AKP AND THE ISTANBUL "ESNAFLAR": A PERFECT MATCH?

UNCLAS SECTION 01 OF 02 ISTANBUL 000880

SIPDIS


SENSITIVE


E.O. 12958: N/A
TAGS: PGOV ECON EFIN TK
SUBJECT: AKP AND THE ISTANBUL "ESNAFLAR": A PERFECT MATCH?



1. (SBU) Summary: Support from the Istanbul "esnaflar" )
small businessmen, restaurant owners, craftsmen, shopkeepers,
street vendors, and taxi and truck drivers - may have
contributed to the Justice and Development (AK) Party's
November 2002 electoral success, but this support may be less
solid than it appears. Esnaflar are frustrated with their
economic circumstances and expect Prime Minister Erdogan to
deliver economic salvation... or at least populist hand-outs.
End Summary.


"Esnaflar": Part of AKP's Base?
--------------

2. (U) Although Turkish "esnaflar" ) small businessmen,
restaurant owners, craftsmen, shopkeepers, street vendors,
and taxi and truck drivers ) may not have the same influence
and access that wealthier manufacturing and industrial groups
enjoy, together they make up one of the largest sectors of
the voting population. The Turkish Esnaflar and Artisan
Union, an umbrella organization for 172 different esnaflar
chambers, claims to represent 3 million Istanbul residents
(700,000 registered members and their families),about a
quarter of the population. Narrow profit margins, a greedy
and corrupt bureaucracy, and a lack of access to credit and
loans have left most of Istanbul's esnaflar on the edge of
poverty. The two-year old economic crisis hit this group
especially hard, forcing many into bankruptcy and the ranks
of the unemployed and others onto the streets to protest
government demands that they pay outstanding social security
debt and personal loans.



3. (SBU) This combination of voting power and desperation has
made this group a major target for political parties in
Turkey. Although it is difficult to make generalizations,
anecdotal evidence and common wisdom suggest that, in line
with the majority of the Turkish population, esnaflar tend to
be both politically conservative and religiously devout,
voting mostly for right-wing parties. The Board of the
Istanbul Esnaflar and Artisan Union (IESB),for example,
includes an adviser to the Chairman of the True Path Party, a
senior Istanbul Motherland Party official, and two Justice
and Development (AK) Party members. Suat Yalkin, IESB
President for the last 18 years, told poloff that IESB is
careful not to endorse particular parties, but he conceded
that IESB members provided significant support to the AK
Party in last November's elections, despite the fact that
IESB had specifically distanced itself from the now-banned
Welfare and Virtue Parties for their Islamic leanings.


Frustration or Fanaticisim?
--------------

4. (SBU) Our anecdotal contacts with typical esnaflar
restaurant owners and shopkeepers confirm that AK made
inroads into these groups. One restaurateur admitted to
voting for AK, citing frustration with the difficult economic
situation and the ineffective and corrupt politicians in
Ankara as his motivating factor. A shopkeeper said he voted
for AK because of his confidence in former Istanbul Mayor and
AK Chairman Tayyip Erdogan. We have heard similar accounts
from vegetable sellers, tailors, and small shop owners. On
the other hand, for every AK supporter we have met, other
esnaflar told us that they have given up on politicians
altogether and did not vote at all in the last elections. On
the whole, our sense is that AK support among the esnaflar
rests on Erdogan's charisma, AK's "clean" reputation, and
growing frustration with the inability of "corrupt" Ankara
politicians to address the crippling economic situation.
Rarely have we encountered esnaflar that supported AK for
purely ideological reasons.


Can AKP and Erdogan Deliver?
--------------

5. (SBU) IESB President Yalkin claimed that despite this
support, AK has not been particularly responsive to esnaflar
concerns. According to Yalkin, esnaflar have almost no ready
access to credit and bank loans. (Note: This is a frequent
complaint we hear from esnaflar, who claim that because such
credits are unavailable, they must save up their own money or
borrow from friends and family.) Yalkin complained that the
ratio between loans to small and large businesses in Turkey
is less than 1:100, while in most western economies the
figure is closer to 50:50. This notwithstanding, Yalkin
complained that the AK government has so far refused to take
measures to prevent the privatization of state-owned Halk
Bank, the only institution that has been willing to lend to
esnaflar in the past. Esnaflar, like the Turkish farmers,
have also pushed the government to forgive their
non-performing bank loans (USD 20 to 40 million).



6. (SBU) Yalkin allowed, however, that Erdogan seemed to be
making a personal effort. Following an appeal from esnaflar
representatives, Erdogan tripled the amount of a small credit
fund for esnaflar in the 2003 budget (increasing it to
approximately USD 80 million). Erdogan also eliminated a
requirement that potential applicants pay all of their
arrears to the state pension fund (a condition almost none of
them can satisfy). Yalkin claims that the 44 percent
interest rate for the fund has limited its utility (only
one-third of the money has been disbursed),but he believes
that Erdogan may lower the rate by another ten percent when
he addresses a gathering of esnaflar in Ankara on June 24.


Comment
--------------

7. (SBU) Many have pointed to esnaflar support as one of the
factors that underpinned AKP's electoral success in Istanbul.
Absent any comprehensive studies it is difficult to draw
definitive conclusions, but it is probably safe to say that
they supported AKP in numbers equal to or greater than the
general population. Anecdotal conversations with individual
shopkeepers and other esnaflar, however, suggest that this
support may be skin-deep and highly dependent on AKP's
ability to turn the economy around or at least deliver
populist hand-outs, including subsidized credits and loan
forgiveness. A similar perception within AK doubtless
explains the government's intermittent populist gestures,
which have periodically roiled Turkish markets and put in
doubt its commitment to economic reform.
ARNETT