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Çiğdem Toker: Huge Hidden Costs of Public -Private Partnerships

cigdem toker

Çiğdem Toker in her seminal work, Devletin Cebinden: Büyük Simbiyoz (From the State’s Pocket: The Great Symbiosis) examines the systematic weaponization of the Public-Private Partnership (PPP) and Build-Operate-Transfer (BOT) models in Turkey, revealing how these structures have created a “political symbiosis” between the ruling power and select capital groups, shifting massive financial risks onto the public while shielding private profits.

The Illusion of “Zero Cost” to the State

The central propaganda tool for Turkey’s massive infrastructure projects—bridges, tunnels, and airports—has been the claim that “not a single penny will come out of the state’s pocket.” Toker’s research dismantles this myth. While the private sector provides the initial financing, the state provides sovereign guarantees in foreign currency (USD or EUR).

These guarantees cover:

  • Minimum usage levels: Payment for a guaranteed number of vehicles, passengers, or patients, even if the actual numbers fall short.

  • Exchange rate volatility: Payments are pegged to hard currencies, meaning that as the Turkish Lira devalues, the public debt grows geometrically.

  • Cost increases: Any rise in construction costs is typically absorbed by the state through contract amendments.

The “Great Symbiosis”: A Political and Financial Loop

Toker introduces the biological concept of symbiosis to describe the relationship between the government and a specific group of construction conglomerates. In this relationship:

  1. The Companies receive multi-decade, inflation-proof revenue streams guaranteed by the state, minimizing their business risk to near zero.

  2. The Political Authority uses these mega-projects as grand displays of “progress” and “service” (propaganda), securing political longevity.

  3. The Financing is often tied to international credit, but the state acts as the ultimate guarantor, effectively mortgaging future tax revenues.

This creates a self-sustaining cycle where the survival of the political regime becomes inextricably linked to the financial health of these corporations.

The Shield of “Commercial Secrecy”

One of Toker’s most damning revelations is the use of “commercial secrecy” to bypass parliamentary and public oversight. When members of Parliament or the Court of Accounts (Sayıştay) inquire about the specific terms of these contracts, they are frequently met with the response that the information cannot be shared because it is a “trade secret.”

Toker argues that a state cannot have commercial secrets regarding public services. If a bridge is built for the public using public tax guarantees, the terms of that agreement belong to the public. By hiding these contracts, the state conceals the massive advantages granted to private companies, such as secret extensions of operating periods or increased guarantee amounts that were never mentioned during the initial tender phase.

Impact on the BIST 100 and Macroeconomic Stability

For institutional investors and those following Borsa Istanbul (BIST), this “symbiosis” represents a double-edged sword. While the conglomerates involved (often referred to as the “Gang of Five” in local political discourse) are major players in the Turkish economy, their reliance on state-backed guarantees creates a fragile fiscal environment.

  • Fiscal Drag: The budget allocations for these guarantees—reaching hundreds of billions of Lira annually—crowd out other essential public spending in education, health, and R&D.

  • Currency Pressure: The constant need for the state to pay out guarantees in USD/EUR puts persistent pressure on the Central Bank’s reserves and the Lira’s value.

  • Meritocracy Collapse: The concentration of contracts within a few hands discourages broader private sector competition and technological innovation.

The Path to Transparency

Toker admits that “nationalizing” these projects overnight is legally complex because they are tied to international finance mechanisms. However, she insists on several immediate reforms:

  • Legal Audits: Re-evaluating existing contracts to align them with the public interest.

  • Transparency Mandates: Abolishing the “commercial secrecy” excuse for public service contracts.

  • Budgetary Honesty: Explicitly listing long-term PPP liabilities in the national budget rather than hiding them as “off-balance-sheet” items.

 

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