Turkish Businesses Snagged In Government's Post-Coup Crackdown
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Once seen as a model for democracy in the Muslim world, Turkey has detained and fired tens of thousands of people since an attempted coup a year ago. Critics say this is President Recep Tayyip Erdogan's effort to crush dissent. The government also seizes businesses it says are connected to the man it blames for the coup attempt. This is the cleric who lives in the U.S. and denies any role. NPR's Lauren Frayer reports on how fearful the business community has become. Even a stack of carpets can seem ominous.
LAUREN FRAYER, BYLINE: At the carpet shop he manages, salesman Abdullah flips through a stack of rugs, showing them off to a customer. He ignores another pile of carpets rolled up in the corner. They're the Pierre Cardin brand, until recently a coveted brand in Turkey. But they're on discount now.
ABDULLAH: (Through interpreter) The brand is now associated with this cleric blamed for last year's failed coup. They're just carpets. Carpets aren't terrorists. Still, people are worried about guilt by association.
FRAYER: So is he. Abdullah doesn't want me to air his surname. It shows how scared Turks are. Any connection to banks or companies the government says are linked to the coup can get you in trouble. Last summer, police raided the Istanbul headquarters of a big textile company licensed to make Pierre Cardin merchandise in Turkey. The government alleges it was connected to the coup conspirators. Turkish TV showed the company's chairman being led away by police. In January, he was replaced by a government trustee. Since then, Abdullah says he's had trouble getting orders and payments on time.
ABDULLAH: (Through interpreter) So I canceled my contract with them. I don't want to be involved. I've got plenty of other brands of carpets I can sell.
FRAYER: Over the past year, nearly 1,000 Turkish companies from carpet makers to TV stations to a popular brand of baklava have been expropriated by the government.
ATILLA YESILADA: Law and order and due process has been completely suspended. The owners, shareholders, whatever, never had their day in the court.
FRAYER: Atilla Yesilada is an economist with the New York-based Global Source Partners. He advises his clients against investing in Turkey right now. Foreign investment is down by half. All three ratings agencies have downgraded Turkish debt.
YESILADA: You know, your assets will be raided, would have diminished values. Your employees will be fired. Your patent rights will be sold over. And that's a scary fact. This is such a huge risk, that companies with decent prudential rules, external auditors, risk management consultants would not do business in Turkey.
FRAYER: Small local businesses don't have a choice, so to them the government has offered relief. It cut sales tax, albeit temporarily, and is guaranteeing bank loans.
(SOUNDBITE OF PHONE RINGING)
SHAFIK ERCAN: (Foreign language spoken).
FRAYER: Shafik Ercan has run an appliance and kitchenware shop in Istanbul for 50 years.
ERCAN: (Through interpreter) Business is great. We've benefited from the government's tax rebate. Our sales are up about 20 percent this year.
FRAYER: The stimulus appears to be working. The Turkish stock market is near an all-time high, and the economy is growing. But the sales tax rebate expires in September. The budget deficit is widening. The government is not likely to be as skilled at making carpets or baklava as the founders of those companies it seized. The economist Yesilada predicts the government will have to sell off these businesses. And that's likely to trigger lawsuits that could last years.
ABDULLAH: (Foreign language spoken).
FRAYER: Meanwhile, Abdullah the carpet salesman is stuck with stock he can't sell. And the baklava chain tweeted a message to its customers after it was taken over by the government - for five generations, our company has passed from father to son since 1871. Now we proceed under new management. Lauren Frayer, NPR News, Istanbul.
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