The business environment is likely to become even more toxic as Erdogan's administration targets companies which are deemed to oppose him. The state seized Bank Asya and Koza Ipek Holding — businesses with close links to Erdogan's bitter rivals, the Gulen movement — in 2015.
Gulen-linked companies have not been the only targets of the government, however. Following the 2013 Gezi Park protests, when Koc Holding's Divan hotel provided shelter to demonstrators fleeing the police, the conglomerate was subjected to an aggressive tax probe and was stripped of a tender it won to construct naval vessels. Such incidents could well occur on a more regular basis as Erdogan excludes parties from big projects whose loyalty is, at best, questioned.
There is no denying Turkey has immense market potential. This is not least because of its 75 million plus consumers and solid economic growth estimated by our sister company Wood Mackenzie at 3.6 percent of GDP in 2016. But President Erdogan risks exacerbating political and economic risk to a degree that market potential increasingly become a secondary consideration for investors.
Clarification: This piece has been updated at the author's request in light of recent developments in Turkey.
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