilmaz often attends Gulenist meetings that gather professional groups throughout Turkey and beyond. They hold readings and theological discussions but also discuss donations, which Mr Yilmaz says can be about 10 per cent of income.
He acknowledges the movement’s lack of transparency about the identity of its members, particularly within Turkish state institutions, which he says is born of the country’s persecution of religious groups and ethnic minorities in the past.
Many others in Turkey – notably the government – have a much less benign view of the movement and its penetration of bodies such as the police, judiciary and prosecution service. Sedat, a policeman who works in the southeast of Turkey, says the Gulenists – known as the “cemaat” or “the community” – have become steadily more powerful in the force over the past half-decade, controlling police units concerned with organised crime, wiretapping and anti-smuggling. “I have school friends who received exam questions beforehand and so got promoted because they belonged to the community,” he says.
Officials argue that the Gulenists have been seeking to enter state institutions for more than 30 years and concede that their educational infrastructure gives them advantages Mr Erdogan’s supporters find difficult to match. Mr Erdogan has moved 7,000 policemen in an attempt to rid the force of Gulenists but Sedat is sceptical such efforts will succeed, arguing that the movement’s followers will be hard to identify. “They stop giving to the charities but they are still there.”
They targeted me. They recorded everybody – journalists, bureaucrats, politicians, businessmen – about their private lives … They have many more tapes, both voice and video. The system is based on this
– Turkish journalist Nedim Sener
The prime minister argues that the Gulenists have set up a “parallel state” within the bureaucracy, following orders from Pennsylvania and pursuing an agenda of their own. Prominent Gulenists in the prosecution service and the media have long championed politically-charged mass trials that critics said implicated hundreds of innocent people and relied on faked evidence. Some of the same figures were involved in the corruption case against Mr Erdogan’s inner circle that erupted in December.
Gulenists argue that there is no evidence for the accusations heaped on them. But Nedim Sener, a Turkish journalist , says he was imprisoned for a year because he investigated the Gulenists’ penetration into the police.
“They targeted me,” he said, adding that Gulenists have used their perch within the bureaucracy to eavesdrop on an industrial scale. “They recorded everybody – journalists, bureaucrats, politicians, businessmen – about their private lives … They have many more tapes, both voice and video. The system is based on this.”
Last month a tape emerged of telephone conversations between Mr Erdogan and his son, allegedly about hiding tens of millions of euros.
For years Mr Erdogan’s government had a partnership with the Gulenists, since both were embarked on a common fight against the military. “I gave them everything they wanted,” the prime minister said last year. Each side accuses the other of seeking too much power after a 2010 referendum that consolidated the independence of the judiciary, but which also, according to the movement’s critics, entrenched Gulenist power over the nation’s courts. As strains grew, the government started abolishing the Gulenist schools in every Turkish town that officials say provide the community with $1bn-$1.5bn a year and new recruits. Then came the split.
Much now depends on whether more damaging tapes emerge. It may be impossible for the Gulenists to beat Mr Erdogan. But after decades in which the movement advanced stealthily, it will also be supremely difficult to extirpate it from the Turkish state.
Aditional reporting by Funja Guler
Recep Tayyip Erdogan: the prime minister
It feels like episodes of a noirish thriller, as Turks gather daily to listen to dark new revelations of graft and intimidation by their political masters, anonymously posted on YouTube and Twitter, writes David Gardner . But the authors are almost certainly adherents of a shadowy Islamic network intent on subjecting Recep Tayyip Erdogan, Turkey’s imperious prime minister, to death by a thousand leaks. This drama is for real.
Mr Erdogan, standard-bearer of an ostensibly modern Islamism marketed as a Muslim analogue to European Christian Democrat parties, and winner of three general elections since 2002, is battling for his political life. There is little doubt he can survive – at least in the short term – but at the risk of sundering the social fabric of Turkey.
The crisis began in December, with police raids on, among others, the families of ministers in the ruling Justice and Development party (AKP), which uncovered big stashes of currency.
It deepened with a tape of telephone conversations between Mr Erdogan and his son Bilal, purportedly about hiding tens of millions of euros in cash.
The first probe caused the resignations of four ministers. But before it could reach further into his inner circle, the prime minister transferred thousands of police and scores of prosecutors, denouncing an attempted coup by followers of Fetullah Gulen, a US-based imam and erstwhile AKP ally.
Mr Erdogan at first dismissed the tapes as “montage” manufactured by the Gulenists, who have painstakingly built power centres in the police and the judiciary over three decades. The AKP, an electoral whirlwind that arrived in power with hardly a bridgehead in the state, was happy to use them as a strike force to defang an army that had been the final arbiter of Turkish politics.
Now the generals are out of the picture, the two allies have turned on each other, with a viciousness that calls into question the integrity of Turkey’s institutions.
The government is assuming what people on both sides call “war powers”, setting aside the rule of law, with measures to hamstring the judiciary, handcuff social media and soon give its spies unbridled snooping powers.
Mr Erdogan has not denied many of the leaked conversations took place – raging that his encrypted phone was tapped.
He has even acknowledged calls in which he is heard to interfere in a public tender for the navy, and a court case against the owner of a big media group.
Close aides justify such intrusion – which in most democracies would prompt investigation and possible resignation – as necessary in the fight against the tentacular “parallel state” built by the Gulenists.
“This is about national security, not about Tayyip Erdogan or the AKP,” says Yalcin Akdogan, a senior adviser to the prime minister. “Future governments will not be free if we surrender to blackmail.”
In the run-up to municipal elections on March 30, followed by presidential elections in August and a general election likely to be called well before Mr Erdogan’s term is up in May 2015, this is total war. “This is a war of attrition in which both sides bleed but the country bleeds more,” says Hakan Altinay of the Brookings Institution.
The prime minister’s camp does not disagree. “We know that Erdogan’s strategy [is that] whenever there is a conflict he makes it bigger and broadens it into a total struggle”, says Ibrahim Uslu, Mr Erdogan’s pollster since 2000. “Even if the opposition complain about corruption, Erdogan transforms this into a life-or-death issue”.
After last summer’s tumultuous protests against the prime minister’s pious intrusions into the public and private space of a diverse society, it seemed that urban and coastal Turkey, at least, had outgrown Mr Erdogan.
But this existential fight seems to have given Mr Erdogan a new lease of life, as he barnstorms across the conservative heartland of Anatolia, waving the shroud of victimhood to galvanise his base.
Core AKP voters, to whom Mr Erdogan gave healthcare, education and, above all, identity, appear to shrug off the corruption allegations. “Norms such as an independent judiciary are not that well established for many people”, says Mustafa Akyol, a Muslim liberal writer.
He has only two choices: he stays in power or he will need to answer the charges of corruption
– Sinan Ulgen of the liberal EDAM think-tank
Two refrains emerge from AKP talking points. One is that extraordinary times demand extraordinary measures. “From day one it was clear this was a campaign designed to smear the prime minister,” says another close aide to Mr Erdogan.
“It’s not like there’s a fully functioning independent judiciary and the government has chosen to interfere with it.”
But this is not just about judges. One thing the tapes reveal is how Mr Erdogan bullies everyone from ministers to press magnates. The second is that the only jury that matters is the electorate, the “ultimate referee” as AKP deputy chairman Huseyin Celik puts it, to decide who rules Turkey.
Yet while the AKP will probably win this month’s local elections, it may lose Ankara, the capital, and is being given a run for its money in Istanbul, the prime minister’s former power base. There is therefore a good chance that this vote will not be the personal referendum Mr Erdogan is seeking.
An inconclusive outcome will probably lead him to abandon plans to run for a presidency whose powers he seeks to enhance and instead stand for a fourth term as prime minister, prohibited by party bylaws but not by the constitution or the law.
“We have two options: either Erdogan will run for the presidency or we will force him to stand for a fourth term”, says Mr Celik.
Either way, the scene is set for a bitter struggle, in which the vestiges of political civility could be swept away, tarnishing the legitimacy of the government and state institutions. “The legitimacy crisis is like a black hole sucking them all in,” says Kadri Gursel, a liberal commentator. And still the tapes keep coming.
“He has only two choices: he stays in power or he will need to answer the charges of corruption,” says Sinan Ulgen, a former diplomat who heads the liberal EDAM think-tank in Istanbul. “That’s what makes this situation so dangerous; it’s not just political power he will lose.”
As one of the country’s top academics points out: “There is no graceful way for him to leave.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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