IRAs, governance and institutional constraints in Turkey

Turkey offers a good case for rapid diffusion of regulatory agencies (Jordana et al. 2011; Levi-Faur and Jordana 2005). It is also a good case for 'sticky' institutional legacies that are not conducive to implanting the IRAs, together with their accountability, vis-a-vis public and interest groups. Accordingly, regulatory reforms in Turkey have faced substantial difficulties brought about by the long history of a centralized and interventionist state, widespread use of executive discretion and the absence of consultation between the state and societal actors (Bianchi 1984; Heper 1985; Ozel 2003). Given such legacies, state actors (politicians and bureaucrats alike) tend to carve out large niches in which to intervene in the market and resist the power and privileges of the new regulatory institutions. Although the literature mostly addresses regulatory capture through the subordination of the regulator to the regulatees, the Turkish regulatory landscape also includes political capture, where the regulators with substantial de jure discretion become subordinated to the government or respective ministries (OECD 2010; Ozel 2012).

Despite the fact that Turkey recently built nine regulatory agencies (Ozel and Atiyas 2011; Zenginobuz 2008),1 a process of dismantling the authority and independence of the IRAs is evident (Ozel 2012). The 2000-2001 crisis, the most severe in Turkish history, created a receptive environment for regulatory reforms in Turkey (Bakir and Oni§ 2010).2 In an environment characterized by a sense of urgency to recover from the crisis, the relative power of the veto players weakened. Thus, based on the conditionality and pressure imposed by external actors, the IRAs were established with high levels of independence, a rather paradoxical institutional aspect given the unitary administrative system in Turkey (§anlisoy and Ozcan 2006; Sosay 2009; Zenginobuz 2008). From their inception, the IRAs, in blunt contradiction of the Turkish Constitution, were bestowed with an ambiguous status such that they were 'affiliated' to the respective ministries (Sezen 2003; Ulusoy 2003).

In such an ambiguous and contested context, both formal and informal rules about the IRAs have undergone various amendments regarding autonomy, authority and links with the executive since their establishment.3 First, agencies, which were initially provided with considerably high levels of autonomy and authority, began to work as 'extensions of the ministries'. Therefore, de facto independence of the agencies increasingly diminished despite the existence of de jure independence (Ozel and Atiyas 2011).4 Then, paralleling the decline in political will- for regulatory reforms and increasing centralization in the policymaking process, the executive increased its control over the IRAs, by and large hazarding their de jure autonomy as well. In 2011, two decrees (No. 643 and No. 649) made the regulatory agencies permeable to their respective ministries' intrusion, exemplifying the processes of backlash, 'political capture' and 'de-delegation' (Ozel 2012).5

Contestation over, and gradual increase of, accountability in Turkish IRAs

Lack of a strong political will and domestic demand, combined with the prevalent intra-bureaucratic rivalry, intensified contestation about the IRAs in Turkey and provided the executive with legitimacy to increase control over the IRAs.6 As independence declined, accountability of the IRAs vis-a-vis the executive, legislature and judiciary increased, as a parallel - if not causal - process (Ozel and Atiyas 2011). Yet, ambiguities and variation across the IRAs continue to prevail, particularly with respect to downward accountability.

Reporting requirements of the IRAs have increased over time. All IRAs are obliged to report annually to the Council of Ministers and the parliament's Planning and Budget Committee. Although the procedures are clear on this front, the content of reporting is left unclarified such that IRAs report in varying contents. The founding laws specified in part the content of the reports only in the cases of the Competition Authority and the Banking Supervisory and Regulatory Agency. Although the founding laws of the IRAs generally state that 'informing the public has utmost importance', the mechanisms of providing information are not clear. Such principles became even stricter through the EU harmonization process, which necessitated the enactment of the Right to Obtain Information Law (No. 4982) in 2003. Nevertheless, mechanisms are not yet adequately delineated.

Judicial oversight is another dimension of variation. For some IRAs such as the ICTA, judicial oversight is granted to regional administrative courts, while for others such as the CA and the BRSA, it is to the Council of State. There is also inconsistency and lack of clarity in terms of the conditions of appeal. Besides, the administrative courts and the Council of State lack expertise in technical matters of regulation (Sosay 2009). In 2004, the 'Thirteenth Department' of the Council of the State was established specifically to take charge in appeals against IRA decisions.

Financial accountability of the IRAs has increased over time. Financial auditing of the IRAs was formerly undertaken by a commission formed by the Inspectors of the Prime Ministry's Office, the Higher Auditing Board and the Ministry of Finance (based on the 7th article of Law No. 4743 in 2002). An important change in IRAs' financial auditing came about in 2005 with the legislation of Law No. 5018 on the Management and Control of Public Finances, which added the IRAs to the list of agencies subject to strict financial control of the Court of Accounts. The Circulars on Economizing Expenses issued in 2002 and 2007 restricted IRAs' financial autonomy further, requiring the direct approval of the minister for certain expenses.7

The State Auditing Board (SAB) published several reports on issues around accountability of the IRAs, including the BRSA and the ICTA, and pointed out concerns about upward and downward accountability (DDK 2010).8 While the SAB does not have any enforcement capacity, without which its reports are limited to a list of 'recommendations', its role in engendering a certain degree of awareness (contingent upon the reach of the reports) might have triggered recent changes in some accountability mechanisms.

 
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