US embassy cable - 03ISTANBUL880

UNCLAS SECTION 01 OF 02 ISTANBUL 000880 
 
SIPDIS 
 
 
SENSITIVE 
 
 
E.O. 12958: N/A 
TAGS: PGOV, ECON, EFIN, TK, Istanbul 
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