Istanbul mayor Ekrem İmamoğlu is seeking European investment to finance stalled infrastructure projects in Turkey’s commercial capital due to what he claims is a politically-motivated refusal by local banks to lend the city money.
İmamoğlu defeated the ruling Justice and Development Party’s (AKP) candidate in the second round of voting in June, a crucial victory for the opposition Republican People’s Party (CHP).
İmamoğlu dubbed his win “historic” and it was seen as a rebuke of the ruling party and President Recep Tayyip Erdoğan’s political and economic mismanagement. The CHP now controls the mayoralty of the major Turkish cities, including the capital Ankara, Mersin, Adana and Antalya.
But İmamoğlu’s rise to power was met with an overt and covert effort by the ruling party to limit the scope of his authority and budget, in an apparent attempt to reduce his effectiveness as mayor.
At a press conference in November last year, İmamoğlu said that the country’s public banks had refused to collaborate with the municipality or even offer routine loans, and the national government had also declined to provide financial assistance to the city, forcing him to seek other avenues for help abroad.
A month earlier, Erdoğan told an AKP gathering that it was the responsibility of mayors, not parliament or the presidency, to find sources of revenue beyond those legally allocated subsidies paid for by central government.
“If the mayors come to power, they have to know how to play this game,” Erdoğan said.
Mustafa Sönmez, an economist, said that the ruling party was still smarting from its defeat in Istanbul and wanted to undermine İmamoğlu’s tenure and future political prospects.
“The foremost reason for the conflict is that Erdoğan has tried to prevent the growing prestige and powerful position of İmamoğlu because they see his potential to be the next candidate for president of the republic,” he continued.
Çiğdem Toker, a well-known Turkish journalist, said that the AKP was seeking to stymie opposition-controlled mayoral strongholds around the country.
“The political tension between the central government and the CHP-captured municipalities is obvious,” Toker said, adding that he was convinced that the banks’ stance was a result of political pressure. “There is no doubt that the credits are not used independently and autonomously or in accordance with banking rules, but by political order instead.”
İmamoğlu recently returned from a tour of European cities including Berlin, Paris, Copenhagen, Strasbourg and London in which he secured loans to pay for subway expansions.
The mayor had complained that the previous AKP-led administration had severely mismanaged the city’s finances. Following the European trip, he announced that the city’s municipality had secured loans amounting to 86 million euros with the French Development Agency (AFD) to build the Pendik – Tuzla subway, as well as 110 million euros through Deutsche Bank to continue the construction of the Sultanbeyli – Çekmeköy line.
This foreign borrowing has stirred debate among observers, some of whom see external investment as necessary to spur economic growth, while others worry the city is taking too many risks while navigating uncertain economic waters and ongoing currency instability.
“Foreign capital is always the locomotive of economic growth of Turkey because the Turkish economy does not grow with its national reserves and tax rebates,” Sönmez said. “There is always a need for foreign capital to sustain economic growth, which is why İmamoğlu is not the only leader venturing to find foreign financial resources.”
But Toker argued that while foreign credit might ease the immediate financial crisis, it could give rise to unforeseen issues down the line, if the municipality overspends or does not meet deadlines set by foreign lenders. The ongoing fluctuations in local currency also added an element of risk to the deals and repayment terms.
İmamoğlu has battled with the AKP on other occasions. The government disqualified a consortium led by the Istanbul municipality over a technicality last autumn from bidding on a tender to renovate a 25,000 square metre warehouse and depot area near the historic Haydarpaşa train station. The contract was awarded to Hezarfen, a company close to the ruling party.
The two sides have also clashed over the proposed Kanal Istanbul, an AKP mega-project worth billions that critics warn will cause devastating environmental damage, and disagreed over the fate and renovation of historic monuments in the city.
Sönmez, the economist, said the clashes amounted to an “attrition campaign” by central government against İmamoğlu, in an effort to convince voters that it had ultimately been a mistake to elect him.
But he also said the mayor could revitalise the interest of international investors who feared Erdogan’s authoritarianism and his attacks on institutions like the International Monetary Fund.
“İmamoğlu’s victory and his outreach to potential partners in the West,” Sönmez concluded, “is a signal that things are changing in Turkey.”