from concessionary foreign capital to public private

2

FROM CONCESSIONARY FOREIGN CAPITAL TO PUBLIC PRIVATE PARTNERSHIP PROJECTS

M. Mustafa AYDIN1, Saadet AYDIN2

Introduction In the academic literature, there is no standard definition for public service term. However, with the broadest definition, the public service includes state employees and general administrative tasks (Evans, 2008, 3). Public service, which is outside the rules of market operation, should not be considered only as social goods production and service provision due to market failures and market insufficiency. In addition to this production, political, sociological and psychological reasons and redistribution objectives should be considered (Spicker, 2009, p. 970). The concept is determined by the capitalist model of production of the social structure. The fulfillment of common needs by the state creates a contradictory situation for the capitalist structure (Karahanoğulları, 2002, p. 4). The Constitutional Court of the Republic of Turkey defined the concept of public service as regular and continuous activities to meet the common needs of the society by taking the public interest into consideration (Gözler, 2003, p. 230). In the execution of public service; license, escrow, joint escrow, concession and public private partnership (PPP) procedures are used. When we consider the execution methods of the public service within the framework of the financing models of the projects, it is possible to differentiate into three categories as state financing, public private partnership and privatization. In the narrow sense, we can define the model of public private partnership as a model of state and private sector participation (Leblebici Teker, 2008, p. 5). Table 1: Project Financing Models State Finance

Public Private Partnership Models

Privatization

The project is funded and operated by the government. Risk and proceed belongs to the state.

• Build-Transfer • Build-Rent-Operate-Transfer • Build-Transfer-Operate • Build-Operate-Transfer • Build-Own-Operate

• Public service is owned and operated by the private sector. • Risk and proceed belongs to the private sector.

Source: Leblebici Teker D. (2008). Sağlık Sektöründe Proje Finansman Modelleri: Türkiye için Bir Model Önerisi ve Bir Hastane Fizibilite Analizi. Mufad Journal, 37, p. 5

Güzelsarı (2012) defined PPP model, in the broad sense, as “integrated, comprehensive legal and institutional form of the methods where private sector participation is ensured to design, finance, construction and operation of the necessary infrastructure and facilities, or renewal, maintenance, repair and operation of an existing public investment for the realization of a service” (p. 30). When the practices in the world are examined, PPP varies among 1 Dr., Social Sciences Institute, Abant İzzet Baysal University, [email protected] 2 Assoc. Prof. Dr., Faculty of Economics & Administrative Sciences

FROM CONCESSIONARY FOREIGN CAPITAL TO PUBLIC PRIVATE PARTNERSHIP PROJECTS M. Mustafa AYDIN, Saadet AYDIN

short term contracts, concession contracts, consortiums, partial privatizations etc. models. Private financing, special purpose companies and multi-structure, secondary market, securitization, complexity, commercial confidentiality and limited liability, outsourcing/subcontracting, deregulation, limited surveillance and marketization are the basic elements of PPPs (Güzelsarı, 2012, pp. 42-44). Although not the same method as privatization, PPPs are the primary means of marketization of public services. PPPs have become the main method for the public service encounter, without the ownership being fully transferred to the private sector in the framework of various principles and rules. In order to eliminate the economic and social problems arising from the privatizations and suppress the social opposition in this direction, the PPPs have become an important option in the provision of new projects and services. The process of marketization of public services started with privatization practices and became widespread with PPPs (Şahin & Uysal, 2012, p. 158). PPPs, which cause the management relations to evolve to a new widened stage, expand the private profit by deprivatizing the risk, damage the integrity of the administration that cause control and management problems, are the results of seeking flexibility in the organization and financing of public services. Under the name of PPP, the negative consequences of the privatization on large sections of society, such as the rise of unemployment, the marketization of public services and the arise of general level of prices, are tried to be eliminated by assing positive meanings such as participation, cooperation and dialogue (Akıllı, 2013, p. 97).

Historical Development Process of PPPs Although the concept of public private partnership has been widely used since the 1990s, the provision of public service through private individuals is based on a fairly old history. Throughout history, there are many examples of the provision of public services by state and/or private individuals. In the 1970s, public private partnership practices started to become widespread in infrastructure investments in early capitalized countries. The PPPs, which became the main tool for the marketization of infrastructure investments and privatization, were implemented in all capitalist countries in the 1990s (Güzelsarı, 2009, p. 47). In the 1980s, there was a transition from Keynesian policies to monetarist policies with the goverments of Margaret Thatcher in UK, Ronald Reagan in USA. With this transformation, public expenditures were interrupted and welfare state practices were rapidly deteriorated, the role of the state in economic life was reduced, capital movements were liberalized and privatization was rapidly raised. During this period, some public services were transferred to the private sector via PPPs. The Government of the Conservative Party, led by John Major, developed the PPP model in 1992 and introduced the “Private Finance Initiative” model (Yalçın, 2014, p. 140). The attitude towards the PPPs was maintained not only by the Conservative Party governments, but also by the Labor Party governments in line with the “Third Way” approach. The globalization process plays an important role in the marketization of public services and the spread of PPPs. With the globalization, competition has taken an international dimension and has started to affect the public sector as well as the private sector. This pressure on the public sector has led to the emergence of new regulations under the name of improvement and reform. Economic, social and political factors exist in the widespread use of PPPs that are one of the most effective tools for this improvement and reform process. They can be classified as

24

ECONOMIC AND MANAGEMENT ISSUES IN RETROSPECT AND PROSPECT Eszter Wirth, Orhan Şimşek, Şükrü Apaydın

micro factors related to the effectiveness of public expenditures and macro factors related to budgets and public investment resources (Şahin & Uysal, 2012, p. 159). When the World Bank PPI Database 1990-2017 data are taken into consideration, it is seen that the number of PPP projects reaching financial closure in developing countries has been following a continuous trend from 1990 to 2013. As of 2012, the number of projects started to decrease. 2012 has the highest number of projects in the reference period with 608 projects (Kalkınma Bakanlığı, 2017, p. 15). Graphic 1: Number of PPP projects in EMDEs, by financial closure (1990 – 2017-first half )

Source: PPI Database, World Bank, as of June 2017

Graphic 2: Investments in PPP projects by financial closure (1990-2017)

Source: PPI Database, World Bank, as of June 2017

Especially after the year 2000, there is a steady growth in project investment amounts realized with PPP model worldwide. The investment amount of the projects by the financial closure reached the highest point in the history in 2012 and the projects amounted to USD 148,1 billion. In 2016, the amount of investment in PPP projects that had a financial closure worldwide, decreased by 37% compared to the previous year. In the first 6 months of 2017, PPP investments increased by 24 percent compared to the first six months of the previous year and reached USD 37,3 billion. On the other hand, worldwide data for the first six months of 2017 are the lowest second level of the last decade, down 15% from the first half of the last five years (Kalkınma Bakanlığı, 2017, p. 15).

25


PPPs in Turkey With the Stabilization Decisions of January 24th 1980, Özal Government caused a big breakage in the Turkish economic life. In this process where the country was reshaped in line with neoliberal regulations, important tasks were assigned to privatization and PPP projects in our country as in the world. In the second half of 1980 the World Bank has offered a PPP model (Build-Operate-Transfer – BOT) to Turkey as if it was a brand new and innovative contrivance. When these projects were on the agenda, the Undersecretariat of Treasury argued that the guarantee system would be against the economy of the country, but this objection was not taken into consideration by the politicians of the period. The lack of a legal basis for the relevant models in the 1980s made it difficult to implement these projects. In the following years, the legal ground has been completed and treasury guarantees for PPP projects as well as financing guarantees have been added (Eğilmez, 2017). In the period from the first half of 2017 until 1986, a total of 221 PPP projects in Turkey has been put in practice. Of these 221 projects implemented, 187 are in operation and the remaining 34 are under construction. In the first six months of 2017, the number of PPP projects has been detected as six. Graphic 3: Number of PPP projects in Turkey (1986-2017)

Source: Development Bank of Turkey

As of the first six months of 2017, the total investment size of the PPP projects reached US $ 60,7 billion. In the first six months of 2017, which was the last year of the data set, the project investment amounted to US $ 4,5 billion. The contract value of the PPP projects realized between 1986 and 2011 exceeded US $ 132 billion (Kalkınma Bakanlığı, 2017, p. 16).

26


Graphic 4: Investments in PPP projects in Turkey (1986-2017)


PPP models and sectors that are being implemented in Turkey can be illustrated as follows (TEPAV, 2016): Table 2: PPP models and sectors in Turkey Build-OperateTransfer

Build-Operate

Build-Rent-Transfer

Transfer Of Operational Rights

• Highway • Port • Airport • Marina • Customs • Electricity

• Thermal Power Plant

• Hospitals • School • Dormitories

• Airport • Port • Plant • Electricity distribution

Source: TEPAV. (2016). Kamu Özel İşbirliği Modeli. Lefkoşa, 5 Şubat 2016

As it can be seen, between the years 1986-2017, Build-Operate-Transfer model is the leading model among the PPP projects with 105 projects. The BOT model is followed by Transfer of Operational Rights with 90 projects, Build-Rent-Transfer with 21 projects and Build-Operate with 5 projects, respectively Graphic 5: PPP project models in Turkey (1986-2017)


27


According to the Ministry of Development data, the total investment size of the PPP projects has been 61.5 billion dollars. The total contract value of the same projects is 134 billion dollars. To put it simply, the difference between the value of the contract and the amount of investment is actually the transfer of resources to the company that performs the service. Further clarifying, the public sector gives up 134.8 billion dollars to obtain during the contract period and the private sector has this income with 61 billion dollars. When the investment amounts of the projects carried out and the size of the loans received by the companies are taken into consideration, the volume of the debt that the treasury will have to bear in the future also arises. Table 3: PPP projects by sector in Turkey (USD) Distribution of contract values by sectors

Distribution of investment by sectors

Distribution of transfer of operational rights by sectors

Distribution of project by sectors

Highway

19.442.664.787

19.420.207.512

22.457.274

42

Airport

69.403.042.697

18.124.481.751

51.278.560.947

18

1.745.147.478

894.836.663

850.310.815

17

Railway

264.759.825

264.759.825

0

1

Culture and Tourism Facility

136.797.635

136.797.635

0

1

Customs Facility

430.332.119

424.166.633

6.165.486

15

Industrial Plant

1.391.262.727

1.391.262.727

0

2

Health Facility

11.707.542.480

11.707.542.480

0

21

Energy

27.689.783.120

9.166.253.529

18.523.529.592

86

2.656.809.804

127.245.286

2.529.564.518

22

134.868.142.671

61.530.308.754

73.210.588.631

225

Marina and Tourism Facility

Port TOTAL Source: Development Bank of Turkey

RAILWAYS IN THE OTTOMAN EMPIRE Railways emerged as a product of industrialization in early capitalized countries. In countries where the Industrial Revolution did not occur, the railroads emerged as a result of other different requirements. The Ottoman Empire was also among these examples. The fact that almost all of the Ottoman railways were built by early capitalized countries presents a colonial view. In addition to serving the various objectives of the central government, the Ottoman railways formed a pattern that served the economic interests of the early capitalized countries (Yeneroğlu Kutbay, 2012, p. 4). With the Industrial Revolution, early capitalized countries began to rapidly weave their territory with railways. However, the lack of adequate dynamism of the Ottoman Empire did not only concern itself (Gül, 2014, p. 4).

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Table 4: The development of railways in the Ottoman Empire 1870-1910 Year

Anatolia (km)

Rumelia (km)

Total (km)

1870

174,5

-

174,5

1875

176,8

1.132,5

1.309,3

1880

178,3

1.309,6

1.487,9

1885

282,5

1.309,6

1.592,1

1890

609

1.440,5

2.049,5

1895

1.519,4

1.785,1

3.304,5

1900

2.171,9

2.553

4.724,9

1905

2.370,8

2.553

4.923,8

1910

2.370,8

2.553

4.923,8

Source: Devlet Salnâmesi, İstanbul: Dârü’t- Tıtbati’l Âmire, 1328, pp. 443-457 as cited in Güran T. (2014). 19. Yüzyılda Osmanlı Ekonomisi Üzerine Araştırmalar. İstanbul: Türkiye İş Bankası Kültür Yayınları, p. 82

The turning point for the Ottoman railways was the establishment of the Ottoman Public Debt Administration, which was established during the reign of Abdulhamid II. External debts were among the most important factors in determining the railway policy in the Ottoman Empire. The Ottoman Governments were only faced with new concession demands when they were able to borrow or demand a loan against rail concessions (Yıldırım, 2002, p. 314). Risks arising from the payment difficulties of the Ottoman Empire disappeared with the establishment of the Ottoman Public Debt Administration. In the following years, organic relations developed between Ottoman Public Debt Administration and railway companies (Özyüksel, 2013, p. 21). The following table shows the increase in Ottoman debts with the establishment of the administration. Table 5: Distribution of Ottoman Debts, 1881-1914 (Million British Pounds) 1881

1890

1898

%

1914

%

%

%

45

34,3

44,6

37,6

53,4

42,2

75,3

53

43,5

33,2

27,4

23,1

22,6

17,9

19,9

14

Germany

8,3

7,5

13,8

11,7

19

15

29,9

21

Belgium

6,6

5

10,3

8,7

14,4

11,4

12

8,4

Austria

7,9

6

7,7

6,5

7,5

5,9

7

5,3

5,3

4,5

3,5

2,8

5,1

3,6

Italy

5,4

4,1

3,2

2,7

1

0,8

Debts in imperial

7,3

5,6

6,2

5,2

5

4

Total

131

100

118,5

100

126,4

100

142,2

100

France United Kingdom

Holland

Source: Pamuk Ş. (2018). Osmanlı Ekonomisinde Bağımlılık ve Büyüme (1820-1913), İstanbul: Türkiye İş Bankası Kültür Yayınları, p. 77

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Ottoman railways can be grouped as follows (Yıldırım, 2002, pp. 321-322): Railways constructed by foreign companies I- Railways on the European part of the empire Cernovada-Constanta line Varna-Ruscuk line Orient Railway Thessaloniki-Monastery line Thessaloniki-Istanbul line II- Railways on the Anatolian part of the empire İzmir-Aydın line İzmir-Kasaba line Anatolia line Baghdad line Bursa-Mudanya line Adana-Mersin line III- Railways in the Arab part of the empire Jaffa-Jerusalem line Beirut-Damascus-Havran line Tripoli-Homs line Riyak-Aleppo line B- Railways constructed by the Ottoman Empire Hejaz railway The most important reason that pushed European capitalists to build railways in Anatolia; had been raw materials and market necessities. When determining the railway route, they chose the regions that produced the raw materials they needed or those that were the hinterland of the production center. When Table 6 and Table 7 are considered together, the structure and change of European capitalist investments by sectors can be observed.

30


Table 6: Distribution of foreign capital by sectors in 1888 French

British

German

Other Countries

Total

Sector’s Total Share % %

%

%

%

%

12,3

63,3

3,1

21,2

100

33,4

-

-

-

-

-

-

Municipal Services (water, gas, etc.)

5,9

65,3

-

28,8

100

9,3

Banking

50

50

-

-

100

31,6

Commerce

54,7

45,3

-

-

100

8,1

Industry

47,5

42

-

10,6

100

12

Mining

20,7

79,3

-

-

100

5,6

Total (wihtout external debts)

31,7

56,2

1,1

11

100

100

External Debts in 1890 (nominal value)

37,6

23,1

11,7

27,6

100

Railways Ports

Source: Pamuk, 2018, p. 68

Table 7: Distribution of foreign capital by sectors in 1914 French

British

German

Other Total Sector’s Total Countries Share % % % %

%

%

Railways

49,6

9,8

36,8

Ports

69,1

12,8

Municipal Services (water, gas, etc.)

44,6

9,5

Banking

38,2

Insurance

3,8

100

63,1

18,1

-

100

4,3

8

38

100

5,1

33,1

19,7

9

100

12

81,8

18,2

-

-

100

0,7

Commerce

70,7

17,6

7

4,7

100

5,8

Industry

30,8

42,1

7,6

19,6

100

5,3

Mining

73,5

16,5

6,4

3,7

100

3,7

Total (wihtout external debts)

50,4

15,3

27,5

6,8

100

100

External Debts (nominal value)

53

14

21

12

100

Total

52

14,4

23,2

10,2

100

Source: Pamuk, 2018, 69

The reasons underlying the construction of the Ottoman railways can be listed as follows: Suppression of rebellions and strengthening of central authority, integrating Europe to revive economic stagnation and strengthening the communication. Among these factors, the predominant was the military factors that aim to strengthen the state authority (Gümüş, 2011, p. 167).

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İzmir-Aydın Railways According to Luxembourg, the European capital -especially the British capital- acted very early to seize the region that developed as the old trade route between Europe and Asia. In the 1850s and 1860s, the Izmir-Aydın-Dinar and the Izmir-Kasaba-Alasehir railways were built by the British capital (Luxemburg, 2013, p. 248). Table 8: Distribution of foreign capital investing in railway in the Ottoman period Line

Capital as Gold Frank

Source of Capital

İzmir-Kasaba

141.000.000

French

Sham-Hama

172.000.000

French

Thessaloniki-Istanbul

170.000.000

French

Jerusalem-Jaffa

14.000.000

French

Mudanya-Bursa

3.800.000

French

Lebanon

4.000.000

French

İzmir-Aydın

114.400.000

British

Anatolia

269.000.000

German

Mersin-Adana

10.000.000

German

Thessaloniki-Monastery

60.000.000

German and French

Orient

50.000.000

German and French

Baghdad

207.000.000

German and French

Total

1.215.200.000

Source: Somervell, W., H., et al. (1936). Türkiye’nin İktisadi Bakımdan Umumi Bir Tetkiki, Ankara: Köy Öğretmeni Basımevi, p. 429, as cited in Güven H., S. (1981). Atatürk Döneminin Ekonomi ve Ulaştırma Siyasaları, Amme İdaresi Dergisi, 14(4), p. 97

The first line built in the Anatolian part of the Ottoman Empire was the İzmir-Aydın railway. This line is important for understanding the colonial or semi-colonial relations. In the construction phase of the İzmir-Aydın railway, the effects of the change in Britain’s position in the world economy are observed. İzmir, the exit city of one of the richest agricultural regions of Anatolia, was one of the most important port of the Ottoman and Mediterranean. İzmir, which became a settlement of European traders from the 16th century onwards, had caused British traders to increase their population in the city due to the commercial and agricultural opportunities it offered (Kurmuş, 1977, p. 55). The only obstacle to the further development of the above-mentioned opportunities by exploding into the inner regions of Western Anatolia was the transportation. The concession for the İzmir-Aydın railway, which started in 1857, was given to the British. The railways, which are both the product and the triggers of the Industrial Revolution, have paved the way for the exploitation of country resources in the periphery countries. In contrast to other railway lines in the Ottoman Empire, a 6% profit was guaranteed for 50 years, without a mileage guarantee on the İzmir-Aydın railway, which was then increased to 8% (Özyüksel, 2013, p. 10). Some of the concessions granted for this railway line were as follows (Kurmuş, 1977, p. 59): The goods needed for the construction and operation of the railway could be brought to the country without any customs duty. The company could use the mines, forests and territories free of charge.

32


The Ottoman Government could not interfere with the company management. All attempts to compete with this line would be blocked. İzmir-Aydın railway, which had been able to direct the agricultural richness of the region to İzmir port with its feeder lines, had a colonial appearance. The disconnection between the feeder lines seemed to be a network that served colonial purposes rather than combining domestic markets (Yeneroğlu Kutbay, 2012, pp. 5-6). As Özyüksel (2013) emphasizes, with the British efforts, the productive forces dependent on the British industry had developed on the route through which this line passed. In this way, the Ottoman economy, which was articulated to the capitalist world economy, became open to the cyclical shocks of capitalism (p. 10). Until 1888, Germany was organizing its relations with the Ottoman Empire according to their relations with Russia. In 1888, Germany changed its attitude in the relations with the Ottoman Empire. The main reason for this change of attitude was the need for new life spaces. Despite its late industrialization, Germany was in the process of rapid industrialization. The area required for this policy to come to life was the Ottoman Empire, which included Anatolia, Mesopotamia and Northern Syria (Efe, 1995, p. 95). Germany’s most important railway projects in Ottoman territory were the Anatolian Railway, which was built from İzmit to Ankara and Baghdad Railway from Konya to the Persian Gulf. The Baghdad Railway was a railway network from Berlin to Baghdad. According to Avcı, this project can be compared with very similar projects such as Trans-Siberian and Trans-Continental lines according to the conditions of the period (Avcı, 2015, p. 264). A concession agreement was signed between the Ottoman government and Deutsche Bank officials on 4 October 1888 for Anadolu Railway. With this agreement, Germany purchased Haydarpaşa-Izmit line in exchange for 6 million francs and obtained the concession of extending the line to Ankara. Germany completed this line in three years and showed a very successful business (Efe, 1995, p. 96). The negotiations started with the German finance groups and the Ottoman government for the Baghdad Railway ended on 24 December 1899. The concession was granted to Deutsche Bank with the agreement signed. On 5 March 1903 the Baghdad Railway concession agreement was finalized and signed. The concession would be valid for 99 years for this 2800 km long line. This line would be extended from Konya to Adana, Mosul, Samarra, Baghdad, Basra and then to the Persian Gulf. On 13 April 1903, the Germans established the Baghdad Railway Company under Ottoman law to finance the construction. The Ottoman Government would pay 11,000 francs per annum for the operation of this line and 4500 francs for the tracking per kilometer (Avcı, 2015, p. 271).

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Table 9: Kilometre guarantees paid to various railway companies (in million francs) Anatolian railway

İzmir – Kasaba line

Year

HaydarpaşaAnkara line

EskişehirKonya line

Old line

Extension line

Sham-Hama line

Baghdad railway

1896

4,023

0,179

0,675

-

-

-

1897

0,400

2,238

0,505

0,755

0,740

-

1898

1,566

2,996

0,471

3,946

0,750

-

l899

4,096

2,996

0,483

4,043

0,750

-

1900

2,961

2,999

0,488

3,843

0,750

-

1901

0,756

2,999

0,256

3,561

0,375

-

1902

0,140

2,999

0,218

3,532

1,023

-

1903

2,167

2,999

0,074

3,608

2,229

-

1904

2,181

2,999

(-0,045)

3,598

2,210

0,508

1905

1,112

2,888

0,124

3,442

1,896

2,777

1906

1,165

3,000

0,190

3,326

1,439

2,026

1907

1,812

3,000

0,339

3,471

2,093

2,749

1908

2,956

3,000

0,058

3,654

2,395

2,732

1909

2,554

3,000

0,024

3,809

2,218

2,713

1910

0,576

2,420

(-0,043)

3,256

1,873

2,586

1911

-

1,045

(-0,010)

2,710

1,840

2,438

Source: Özyüksel M. (2013). Osmanlı İmparatorluğu’nda Nüfuz Mücadelesi: Anadolu ve Bağdat Demiryolları, İstanbul: Türkiye İş Bankası Kültür Yayınları, p. 21

According to Luxemburg (2013a), Turkey has been the most important area of operations of German imperialism. Deutsche Bank, which was at the focal point of Eastern policy, opened this path to Germany. Abdulhamid II gave the Germans the right to operate the Izmit line, which was built by the British, and the concession of the line from İzmit to Ankara. In addition to this main line, the concessions of the side lines extending to Üsküdar, Bursa, Konya and Kayseri were given to the Germans. In addition to these concessions, Deutsche Bank had acquired the privileges of establishing and operating a port in Haydarpaşa in 1899. Thus the German sovereignty over trade and customs affairs was established through this port. In 1907, the Germans were given the concessions to dain the Karaviran Lake and to irrigate the Konya Plain. “Behind this great peaceful cultural work lies the ‘peaceful’ destruction of the peasantry in Asia Minor.” (p. 191). Deutsche Bank was not the only winner in the construction of the Baghdad Railway. Provision of necessary materials for the construction of the railway had been fixed in the agreements with Mauser and Krupp. Because of these agreements, the Ottoman Government quickly became indebted to the Germans (Avcı, 2015, p. 275).

34


Table 10: Germany’s exports of iron, iron products and machinery to Ottoman Empire between 1880-1913 Year

Iron and iron products

Machinery

Ton

1000 Mark

Ton

1000 Mark

73

160

1881

1499

881

131

206

1882

1080

655

178

221

1883

2375

961

101

208

1884

2918

1264

146

223

1885

5361

1652

165

290

1886

5102

3122

166

309

1887

5164

3024

232

345

1888

2715

3340

253

416

1889

8221

12520

413

636

1890

18650

12370

960

922

1891

38870

10270

1702

1607

1892

13450

12120

1737

1408

1893

37550

13360

3358

2681

1894

27140

8036

1646

1028

1895

46270

14740

2148

1917

1896

26140

7938

1676

1273

1897

9340

3639

660

684

1898

8729

4431

1127

1166

1899

5500

3520

1215

1322

1900

10150

5219

898

874

1901

27170

7730

549

611

1902

21350

7682

1166

1148

1903

24830

7638

1750

1438

1904

61060

21408

4067

3499

1905

26580

12459

2478

3733

1906

-

-

-

-

1907

78170(a)

15750(a)

2537

3158

1908

50030

12210

2758

3576

1909

32240

8046

2606

3201

1910

71110

16040

4183

4640

1911

100500

23590

6478

7111

1912

125600

25450

5886

6598

1913

78870

18720

4093

4357

1880

Source: Statistisches Jahrbuch für das Deutsche Reich, 1880-1913, as cited in Kaynak M. (1985). Osmanlı Demiryolları ve Demiryolu Araç ve Malzemeleri İthalatı. Hacettepe Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 3(1-2), p. 269

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Note: (a): Iron and iron alloys for the years 1907-1913 Other concessions granted to the Germans within the framework of Baghdad Railway can be listed as follows (Avcı, 2015, p. 276): The right to operate underground resources at a distance of up to 20 kilometers on both sides of the railway line was given to the companies that built the railway. The operation rights of the state-owned lands through which the railway lines passed were transferred to the Baghdad Railway Company. The company could benefit from forests and quarries for use in construction along the line. According to the agreement made in 1903, the railway company was given the right to carry out archaeological researches. Regular boat tours could be organized on the Euphrates and Tigris rivers and new ports would be established in Baghdad and Basra. In 1907, the concession was granted to create the irrigation infrastructure of the Konya Plain. In 1904, Deutsche Bank acquired oil exploration concession in Mezoptamya and obtained a 25% share of Iraqi oil with a treaty reached in 1912. The Anatolian Railway Company was granted the concession of operating the ferry between Haydarpaşa and the European side. Since the Ottoman railways did not appear as part of the Industrial Revolution, as in the early capitalist countries, it did not lead to the development of the railway and connected industries. On the contrary, the capitalist foreign countries in the Ottoman Empire enlarged their market opportunities. This evaluation showed itself in the development of railways in the Ottoman Empire and in coal imports. In the last years of the Ottoman Empire, coal imports increased significantly. As Kaynak pointed out, on the one hand, the Ottoman Empire was exporting coal, on the other hand, coal imports increased in a short period of four years between 1908-1911 (Kaynak, 1985, p. 271). Table 11: Coal import of the Ottoman Empire between 1908-1911 Year

Coal Import (Ton)

1908

203.000

1909

189.000

1910

347.000

1911

422.000

Source: Eldem V. (1970). Osmanlı İmparatorluğu’nun İktisadi Şartları Hakkında Bir Tetkik. Ankara: Türkiye İş Bankası Yayınları, p. 101, as cited in Kaynak, 1985, p. 271

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Conclusion Public Private Partnerships, which are public and private participation forms, include the transfer of public services to the private sector by the state. Although not evaluated within the framework of privatization, PPP models are one of the most important marketization tools of neoliberalism. Beginning in the 1980s, PPPs were widely used by states to overcome the structural problems of neoliberalism and to transfer capital to certain capital groups by the public. PPPs in Turkey shows a parallel historical development with PPPs worldwide. The process, which gained momentum with the Özal governments, has peaked with Justice and Development Party (Adalet ve Kalkınma Partisi – AKP) governments. The most commonly applied PPP model in Turkey is build-operate-transfer model. Although PPPs are presented as a new practice in the literature, they have a very similar view to the concessions given to foreign capital for railways in the late periods of the Ottoman Empire. Although PPPs are presented as a new practise in the literature, they are very similar to the privileges given to foreign capital for railways in the late periods of the Ottoman Empire. The Ottoman Empire could not build railways due to both technical and economic reasons. For these reasons, the early capitalized countries were granted concessions on various subjects to construct railways. One of the important points in the development process of Ottoman railways, which was built in line with the raw material and market requirements of European capitalists, was the establishment of Ottoman Public Debt Administration. After the establishment of the Ottoman Public Debt Administration, the construction of railways in the Ottoman lands gained speed; the number and the issues of concessions granted in this direction expanded. We can list the factors in Germany’s orientation towards the Ottoman market as follows; the crisis that Germany and the capitalist world werre experiencing, the decline of profit margins due to the crisis, the satisfaction of railways in the early capitalized countries, and the need to distribute the surplus in iron and iron alloys to new markets. The most substantial field of action for Germany, which was late capitalized, was the Ottoman Empire. German major capital groups such as Deutsche Bank, Siemens, Mauser and Krupp were not only involved in the construction of railways, but also they were the hegemonic power in many areas such as port operations, customs, finance capital and trade. The Ottoman Empire, which fell into a semi-colonial position, was constantly over-borrowed to the German and German capitalist groups. The Ottoman Empire, which fell into a semi-colonial position, had been heavily indebted to the German and German capitalist groups and had been under the hegemony of these groups. Turkey signed an agreement with Siemens on April 2018 for ten high-speed trains. The contract value, which is 340 million Euros, includes maintenance, repair and cleaning of the trains. In addition to this agreement, there are continuing talks on the modernization of the railways between the government of the Republic of Turkey and Siemens. The value of this modernization project is 35 billion Euro. In addition to this concession, credit negotiations between the Turkish government and the German government are emphasized. AKP governments convert the regime in Turkey within the framework of the ideology of neo-Ottomanism. Without taking lessons from the mistakes of Abdulhamid II, they are dragging Turkey into the same quagmire. In his work “The Eighteenth Brumaire of Louis Bonaparte” Karl Marx pointed out “all great world-historic facts and personages appear, so to speak, twice. The first time as tragedy, the second time as farce.” (p. 17). In this respect, his historical consciousness is still valid today.

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