Dirk Matten is the Hewlett-Packard chair in corporate social responsibility at the Schulich School of Business in Toronto and a visiting professor at Sabanci University in Istanbul.
From a business perspective, the immediate, already visible, fallout from the Turkish coup attempt is that the government will strengthen its position and its grip on all key institutions of society and the economy. There will be no teddy bears and candles on the street – Turkey has been efficient in eradicating all signs of disruption, whenever acts of violence or terrorism occur.
So stability will return very swiftly and this in itself may be good news. But there are a number of areas to watch closely.
First, domestic Turkish business is still very much dominated by large, family-controlled conglomerates. So far, despite some efforts to discipline these companies (for instance, with more or less trumped-up tax charges), the AKP government has not succeeded in controlling this part of the economy. Since many of these conglomerates operate a multitude of joint ventures and jointly-owned subsidiaries with many foreign multinationals, this is a space that warrants close monitoring.
The government has already shown that it is able to affect business quite decisively: It has pushed into receivership businesses close to the so-called Gulenist movement, including media organizations such as the Zaman newspaper.
From a Canadian perspective, there is another angle worth considering. In recent years, the AKP has created its own business elite, who are taking over businesses from international companies and the Gulenist movement in key sectors, such as natural resources and mining. The most prominent example is Koza Gold, which was taken over before last year's election with top managers detained, but there are a number of similar examples. This points to the possibility of a more interventionist government engagement in the Turkish economy, with significant risks to foreign investors. Certainly, the question with whom to engage in deals now also should include a careful consideration of local partners' ties to government.
Another area of concern might be the future of the rule of law, the reliability and enforcement of contracts and the freedom of markets in Turkey. With the overhaul of the judiciary – a process that has been ongoing for a while – there are indeed warranted concerns in how far Turkey will remain a safe place to invest. This is exacerbated by news emerging around the 2013 corruption scandal, which provided a basis for suspicion of widespread involvement of government actors and key businesses in the country. While preserving a stable and business-friendly environment is in the AKP government's interest, foreign business will likely be wary to invest.
Finally, an emboldened AKP administration may also raise some longer-term concerns about Turkey's relations to the European Union, the United States and other major economies with interest in the country and the Middle East. Maybe this weekend's change in tone between the government and the United States is just an indicator of relations becoming more strained and adversarial.
From a Canadian perspective, some of these concerns may also have a silver lining. There is currently a vigorous discussion among many business leaders and owners in Turkey about whether to move at least some of their assets and international operations and out of the country. As a stable and free democratic country with good business infrastructure, Canada increasingly features in these discussions.