In Turkey, the crackdown on anti-government protesters has begun

The Turkish government’s spin doctors have linked the recent protests to cyber attacks and historical cases of secular dissent to silence anti-government demonstrators.

The latest joke among members of the Turkish protest movement is that they are “soldiers of the intergalactic coup lobby”. But it’s not just for fun; their humour is a response to what the Turkish government’s spin doctors are saying about the protesters, whose camps in Istanbul and elsewhere have been cleared forcibly by police in the past few weeks.

When the spin doctors claimed that Turkey was about to face a cyber attack, and that the anti-government demonstrations were linked to it, the protesters had no option but to mock their reasoning. But the government’s response is becoming increasingly sophisticated – and it’s not all so easy to laugh off.

“There are the names of nine illegal organisations in my criminal charge, Your Honour. Are you going to pick one for me or am I supposed to choose?” Those were the words of one young protester hauled before a court last month. Since protests began at the end of May – initially over the destruction of Gezi Park in Taksim Square but soon spreading from Istanbul to the rest of the country – thousands of people have been arrested. The charges vary from “joining illegal demonstrations” to “being a member of a terrorist organisation”. The justice system, which in Turkey is politicised, has increased the pressure on demonstrators.

On 22 June the government announced that prosecutors will link the protests to “Sledgehammer”, an alleged secularist coup plot that dates back to 2003 and has led since then to the prosecution of thousands of army personnel. Linking the 2013 protests to this case – even though both secularists and islamists were on the streets to voice their discontent with the Erdogan government – is a way to discredit the movement. Similarly politicised cases have been used to silence secular politicians and Kurdish activists over the past ten years.

While some protesters are brought before judges, others face physical violence. Since the protest camps were cleared, activists have been meeting in public parks in Istanbul, Ankara and Izmir in the evenings to discuss what they have been through and how the action should continue.

Recently three of these forums have been attacked by young, government-supporting thugs who then took to Twitter to declare that they were proud of what they had done. They operate with sticks and knives, and preferably in dark alleys. Somehow, the police seem unable to stop them. Elsewhere, vocal critics of the government, including myself, have been singled out by establishment newspapers, or by supporters of the governing Justice and Development (AK) Party, as “provocateurs”.

Clumsy indictments and the intergalactic coup lobby can be regarded as a joke. But as the days pass, we’re not sure how much longer we’ll be able to carry on laughing.

Ece Temelkuran is a novelist and political commentator based in Istanbul

Demonstrators with flares in the port city of Izmir, western Turkey. Photograph: Reuters

This article first appeared in the 08 July 2013 issue of the New Statesman, The world takes sides

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Labour's investment bank plan could help fix our damaging financial system

The UK should learn from the success of a similar project in Germany.

Labour’s election manifesto has proved controversial, with the Tories and the right-wing media claiming it would take us back to the 1970s. But it contains at least one excellent idea which is certainly not out-dated and which would in fact help to address a key problem in our post-financial-crisis world.

Even setting aside the damage wrought by the 2008 crash, it’s clear the UK’s financial sector is not serving the real economy. The New Economics Foundation recently revealed that fewer than 10% of the total stock of UK bank loans are to non-financial and non-real estate businesses. The majority of their lending goes to other financial sector firms, insurance and pension funds, consumer finance, and commercial real estate.

Labour’s proposed UK Investment Bank would be a welcome antidote to a financial system that is too often damaging or simply useless. There are many successful examples of public development banks in the world’s fastest-growing economies, such as China and Korea. However, the UK can look closer to home for a suitable model: the KfW in Germany (not exactly a country known for ‘disastrous socialist policies’). With assets of over 500bn, the KfW is the world’s largest state-owned development bank when its size is measured as a percentage of GDP, and it is an institution from which the UK can draw much-needed lessons if it wishes to create a financial system more beneficial to the real economy.

Where does the money come from? Although KfW’s initial paid-up capital stems purely from public sources, it currently funds itself mainly through borrowing cheaply on the international capital markets with a federal government guarantee,  AA+ rating, and safe haven status for its public securities. With its own high ratings, the UK could easily follow this model, allowing its bank to borrow very cheaply. These activities would not add to the long-run public debt either: by definition an investment bank would invest in projects that would stimulate growth.

Aside from the obviously countercyclical role KfW played during the financial crisis, ramping up total business volume by over 40 per cent between 2007 and 2011 while UK banks became risk averse and caused a credit crunch, it also plays an important part in financing key sectors of the real economy that would otherwise have trouble accessing funds. This includes investment in research and innovation, and special programs for SMEs. Thanks to KfW, as well as an extensive network of regional and savings banks, fewer German SMEs report access to finance as a major problem than in comparator Euro area countries.

The Conservatives have talked a great deal about the need to rebalance the UK economy towards manufacturing. However, a real industrial policy needs more than just empty rhetoric: it needs finance. The KfW has historically played an important role in promoting German manufacturing, both at home and abroad, and to this day continues to provide finance to encourage the export of high-value-added German products

KfW works by on-lending most of its funds through the private banking system. This means that far from being the equivalent of a nationalisation, a public development bank can coexist without competing with the rest of the financial system. Like the UK, Germany has its share of large investment banks, some of which have caused massive instabilities. It is important to note that the establishment of a public bank would not have a negative effect on existing private banks, because in the short term, the UK will remain heavily dependent on financial services.

The main problem with Labour’s proposal is therefore not that too much of the financial sector will be publicly owned, but too little. Its proposed lending volume of £250bn over 10 years is small compared to the KfW’s total financing commitments of  750 billion over the past 10 years. Although the proposal is better than nothing, in order to be effective a public development bank will need to have sufficient scale.

Finally, although Brexit might make it marginally easier to establish the UK Investment Bank, because the country would no longer be constrained by EU State Aid Rules or the Maastricht criteria, it is worth remembering that KfW’s sizeable range of activities is perfectly legal under current EU rules.

So Europe cannot be blamed for holding back UK financial sector reform to date - the problem is simply a lack of political will in the current government. And with even key architects of 1980s financial liberalisation, such as the IMF and the economist Jeffrey Sachs, rethinking the role of the financial sector, isn’t it time Britain did the same?

Dr Natalya Naqvi is a research fellow at University College and the Blavatnik School of Government, University of Oxford, where she focuses on the role of the state and the financial sector in economic development

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