Turkey’s Minister for Treasure and Finance, Berat Albayrak, announced in his statement on September 27 that the Office for Costs and Transformation, which was formed recently within the scope of Turkey’s New Economic Programme (YEP), came to an agreement with the US-based international management corporation McKinney & Company.
The Office for Costs and Transformation is the most recent instrument of the YEP which aims to structure the state as a corporation and approach it within the mentality of the market. Hosting representatives of 16 ministries of Turkey, the Office will work with the US-based company McKinsey.
Minister Albayrak stated in his announcement: “We have decided for the Office for Costs and Transformation recently formed inside the New Economic Programme to work with the international management corporation McKinsey. This Office, which hosts representatives of 16 ministries, will check all of our aims and results in every quarter.”
It appears that the Office will also practically assume the role of “inspection” of the Audit Court included in the classical custom of public administration.
In the YEP, a series of impositions are projected on state workers under the title of “saving”, especially precarious employment. The “architecture” of the relevant impositions seems to have been entrusted to McKinney, which previously had roles in the privatisation and opening to the capital of the energy sector in Turkey.
A Turkish economist, Ümit Akçay, posted an article about the issue on his personal blog.
In his article titled “No more Audit Court – would you care for some McKinsey?”, Akçay said:
“Here is what Berat Albayrak’s announcement means: The foreign world has such a low confidence in the institutions and political power in Turkey that the administration of the economy had to work with a consulting firm to solve these ‘trust issues’ without going to the IMF. Thus, a way has been found to pretend like having a contract with the IMF without actually doing it.
“It could be too much to say that sharing information that is not open to the public with a private company and, even more important, carrying out the project of the transformation of the state with this company can lead to another ‘scandal of entering the cosmic chamber’. However, in any case, the conditions of the agreement must be revealed immediately.
“We used to follow the discussions on public reforms and transformation of the state from the plans (not like the YEP – actual plans!) of the State Planning Organisation, discussion texts of the Institute of Public Administration for Turkey and the Middle East, and the reports of the TÜSİAD [Turkish Industry and Business Association]. Obviously, we will be reading the reports of McKinsey from now on!
“The fact that institutions such as the Audit Court, which performs the control function in the name of the public, and the TBMM [Turkish Grand National Assembly] have been disabled, and worse, they haven’t been replaced with anything, shows how huge the administrative crisis in Turkey is.”
Kadir Sev, a former Chief Auditor for the Audit Court and soL columnist, commented on the issue: “A state is entrusted with a corporation. It will work with 16 ministers, and compile all the information about the public; it will issue reports, direct and see over the execution of the reconstruction of public institutions, the projection of how and to whom the budget and the public funds are distributed, and from where savings must be made. Are those who disabled the Audit Court replacing it with this?”
In his commentary to soL, Kadir Sev said:
- Among the main aims of the YEP are utilising public funds productively, reducing costs and expenses, and increasing the income quality. The programme has three aims, and significant cuts are foreseen in public expenditures in all three. They say, “We will execute a strict policy of finance, and reduce the budget deficit and current deficit.” The expression “savings from the budget” reminds one of new attacks at the rights of the workers. Indeed, it is noted that, of the 60 billion [Turkish] Lira [nearly $10 billion] they have been expecting for 2019 by cutting expenditures, 10 billion lira [more than $1,6 billion] will be provided from the SGK [the Social Security Institution], and 30 billion lira [nearly $5 billion] by giving up on investments. We do not know what those investments they have given up on are. Will they never make them? Have they given up on serving? Are they planning to appeal to a model that does not reflect on the budget, such as the “build-operate-transfer” model? It is unclear.
- It is anticipated to form an “Office for Public Finance Transformation and Conversion” in the organisational structure of the Finance Ministry in order to carry out their objectives in a more organised way. The Office will prepare a savings and income conversion programme, monitor its execution, and thus, there will be improvements in public finance.
- We have learned from Berat Albayrak’s speech at the American Turkish Council’s meeting in New York that they have decided to work with McKinsey for the preparation and monitoring of the conversion programme.
- The Minister’s traffic in the US needs careful attention. He met with German investors and the representatives of the banking and finance world, who dominate 5 trillion dollars globally, and explained the YEP to them. He talked with the World Bank’s Vice President for Europe and Central Asia. We do not know what he discussed with him.
- McKinsey is a corporation for senior management consultancy. It is stated on their website that they have more than 1,400 partners throughout the world. They have an office in İstanbul. They have services in the sectors of telecommunication, finance, banking, for privatisation, and for multinational corporations interested in the sectors in Turkey and GMO’s. They reached a consultancy staff of 30 in early 2000’s, and they have a portfolio that includes improving the standards of the automotive sector, reconstruction of a television manufacturer, and an expansion programme for a bank.
- A state is entrusted with this company. It will work with 16 ministers, and compile all the information about the public; it will issue reports, direct and see over the execution of the reconstruction of public institutions, projection of how and to whom the budget and the public funds are distributed, and from where savings must be made. I guess this is the biggest job the company has ever had!
- Those who have disabled the Audit Court, who destroyed the planning organisation, agree with a company to have these jobs done.
- Korkut Boratav [a celebrated Turkish economy professor and columnist] calls the YEP “the IMF programme without the IMF” in his column. One necessarily thinks: Was this company thought of as the invisible hand of the IMF?
- Let us not forget the public economic enterprises, prerogatives, and the premises transferred to the Turkish Wealth Fund. These aren’t protected as public property anymore. The company they have decided to work with is also specialised on privatisation. Berat Albayrak, on the other hand, is the Deputy Chairman for the Wealth Fund, Inc. Can you imagine what could happen in such circumstances?
AKP GOVERNMENT'S LOVE FOR MCKINSEY
Having been founded by James O. McKinsey and Marvin Bower in 1926, McKinsey & Company is an international management corporation based in New York with 27,000 employees. The company serves several multinational monopolies and large investment groups, but it is not the only thing they do – McKinsey’s domain also involves, interestingly, “public administration”, as well.
The official Turkish website of the company describes their operations in the area of “public administration” as: “We support national, regional, and local state institutions to improve their operations and influence, enabling them to carry out their duties to the public.”
The company’s specialities for the public sector are listed as: Defence and Security, Economic Development, Healthcare, Public Finance, Information Technologies, Operations, Organisation, and Strategy.
McKinsey has been one of the companies Turkey’s AKP government has been consulting with since the beginning, especially about the privatisations. The biggest operation of McKinsey, which was consulted by the public institutions on topics such as the privatisation of the public banks in 2004 and the sale of the banks that were transferred to the Saving Deposit and Insurance Fund (TMSF) after the crisis in 2001, was the “liberalisation” process of the energy sector.
Even though it was involved in one of the greatest energy scandals in the world, the Enron embezzlement in the US, McKinsey was first consulted by the Privatisation Administration on the privatisation of power distribution, then, by Turkey’s Energy Ministry on topics about the regulation of the energy market.
The central office of McKinsey in Turkey is in İstanbul. One interesting coincidence is that Ali Üstün, one of the directors of the company’s office in Ankara, is the son-in-law of Beşir Atalay, a former deputy prime minister.
It was covered in several news reports in previous months that some management companies have started to play roles in the administration of the Kingdom of Saudi Arabia, and that Saudi Arabia was working with McKinsey as well as the SCL Group, the parent firm of Cambridge Analytica. Besides, when Saudi Arabia economically collapsed after oil prices had dropped, they appealed to McKinsey, and had them prepare a report. In the light of that report, they started a programme of retrenchment and financial discipline called “Vision 2030”.