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State Economic Enterprises and Revolving-Capital Enterprises

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The Political and Economic History of North Cyprus

Part of the book series: Palgrave Studies in Economic History ((PEHS))

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Abstract

The ‘spoils of war’ after division of Cyprus provided opportunity for the economic development of north Cyprus. However, the politicians were quick to realize the rentierist and rent-seeking opportunities for securing political power. This chapter shows how the policymakers used these opportunities to satisfy their own close clients and ignored the rest of the population. The chapter discusses the key law and modifications thereof that regulate the working of these semi-state-owned enterprises and provides an overview of histories of some of the significant enterprises, including the national airlines company (KTHY), the Electricity Board (KIBTEK) and the key agricultural product exporter (Cypfruvex), as well as other examples.

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Notes

  1. 1.

    The state refers to KTFD before 1983 and TRNC after that.

  2. 2.

    The word ‘Fasil’ indicates that the related law was first passed during the colonial period.

  3. 3.

    TFSC, Parliament Proceedings, 21 November 1975, pp. 27–28.

  4. 4.

    Ibid., p. 30.

  5. 5.

    Ibid., p. 34.

  6. 6.

    Ibid., p. 24.

  7. 7.

    TRNC Parliament Proceedings, 6 June 2005, p. 1003.

  8. 8.

    Ibid., p. 1006.

  9. 9.

    The relevant decision is AM.5/98–D.4/98 dated 26 November 1998.

  10. 10.

    Sonan (2014), p. 95.

  11. 11.

    TFSC Parliament Proceedings, 6 February 1976, pp. 88–90.

  12. 12.

    For example, the director of the executive board will be paid at least 10,000 TL/month, and other members of the board and the accountants will receive at least 8000 TL/month as part of Hakkı Huzur Tahsisati (honorarium allocation, Council of Minister decision #C-720-81, 2/9/81) which was on top of salaries they obtained at their own employment. (The minimum wage at this time was 13,000 TL.).

  13. 13.

    Aksoy (1994), p. 20.

  14. 14.

    Information on Second Joint Economic Commission obtained from TFSC Parliament Reports (10 November 1981), pp. 73–74.

  15. 15.

    TRNC Parliament Proceedings (30 June 1996), pp. 8226–8250.

  16. 16.

    TRNC Parliament Proceedings (6 January 1995), p. 4174.

  17. 17.

    The information in this paragraph is obtained from Lisaniler et al. (2013).

  18. 18.

    Available in Turkish at https://www.cumhuriyetciturkpartisi.org/8-subat-2017-iste-gercek-KTHY-Raporu.html.

  19. 19.

    Ibid. Original text is ‘KTHY’nin kurulduğu 4 Aralık 1974 ve uçmaya başladığı Şubat 1975’ten, 2005 yılına gelene kadar geçen 30 yıllık süreçte şirketin yeniden yapılandırılarak rekabet edilebilir hale getirilebilmesi için hiçbir ciddi adım atılmamış, mevcut yapı sürdürülegelmişti’.

  20. 20.

    Annual Report of Industry-Commerce and Tourism Ministry, 1977.

  21. 21.

    TR Commerce Ministry, 1979.

  22. 22.

    Mungan (1999), p. 130.

  23. 23.

    Cyprus Turkish Industrial Holding (1976).

  24. 24.

    Ibid., p. 43.

  25. 25.

    TFSC Parliament Proceedings, 6 February 1976, pp. 3–6.

  26. 26.

    We have introduced the details of the court’s decision in Box 4. Kenan Akin (one of the defendants) later became part of UBP and then DP and he came at crossroads many times with CTP. Hasan Sarica announced publicly (on Facebook) that he resigned from CTP membership in 2017 when CTP nominated the head of Chamber of Commerce as an MP candidate for 2018 elections.

  27. 27.

    İşçi Postası [Worker Post] Newspaper, 30/6/1982, front page.

  28. 28.

    TFSC Parliament Proceedings (11 March 1983).

  29. 29.

    İşçi Postası, 30/6/1982.

  30. 30.

    SPO (1987), p. 65.

  31. 31.

    On June 1983, the Council of Ministers approved appointment of an individual as a general manager (BK #:C(K-I)565-83) with gross monthly salary of 150,000 TL (six times more than the minimum wages), 5000 TL budget for guest expenditures, free boarding and a company car.

  32. 32.

    The information in this paragraph was obtained from the answer of the commerce and industry minister to the written question of Salih Usar (#175/4/88) on 5 December 1988.

  33. 33.

    TRNC Council of Minister decision number E(K-2) 1203-87.

  34. 34.

    TRNC Council of Minister decisions number, respectively, E(K-2) 1203-87 and E(K-2) 238-88.

  35. 35.

    Cyprus Turkish Industrial Holding (1991), p. 20.

  36. 36.

    Erdim (2014), p. 376.

  37. 37.

    TRNC Central Bank Bulletin, No. 14, December 1990, Table 2, p. 11.

  38. 38.

    Mungan (1999), p. 135.

  39. 39.

    Erdim (2014).

  40. 40.

    All of the information in this paragraph are taken from Mungan (1999), p. 128.

  41. 41.

    KTTI, 1980 Activities Report.

  42. 42.

    TFSC Parliament Proceedings (11 March 1983).

  43. 43.

    These numbers are obtained from TRNC Parliament Proceedings (5 April 1996), pp. 6147–6168.

  44. 44.

    Cyprus Turkish Industrial Holding (1976).

  45. 45.

    The information on this are obtained from Ziye Necatigil’s speech at the parliament which is available at TFSC Parliament Proceedings (10 March 1976), pp. 10–17.

  46. 46.

    Ibid., p. 17.

  47. 47.

    For amounts of citrus fruit exports/imports, please refer to TRNC Ministry of Agriculture (2003).

  48. 48.

    There is also “other” category for exporters who had less than 10% market share between 1988 and 1990 but increased their share after Sunzest went bankrupt and Cypfruvex continued to be managed poorly.

  49. 49.

    TRNC Parliament Proceedings (2 October 1989), p. 416.

  50. 50.

    Ibid., p. 417.

  51. 51.

    Ibid.

  52. 52.

    TRNC Central Bank Bulletin, No. 23, May 1995, Table 2, p. 9.

  53. 53.

    Mehmet Civa (CTP ) would make this accusation in the parliament on that day, but other MPs would blame the high-level government officials including the president for having close personal relationships with Asil Nadir (the owner of Sunzest) and providing him with unfair advantages in the markets his firms were operating.

  54. 54.

    TRNC Central Bank Bulletin, No. 23, May 1995, Table 2, p. 9.

  55. 55.

    The market shares for 1986–2003 are taken from TRNC Ministry of Agriculture and Natural Resources, 75-2003 Agricultural Statistics Almanac, Table 36 available at http://www.tarim.gov.ct.tr/tr-tr/istatistik.aspx.

  56. 56.

    Andreou (2015).

  57. 57.

    We don’t know the electricity rates before 2000; hence we cannot calculate the total potential revenues prior to this date.

  58. 58.

    Erdal & CO (2012), Independent Audit Report of KIBTEK covering 1 January 2010 to 31 December 2010, page 4, Nicosia.

  59. 59.

    I don’t have the tariff rates before 1995 and I also don’t have the amount of electricity usage between 1995 and 2004. Thus, the potential revenues cannot be calculated before 2004 except for 1995.

  60. 60.

    TRNC SAC (2012), p. 20.

  61. 61.

    TRNC Parliament Proceedings (6 January 1995), p. 4172.

  62. 62.

    TR Aid Office (2014).

  63. 63.

    Ibid., Table 25. The same source reveals that the permanent personnel salaries make up 68% of total employee expenditures and worker salaries are 27% of the total. The remaining 5% is for ‘other’ personnel.

  64. 64.

    Yucel (2015).

  65. 65.

    ‘Worker’ status is given to full-time employees who work at technical positions in the government, and their salary scale is significantly less than full-time civil servant’s scale.

  66. 66.

    TR Aid Office (2014).

  67. 67.

    TRNC SCA (2014).

  68. 68.

    Diler (2015), p. 233.

  69. 69.

    I have contacted the producer of this report and asked for full manuscript and methodology of how the price is calculated, but despite my numerous attempts, I was not able to obtain such details.

  70. 70.

    http://www.toprakkurumu.org/site/sayfa.aspx?pkey=2.

  71. 71.

    TRNC Parliament Proceedings, 29 January 1993, p. 5004.

  72. 72.

    Ibid., p. 4998.

  73. 73.

    TRNC Central Bank Bulletin, No. 25, May 1997, Table 2, p. 8.

  74. 74.

    Turkish Republic Aid Office (2014).

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  1. William Paterson University, Wayne, NJ, USA

    Tufan Ekici

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Ekici, T. (2019). State Economic Enterprises and Revolving-Capital Enterprises. In: The Political and Economic History of North Cyprus. Palgrave Studies in Economic History. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-13479-2_7

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  • DOI: https://doi.org/10.1007/978-3-030-13479-2_7

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