Turkey’s Supreme Irony: Kayseri’s Business Globalists

The irony of the disdain expressed by Istanbul’s secularists toward Turkey’s small-town, “yokel” businessmen who so strongly support the AKP is a delicious one. Those small-towners are far more at home with globalization than the cosseted government-supported business elite of old ever was — or could be.

Today’s Turkish entrepreneurs do business directly with European and American companies and are sensitive to global economic trends. Their interests are tied to the health of Western markets and financial institutions.

This means in addition that they are sensitive to Western concerns about Turkey’s image and understand Western sensitivities when it comes to things Islamic. The AKP’s soft Islam is not only handy for backing off Kemalist stifling of the economy at home, but is good for business abroad too.

Perhaps nowhere in Turkey is the attitude of this new business class more clearly on display than in the Anatolian city of Kayseri. About 550 miles east of Istanbul, spread out on a volcanic plateau and surrounded by rich agricultural plains that stretch for hundreds of miles in all directions, Kayseri came late to industrialization.

The town was awarded an aircraft factory in 1926, shortly after the birth of modern Turkey, and over the years other factories came to Kayseri. Despite this, the city remained something of a backwater, displaying none of Istanbul and western Turkey’s sophistication or business vitality.

Kayseri was a place for small-scale manufacturing that drew little attention or support from the big-city bureaucrats who ran the economy and favored large enterprises.

All that began to change in the 1980s, when then-Prime Minister Turgut Ozal’s economic restructuring tilted the balance in favor of Kayseri’s small businesses. Money flowed into the town’s industrial zone, credit became far easier to obtain — and trade policy as well as exchange rates favored exports.

Small Anatolian manufacturers began taking orders from Europe and America and quickly became part of globalization’s supply chain. Furniture making and textiles did particularly well. Kayseri began booming and grew rapidly into one of the largest Turkish industrial zones.

The pace of growth was so fast that in 2004 the city applied to the Guinness Book of World Records for the most new businesses started in a single day: 139.

Kayseri had no obvious comparative advantage in the manufacture of furniture. The landlocked town was not close to the forests of the Black Sea nor to rivers, canals, or highway arteries that would cheaply bring wood to its factories.

Nevertheless, the city has emerged as the most successful furniture-making hub in Turkey, where some 3,500 companies make an average of 20,000 sofas and 8,000 armchairs a day, employing some 40,000 people. (From those numbers alone you can tell that the average firm size is quite small.)

Firms such as Boydak, which was an early mover and is now an industry heavyweight, have grown into global producers, doing for Kayseri and Turkey what IT did for Bangalore and India. The Kayseri furniture-making industry earned more than a billion dollars in export revenues in 2007.

Americans would more readily recognize the other major Kayseri export, Levi Strauss blue jeans. Orta Anadolu (the name means “Mid-Anatolia”) is today Kayseri’s number one exporter and one of Turkey’s most profitable companies. It is a giant in the denim business, supplying Levi’s European operations.

Orta was established in 1953 by 13 Kayseri traders. They imported weaving machines from East Germany to supply textiles to the home market. Protected by high tariffs and with easy access to Turkey’s ample cotton crops, the company had little competition and almost no need to be efficient.

Then in the 1980s, Ozal ended its government protection. Inefficient and exposed to competition, Orta fell on hard times and was almost bankrupt when two wealthy, 30-something Kayseri businessmen bought the company.

The new management revamped operations, trimming costs and cutting fat. Production shifted to exports, and the company worked its way back into the black. By the mid-1980s, Orta was producing denim for the export market. Levi Strauss took note, came to Kayseri to take a closer look and liked what it saw.

The American company sent engineers to teach Orta the tricks of the trade and help it retool its plants, taking advantage of cheap government credit set aside for exporters. By 1990, the Turkish company was producing world-class denim in quantities large enough to make it one of Levi’s three European suppliers.

Levi’s then helped Orta with design and marketing, and more generally turning Orta into a global player. The company now supplies several other global brands, including Wrangler, Rifle and Diesel.

Orta is not alone in making a killing in denim in Kayseri: Five of the city’s top 20 exporters are textile manufacturers and produce world-quality denim. The $2 billion Turkish denim industry accounts for 6.5% of the world’s production and clothes some 200 million people. Orta alone makes 1% of the world’s denim.

Virtually every major brand of jeans on earth today uses Turkish denim. What’s more, the lessons the industry has learned about doing business in the global market are benefiting other areas of textile manufacturing as well. The business acumen developed in Kayseri is also leading the way in construction, services, transport and tourism. Textiles and furniture have led the way to a much broader industrial revolution.

The up-and-coming business elite of Kayseri are conservative but fiercely pro-market and firmly committed to globalization. They rely on foreign investment and produce for Western markets, but are also expanding their businesses into the Middle East, the Balkans, Caucasus and Central Asia.

The Kayseri-based food products manufacturing giant, Ulker — the owner of Godiva Chocolatier — now has a vast business empire stretching from Europe into Central Asia in everything from construction to food products and media outlets. These business leaders believe in entrepreneurship and hard work rather than government patronage.

Even the city’s only non-AKP member of parliament said of his country in 2005, “Today Turkey is governed in the way in which Kayseri was governed for the past 15 years.” No wonder, then, that the AKP sweeps elections in Kayseri.

For these businessmen, Islam is simply a way of life, not a matter of political mission. They grew up in praying and mosque-going households, and many got to know one another — and still network — in Nurcu circles. In fact, Islamic gatherings in Anatolia’s small towns and cities act pretty much as do the Lions or Rotary clubs in countless American counties and cities.

The Islamic institutions in Turkey function well as places where businessmen can mingle, network and make deals. Secular businessmen, meanwhile, find it difficult to succeed in Kayseri because they are not in the right networks.

There is a grand new mosque in the heart of Kayseri’s business district, a testament to the city’s wealth along with its piety. But the Islam on display in Kayseri, and towns and cities like it across Anatolia, is not hard-edged fundamentalism and even less so an echo of extremism that inspires radicalism in Pakistan and the Arab world. Islam here is conservative but pro-Europe, pro-democracy — and above all pro-capitalism.

Anatolian businessmen combine religion, hard work and economic innovation in much the same way as did Calvinist Burghers of Northern Europe in the 16th century when capitalism was just starting out. What is at play is an Islamic version of that — an “Islamic Calvinism” as some have come to call it.

It is an ethic of hard work and savings, investment, and economic growth, combining strict piety with raging entrepreneurship. The description sits well with many in Kayseri, who readily identify with how Calvinists worked hard, prayed hard, saved money and then invested it in their businesses — and were comfortable being both rich and pious.

It is a common refrain in Turkey that work is a form of worship and, as Pope Benedict learned at the Blue Mosque, God loves businessmen. The political scientist Hakan Yavuz calls the ascent of these provincial businessmen the triumph of the “Anatolian-based Islamic bourgeoisie.”

Turkey today hosts little in the form of class warfare. The poor versus the rich has been replaced by the clash of two middle classes, their tastes and habits, political preferences and their contending visions of society and the economy. One is secular, the other devoutly Islamic.

Secularists’ worst fears about AKP rule seemed to be coming true in January 2008. It became known that the party’s draft of a new Turkish constitution — which had long been in the works as part of Turkey’s efforts to bring its laws into alignment with the EU’s demands — would omit the ban — dating back to Ataturk — on the wearing of headscarves in universities.

Once again this long-standing hot-button issue flared up. Secularists see the ban as a litmus test of loyalty to Kemalism, while the religiously minded see nullifying the ban as a matter of religious freedom.

They point out that nearly two-thirds of Turkish women wear a headscarf daily, while 70% of Turks think that college women who want to wear the scarf on campus and in class should be allowed to do so.

The fate of the AKP is anything but secure, and yet the truth is also undeniable that Kemalist ideology has decisively lost its grip on the Turkish public because the economic coalition that stood behind it has come undone.

Small-town values have combined with raw capitalism to become a powerful force in the culture. Commerce has both shackled state power and softened Islam’s hard edges.

The secularists fearing the AKP should take note that commerce has also tied the hands of the AKP. There are many more businessmen in AKP’s ranks these days, and it is rapidly becoming a party of tycoons.

Many challenges lie ahead for Turkey. The global recession will slow economic growth — and that may destabilize the political system, challenging the AKP’s primacy. The EU may also close its doors to full Turkish membership. Kurdish nationalism may flare up, causing a crisis.

The Turkish experiment is also threatened by the rise of a new brand of virulent nationalism that has been gaining ground over the past decade in reaction to Kurdish nationalism and separatism. The rising nationalism is intolerant and xenophobic. If it grows unchecked it will threaten state and society, democracy and capitalism.

But with all that said, Turkey has shown a promising way forward for the wider region.

If Turkey stays on its current course, it will become a Muslim capitalist democracy, and the face of Turkish modernity today will become the face of the wider Muslim world tomorrow, if the rising business leadership and its attendant new middle class get their way. The United States and its allies should do all that they can to help bring this outcome to pass.

Editor’s Note: This feature is adapted from FORCES OF FORTUNE by Vali Nasr, published by Free Press. Copyright 2010 Vali Nasr. Reprinted with permission of the publisher.