170 O. BAYULGEN
low to subsidize certain customers in the market. For example, it is
reported that in 2013 BOTAS absorbed losses of around US $2 billion,
which the government had to reimburse. 59 This resistance to pass the
rapid rise in international energy prices to the domestic market in fear of
losing political legitimacy makes it harder for the state to be an objective
and fair regulator in the energy business. 60
Clientelism and Populism: Creating Cronies and Co-opting
Constituents
AKP governments’ energy priorities have also been shaped by their aspiration to create a loyal business class that would legitimize and finance
their hold on power. By forging alliances with certain capital owners and
ensuring that they accumulate huge sums of wealth, the AKP governments created a loyal bourgeoise that depends on them for lucrative
government contracts and favorable regulations. 61 Especially in the aftermath of the 2008 economic crisis, the government turned to large infrastructure (in many cases energy infrastructure) and real-estate projects to
generate economic growth, employment, and political rent. Extraction
and construction sectors have been of particular importance to AKP since
they feed into other subsectors, require low technical expertise and human
capital, create vast opportunities for employment, and incidentally are the
sectors that are the most vulnerable to political intervention and corruption. This extraction and construction-fueled economic growth model
provided the cover for distributing public resources to AKP cronies.
One way the AKP government helped with pro-government capital
accumulation has been through privatization deals. Ozcan and Gunduz
(2015) in their study of energy sector privatizations—the most extensive
sector privatizations in the economy under AKP rule—find that pro-AKP
firms, such as Kolin, Calik, Limak, Kazanci, and Cengiz Holdings, won
16 out of 20 electricity distribution tenders across Turkey. Similarly, in the
natural gas sector, firms connected to AKP won gas distribution tenders
in 15 out of 19 large, 13 out of 18 medium, and 18 out of 29 small
size cities. 62 The negotiated and opaque method of auctions as well as
the appointment of family members and relatives of government officials
to key regulatory agencies have, arguably, made the whole privatization
process vulnerable to political intervention.
Another mechanism by which the government enriched and emboldened its own loyal bourgeoise was through the easing of regulations
low to subsidize certain customers in the market. For example, it is
reported that in 2013 BOTAS absorbed losses of around US $2 billion,
which the government had to reimburse. 59 This resistance to pass the
rapid rise in international energy prices to the domestic market in fear of
losing political legitimacy makes it harder for the state to be an objective
and fair regulator in the energy business. 60
Clientelism and Populism: Creating Cronies and Co-opting
Constituents
AKP governments’ energy priorities have also been shaped by their aspiration to create a loyal business class that would legitimize and finance
their hold on power. By forging alliances with certain capital owners and
ensuring that they accumulate huge sums of wealth, the AKP governments created a loyal bourgeoise that depends on them for lucrative
government contracts and favorable regulations. 61 Especially in the aftermath of the 2008 economic crisis, the government turned to large infrastructure (in many cases energy infrastructure) and real-estate projects to
generate economic growth, employment, and political rent. Extraction
and construction sectors have been of particular importance to AKP since
they feed into other subsectors, require low technical expertise and human
capital, create vast opportunities for employment, and incidentally are the
sectors that are the most vulnerable to political intervention and corruption. This extraction and construction-fueled economic growth model
provided the cover for distributing public resources to AKP cronies.
One way the AKP government helped with pro-government capital
accumulation has been through privatization deals. Ozcan and Gunduz
(2015) in their study of energy sector privatizations—the most extensive
sector privatizations in the economy under AKP rule—find that pro-AKP
firms, such as Kolin, Calik, Limak, Kazanci, and Cengiz Holdings, won
16 out of 20 electricity distribution tenders across Turkey. Similarly, in the
natural gas sector, firms connected to AKP won gas distribution tenders
in 15 out of 19 large, 13 out of 18 medium, and 18 out of 29 small
size cities. 62 The negotiated and opaque method of auctions as well as
the appointment of family members and relatives of government officials
to key regulatory agencies have, arguably, made the whole privatization
process vulnerable to political intervention.
Another mechanism by which the government enriched and emboldened its own loyal bourgeoise was through the easing of regulations