Is government support first for entrepreneurs or low-income people? – Competent report

The government is looking for a formula to support public contractors who have suffered from price increases. President Erdoğan speaks via video link at the opening ceremony of the Malatya Ring Road on April 4. (Photo Presidency)

It took time for the AKP party government to accept that Turkey was going through an economic crisis and the people were struggling to make ends meet. It was not until the official inflation rate rose to 50% in January, 54% in February and 61% in March, that it succumbed to the existence of the crisis, after initially stalling with foreign powers and profitable grocery stores. . We understand that the administration of the AK party, which is worried about the election, is now at the stage of discussing who to support and how to prioritize entrepreneurs or low-income people who are struggling to support themselves. base.
How do we know? Two short stories and the following journalism research.
The acceptance of the economic crisis can be inferred from Yücel Kayaoğlu’s news from the Turkish newspaper. As a result, the “economy staffs” of the AK Party are studying how to respond to requests for price differences from public contractors in the face of rising prices for building materials.
We understand from news from CNN Türk correspondent Arda Erdoğan that they have finally accepted that the citizens are in financial difficulty. As a result, the “general staff” of the AK Party are discussing paying the difference to the markets by determining about twenty basic necessities and keeping their prices constant until the end of the year.

Entrepreneurs or low-income people?

This is actually a tough question. “To contractors? when I ask, what I mean is not the contractors who won the mega-project tenders with the Public-Private Partnership, which the opposition calls the “Gang of Five” and the guarantee of the State ; they somehow find their way through citizens’ taxes. There is no question of supporting individual investor entrepreneurs, known as builders. The third category is crisis support for contractors working in public, from buildings to water and sanitation projects, which number in the tens of thousands and affect the livelihoods of millions of people.
In fact, President Tayyip Erdoğan was giving hints to CHP leader Kemal Kılıçdaroğlu in the speech that he called a “taxman”. If the construction industry stopped in a country, economic life would also stop. The construction sector has kept 250 different economic activities alive. (My sources in the construction industry list that number as over 300 items, from plumbers to painters, furniture makers to white goods makers.) He couldn’t ignore it.
Support for these contractors would affect not only millions of voters, but also PPP companies, since some five thousand of the contracting companies in this category worked as “mega-project” subcontractors.

three scenarios

At this stage, it is clear that when we talk about public projects, we are not only talking about government projects but also municipal projects. The same problem applies to contractors working for municipalities.
Three scenarios are discussed in Ankara:
1- Resend letters of guarantee from companies and liquidate projects. This is the most risky scenario, both in terms of legality and the inability to carry out projects.
2- Transfer the projects to the company, institution or public that will carry them out. This is a scenario that can lead to allegations of impropriety and legal issues.
3- Ensure the continuation of projects by paying contractors increases due to inflation with additional installments.
Two problems arise here. First, how will the difference be calculated? Ultimately, iron prices are up around 160% since the start of 2021, and cement prices are up around 100%; The industry average is estimated at over 110%. However, the inflation rate announced by TURKSTAT is 61% and it is likely that the difference to be made by the government will be less than this rate.
Second, where will this difference come from? The answer is clear, from citizens’ taxes.

Support for low-income people is another confession

The fact that the prices of basic necessities, including food, will be frozen until the end of the year, shows that the AKP party government has finally accepted that low-income people have suffered from the economic crisis. Otherwise, why would such a precaution go? About twenty basic necessities are mentioned. For example, does it include meat, milk, diapers, etc. ? Not clear yet.
There is news that the difference between the prices to be fixed and the rate of inflation will be paid to retailers. This is another admission: Until recently, Erdogan and AK Party leaders blamed retailers, whom they called “profiteers,” for the price increases.
On the other hand, it is positive, albeit belated and insufficient, to support citizens in terms of basic needs while providing support to entrepreneurs doing business with the public, as well as to subsidiaries. Even if we see that this was done for the sake of votes and was intended to soften the reaction to the support to be given to entrepreneurs.
A final note: Meanwhile, MHP Kayseri MP Mustafa Baki Ersoy has been handed over to the party’s disciplinary committee for criticizing the hikes.
I wonder how many AK party fellow travelers are more Erdoganist than MHP leader Devlet Bahçeli?

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