The new draft of the Capital Markets Law will reinforce the notion that Turkey is becoming just like China.

It really is. We are witnessing appealing debates. Turkey is becoming just like China. The signs are coming one after another. First, we took the growth record of 2011 off the hands of China. Turkey outperformed China in growth in the first three quarters of 2011. We were delighted, though there was nothing to be delighted about. This was the first sign. Then came the second one: American novelist Paul Auster refused to visit Turkey for his new book, which was published first in Turkey. He said he would not visit countries such as China and Turkey that limited the freedom of the press and imprisoned journalists. Our prime minister talked about this issue joyfully, for some reason. I guess he was delighted because China and Turkey were mentioned in the same context. I have been arguing that Turkey is becoming just like China for a reason. It is evident. Wait for the approval of the Corporate Governance Principles Statement of the Capital Markets Board of Turkey (CMB) and the new Capital Markets Law. After that, the notion that Turkey is just like China will be reinforced. When the above-mentioned statement and law comes into effect, Turkey will become just like China. Let me tell you how.

First, let me touch upon prime minister Erdoğan laying Auster out. Among contemporary novelists, three are my favorites: Paul Auster, Kazuo İshigura, and Julian Barnes. I can read anything they write. But now I have learned straight from the horse’s mouth that Paul Auster is actually an ignorant man. Yet, his novels are fantastic. I recommend that our prime minister read his novels starting with The New York Trilogy. It’s a shame he has never read Auster. That is clear. 

The CMB’s power to approve
Let me cut the long story short and skip to the CMB legislation. The draft of the Capital Markets Law has been under debate lately. Hearing the debates, I became curious, as the CMB was where I started my career. I took a look at the draft. One of the new articles directly concerns the independent members of corporate boards of directors. The CMB is working to turn this recent arrangement introduced with the above-mentioned statement as a statutory obligation. Publicly traded companies will have to have at least two independent members on their boards of directors. And important decisions will have to be made in the presence of independent members.

You might ask why this is bad. Yes, at first glance, it looks like a reasonable attempt. Everything is understandable up to this point. In fact, such voluntary changes have been introduced throughout the world. This was the first point. The second relates to the detail that obsesses me about this arrangement: the authority to decide the principles and procedures concerning independent board members, and the authority to approve the independent board members for the case of some companies is assigned to the CMB. I face difficulty in understanding this part. I think it should not be the public authority to decide who can or cannot be an independent board member in private companies to facilitate access of the companies to funds. In normal countries, regulations for this purpose are not this detailed or compulsory.

So, what does this have to do with China? China also has a regulation that interferes with the decision for selecting the board members of private companies. In order to assign board members, Chinese companies first have to get the approval of the Communist Party of China (CPC). This practice was initiated in the 1990s. Back then, the main framework of the debates was whether to transfer the ownership of all public economic enterprises to the CPC. Deciding that this would be a decision on the axis, the CPC decided, “At least, we can assign our supporters as board members.” The CPC initiated a new organization to this end within the body of the party. One of the chief problems of companies doing business with their Chinese counterparts is the high level of CPC activity within companies. This is the third point.

The new draft of the Capital Markets Law will reinforce the notion that “Turkey is becoming just like China.” I recently argued that “Turkey has been stealthily returning to the statism of the 1930s” for a reason. Back in the 1930s, Turkey’s Republican People’s Party was just like the CPC. Today, the Justice and Development Party is advancing on the same path.

This commentary was published in Radikal daily on 03.02.2012