Turkish Retaliation

ISTANBUL -- Prime Minister Recep Tayyip Erdogan (below) is widely feared in Turkey’s business world. From the country’s billionaires to its bankers, people worry their political stances will draw the ire of the controversial leader and that their businesses will suffer as a result.

"We have seen growing authoritarian rule and increasingly the prime minister has become the only actor," said a source close to the industrial conglomerate Dogan Holding who requested anonymity out of fear of the government. "Even companies supporting the government are feeling the pressure."

Erdogan has a history of lashing out at businesses when they don't fully support the state. He slapped Dogan Holding, which has stakes in everything from the media to energy industries, with a nearly $4 billion tax fine in 2009 for its media coverage of a corruption scandal implicating members of the government.

As Turkey prepares for highly-anticipated municipal elections, widely seen as a referendum on the prime minister's 11-year rule, many business owners are increasingly fearful they'll face retaliation from the state if they're deemed to be anti-government. 

Amid another corruption scandal and recently renewed anti-government protests, Erdogan is trying to root out any opposition to his party and maintain his grip on the state. The election is expected to set the tone for upcoming presidential elections in August (which Erdogan may enter) and parliamentary elections next year.

Erdogen claims that Fetullah Gulen, a U.S.-based Islamic preacher in exile who has become his staunch enemy in recent years, is trying to overthrow the government. He says Gulen is responsible for leaking recordings to social media that appear to tie him and the government to money laundering. 

Some companies say they have been labeled as Gulen supporters -- considered treasonous by Erdogan -- just because they are perceived as government opponents.

Fadi Hakura, a Turkey analyst for the international think tank Chatham House, says that businesses viewed as anti-government -- and especially pro-Gulen -- could soon come under increased pressure from the prime minister and his ruling party.

"We have seen in the past and today that the favorite method used by the government to put pressure on business opponents is via tax investigation," he said. "The Turkish state has enormous amounts of legal regulatory and political power in its hands."

"It is a highly centralized country with weak checks and balances, so businesses do not have the recourses afforded to them like in the United States to go to the courts to fight against government overreach," he continued. "Power is concentrated in the hands of the prime minister. And right now, the Gulen companies are the main companies in the firing line."