President Recep Tayyip Erdogan’s Syria policy has put Turkey between the proverbial rock and hard place. The looming disaster of a fresh wave of refugees awaits in the last rebel-held province of Idlib, while tensions with Kurdish fighters east of the River Euphrates are nearing a boil.

In response to the half million asylum seekers the Syrian government advance could unleash from Idlib, Erdogan has threatened to open the gates and allow Syrians to cross into Europe.

Meanwhile, at a meeting of provincial heads of the ruling Justice and Development Party (AKP) last week, the president said he would build luxurious houses in the safe zone that Turkish and U.S. officials are creating east of the Euphrates to assuage Turkish security fears over Syrian Kurdish militias.

Erdogan said at least 1 million of the 3.6 million Syrians in Turkey could stay in the safe zone, and that his government would build houses with gardens for them free of charge. Turkey’s cost of sheltering refugees since the Syrian conflict began has reached some $40 billion, Erdogan added.

In 2016, Turkey agreed to stem the flow of migrants to Europe as part of a deal with the European Union in which the bloc agreed to speed up the disbursement of 3 billion euros it had already allocated to Turkey to cope with the influx of refugees, and provide another 3 billion euros, if Turkey kept its side of the bargain.

Erdogan said Turkey had so far received only around half of that amount, a claim that European Commission spokeswoman Natasha Bertaud quickly rejected.

She said Turkey had received 5.6 billion euros, and the rest would be transferred in due course. Additional funds could also be made available to Turkey after further negotiations, Bertaud said.

Erdogan wants the funds transferred directly to his government, which would allow him to spend them as he sees fit. But the EU is unwilling to directly fund a government that is accused of corrupt and non-transparent tender practices.

The agreement stipulates that funding is sent to finance projects through the mediation of official EU institutions, European development and investment banks, and UN institutions.

Meanwhile, Erdogan has continued to pile the pressure on the United States, which is acting as a mediator in the creation of a safe zone in Syria.

The Turkish government has consistently threatened to launch an attack on the Syrian Kurdish People’s Protection Units (YPG) and allied militias that control territory across its border, which it views as extensions of outlawed Kurdish armed groups in Turkey. Yet the United States has fought alongside the YPG against Islamic State, and has agreed to mediate the safe zone in order to prevent a Turkish attack.

If the safe zone is not established to his satisfaction by the end of the month, Erdogan has said, Turkey would move unilaterally against the YPG. This threat came not long after his threat to open the gates and flood the EU with migrants, and the two are related.

Domestic discontent over the presence of the large population of Syrians hit a peak this year, and Erdogan has frequently discussed plans to send refugees back over the border to Syria.

The president is hoping to whip up international financial support for a model that will see new settlements built for the Syrian refugees in territory taken over by Turkey.

That could involve building houses of between 250 to 300 square metres with up to 150-square-metre gardens, Erdogan has said. To do so, the president plans to enlist the Public Housing Development Administration (TOKI), Turkey’s government-backed housing agency.

TOKI is known in Turkey for its involvement in some of Turkey’s most disputed development plans in recent decades, including construction projects that have seen public land turned over to government-linked contractors for building at a huge profit.

This could give a taste of who on the Turkish side would benefit from the project. With the construction sector in dire straits, this must be a tempting prospect for Erdogan.

The question of who will pay has already been the subject of sharp debate in Turkey, where many have questioned whether such an expensive project is realistic.

The president previously said he would seek funding for such a project from the United States, the EU and the World Bank, as well as Saudi Arabia, Qatar and the United Arab Emirates, and that Turkish contractors would be called on to bring it to life.

In January, Erdogan said he had discussed the project with German Chancellor Angela Merkel and Saudi Crown Prince Mohammed bin Salman, and both had responded positively.

“In fact, I raised the topic with the Saudi crown prince at the G-20 summit in China and he said he would give a certain amount for it, but sadly none of them have given any serious support,” Erdogan said at the time.

With a budget deficit of 70 billion liras ($12.1 billion) and the central bank and Treasury reserves stretched paper-thin, there is no chance Turkey could fund such a project alone. Thus, finding the cash for Turkish-built housing in the safe zone will require serious negotiations with potential partners.

Turkey’s economy has long been on a downward trend, but has taken a real battering since a currency crisis last year sparked a recession. The figures from the second quarter of this year show the economy has continued to contract, with investment down by 23 percent and GDP dragged below the level it reached 12 years ago.

Even more important is the state of Turkey’s construction sector, which for the last year and a half has seen hundreds of companies put out of business or forced to file for bankruptcy protection.

The sector shrank by 13 percent in the last quarter, while investment in construction fell 29 percent. Housing sales have continued to fall, leaving an unsold housing stock of nearly 1 million.

The August 2019 report from the Association of Construction Materials Producers (IMSAD) revealed a 60-percent decrease in building permits in the first half of this year. The sharp fall in new constructions has led to a 20-percent decrease in production of construction materials.

If Erdogan is somehow able to rustle up the funding, the safe zone housing project could kill two sizable birds with one stone: address growing public anger at the continuing presence of millions of Syrians in Turkey, and prop up the crumbling construction sector, which includes close allies that have helped keep him in power.

Ahval

Reporter’s code: 50101