Public Made, Public Operated, Public Earned: The Constitutive Logic of Revenue Sovereignty
Turkey's first Bosphorus bridge opened in 1973: July 15 Martyrs Bridge.
In 1988 came the second bridge: Fatih Sultan Mehmet Bridge.
These two bridges are not the political project of any particular era, but the product of the Republic's public investment approach. The state borrowed, built, operated and collected the revenue. Costs were paid over the years. The bridges have completed their depreciation. What is left? Continuous, regular and reliable public revenue.
Here we need to pause and think.
When an infrastructure investment is completed, two things happen. Either the investment remains only a physical asset or it starts to generate a financial flow. Bosphorus bridges fall into the latter category. They are not just means of transportation; they are instruments of public finance that generate regular cash flows.
At this point, it is important to remember an important fact: Infrastructure is not just concrete. Infrastructure generates revenue. And the capacity to generate revenue is part of the sovereignty of the state.
Sovereignty is not only about drawing borders. Sovereignty is not only a security apparatus. Sovereignty is the capacity for fiscal decision-making. The state's ability to raise resources in times of crisis, to implement social policy and to provide economic direction is directly proportional to the revenue instruments it possesses.
Bosphorus bridges are not ordinary investments:
They are transit lines with no alternatives.
There is a daily flow of essential traffic.
Demand risk is low.
The revenue stream is continuous.
These are qualities that any private sector investor would dream of. Because such assets provide low uncertainty, predictable and long-term income. In the economics literature, such assets are defined as “cash-generating strategic assets”. For the social state, it has a different meaning: This income is the capacity to finance social policy without raising taxes.
Public finance has three pillars:
Tax
Borrowing
Public operating income
The Bosphorus bridges were one of the strongest examples of the third pillar. The state was not only a tax collector but also a revenue generator.
This distinction is vital.
Tax is an instrument with political costs.
Borrowing is an instrument that burdens the future.
But public enterprise income is a regular source of production.
Fiscal independence increases when the state has operating income. This independence means not only budget balance but also policy flexibility.
This model had another characteristic: Price sovereignty. If the state wished, it could regulate tolls for social purposes. It could offer discounts in times of crisis. It could provide free passage in times of disaster. Because the right to operate was in the public domain.
This is what sovereignty is all about: The power to dispose of income.
This was basically the understanding of infrastructure until the 2000s. It may be slow, it may be limited, but public revenue and public control were essential.
This model was not perfect. There could be financing problems. Investments were slower. But the basic principle was clear: If the public bears the risk, the public bears the return.
This principle is the foundation of fiscal sanity.
Depreciated infrastructure is no longer investment. It is an instrument of financial sovereignty. The long-term transfer of the right to operate such an asset means the de facto transfer of revenue sovereignty, even if ownership is not transferred. This is because sovereignty is not only ownership but also the power to dispose.
The Republic's understanding of public investment positioned the state as an active economic actor rather than a passive regulator. The state was both investor, operator and revenue generator.
Then the paradigm shifted.
This change was not only a change in the financing model. It was a transformation of the economic role of the state.
After 2002: “No Money Out of the Coffers” Discourse and the Establishment of the Guarantee State
After 2002, infrastructure investments really accelerated. Motorways, bridges, tunnels, city hospitals... The AKP government led by Recep Tayyip Erdoğan made infrastructure the showcase of growth. The ’we are doing it“ discourse became the center of politics.
This is a period of quantitative growth. Kilometers increased. The number of bridges increased. Tunnels increased. Airports increased. Infrastructure visibly expanded.
But the question was: How is it done?
Answer: Build-Operate-Transfer (BOT).
The BOT model is theoretically a model of cooperation between the public and private sectors based on risk sharing. The state does not finance the entire investment from the budget. The private sector builds the project, operates it and transfers it to the state at the end of a certain period.
On paper, the model is this:
Risk is shared.
The financing burden eases.
Investment accelerates.
In practice, however, the model was structured differently.
Among the major projects built with this model are the following:
Osmangazi Bridge
1915 Çanakkale Bridge
Common features of these projects:
Daily vehicle pass guarantee
Currency (USD/Euro) based fee
Long-term (15-25 years) contract
Public obligation to pay the demand difference
When these four elements are considered together, the result is not classic risk sharing, but risk asymmetry.
Let's be concrete.
The daily guarantee for the Osmangazi Bridge was around 40 thousand vehicles. Realized traffic was significantly below this in the first years. The difference was paid by the public.
This means the following: If demand expectations do not materialize, the investor does not make a loss. The public makes up the difference.
The daily guarantee for the 1915 Çanakkale Bridge is around 45 thousand vehicles. Actual passage in the first years was well below this. The difference was again covered by the public budget.
There is a systematic mechanism here.
Demand forecasting is highly determined by the private sector.
If realization is lower, the difference is paid by the public.
The risk is expropriated.
Now let's get to the most critical point: Foreign exchange.
In the 2009-2013 period, 1 dollar was around 1.5-3 TL.
After 2023, 1 dollar rose above 20 TL.
Same contract.
Same amount of guarantee.
But the exchange rate multiplier has changed.
So same project, same traffic, but the public burden has multiplied.
Example.
Let's assume a guaranteed difference of 150 million euros per year.
When the Euro was 5 TL:
750 million TL.
When the Euro is 25 TL:
3.75 billion TL.
The difference: 3 billion TL.
This difference does not appear as “debt”. But it comes out of the budget.
The critical point here is this: This payment does not appear directly in the public debt stock. However, it creates a de facto debt effect. Because a regular and compulsory payment obligation has been created.
This is called a “conditional obligation” in the literature.
In Turkish: Hidden debt.
The most repeated phrase of the AKP was this:
“We did it without any money from the state coffers.”
This is not true.
Maybe the money didn't come out today.
But there was a 20-25 year payment commitment.
This debt has been pushed off the balance sheet.
There is a very important financial fact here.
While the state could borrow around %8-9, the private sector's financing cost was in the -14 band. For a $10 billion project, this interest rate differential means billions of dollars in additional costs at the end of 20 years.
This means this:
If the state had borrowed directly, it could have financed it at a lower cost.
But more expensive financing was provided through the private sector.
The difference was compensated either by guarantees or tolls.
So the citizen paid.
At this point, it is no longer a question of technical financing choices. It is the transformation of the role of the state.
And here a new type of state emerged:
It is not the producing state,
The guarantor is the state.
This distinction is decisive.
A productive state takes risks but generates income.
The guaranteeing state takes the risk, but the revenue is contractual.
Who is at risk?
Public sector if demand falls
If the exchange rate increases, the public
If financing is expensive, public
Who gets the return?
Contract holder.
This is not equal partnership.
This is the nationalization of risk and privatization of return.
What emerges here is not classical privatization. Because the ownership may not have been transferred. But the revenue mechanism is contracted.
The state assumed fiscal risk to increase the pace of investment, but limited its sovereignty over revenue.
This is not an expansion of fiscal capacity; it is tying it to the future.
The BOT model is not theoretically bad. However, if the risk sharing is not symmetric, if the FX-based guarantee puts the exchange rate risk on the public, and if the contracts create long-term fixed payment commitments, the model ceases to be investment financing and generates vulnerability for the public budget.
At this stage, the state ceased to be an investor and became a contract guarantor.
This is where the first contraction of fiscal sovereignty begins.
But the real break is not yet complete.
Because, new projects aside, the real issue is the transfer of the operating rights of depreciated public bridges and highways.
What is transferred there is not risk.
It is a ready income stream.
Bosphorus Bridges and Rent Transfer: If Not a Sale, What Is It?
July 15th Martyrs Bridge
Fatih Sultan Mehmet Bridge
These two bridges were built in 1973 and 1988. Their costs have risen over the years. There is no demand risk. No alternative. The backbone of Istanbul traffic.
The economic definition of such infrastructure is clear: guaranteed cash flow.
The critical concept here is the depreciated strategic asset.
Depreciated infrastructure is no longer an investment. It is a financial instrument that generates continuous income. Such an asset provides regular and predictable cash flows for the state budget. This cash flow is one of the main instruments for social spending, for fiscal expansion in times of crisis and for producing public services without tax increases.
Now the question is:
If these bridges were not sold but the operating rights were transferred for 20-25 years, what happened?
Property remains with the state.
But the revenue stream goes to private enterprise.
One could say that this is not technically “privatization”.
But the economic outcome is the same: Revenue comes out of the public purse.
This point requires conceptual clarity.
Privatization is not just a transfer of ownership.
Revenue devolution is also de facto privatization.
Let's be concrete.
Let's assume that the annual net revenue potential of these two bridges is the equivalent of 1 billion dollars (a realistic band given traffic volumes and toll levels).
For 25 years:
1 billion × 25 = 25 billion dollars.
This is gross potential income.
Now let's think:
Let's say this operating right is transferred for 5-6 billion dollars.
What happened?
25 billion in regular, low-risk, strategic revenue streams were traded for $6 billion in upfront collections.
What does this mean in the finance literature?
Disposal of a high-yielding long-term asset for short-term cash needs.
This is not investment.
This is balance sheet engineering.
Here, a long-term high-yielding asset was introduced to cover the budget deficit or to meet short-term cash needs.
This is not fiscal sustainability.
This is short-term relief for long-term loss of revenue.
And here the concept needs to be clear:
This is not risk transfer.
This is rent transfer.
What is rent?
Guaranteed income without risk.
Transferring the right to operate depreciated bridges with guaranteed demand is not transferring the investment risk. It is transferring a ready revenue stream.
At this point, system criticism is imperative.
If the state transfers a new and risky project to the private sector, we can talk about risk transfer.
But if the risk has disappeared and demand is already guaranteed, what is transferred is not risk but profit.
For a social democrat, the issue starts right here.
Because public finance is based on three sources:
Tax
Debt
Public operating income
If you weaken the third pillar, two options remain:
Either you increase taxes.
Either you borrow money.
This math is simple.
When public operating income weakens, the budget deficit increases.
When the budget deficit increases, either taxes go up or debt goes up.
In both cases, the financial burden returns to society.
In other words, the transfer of operating rights is indirect tax pressure or indirect debt pressure.
And it is not only a financial issue.
It is a question of intergenerational justice.
A 25-year transfer of operation means:
Today's political decision narrows the fiscal space of the next 3-4 governments.
Today, money is taken in advance.
But tomorrow there will be a loss of regular income.
This regular loss of income narrows the scope for social spending in times of crisis.
For example, in times of economic contraction, the state may want to reduce tolls. But if the operating rights have been transferred, this decision is stuck in the contract.
It may want to provide free passage in times of disaster. But the contract sets limits.
Price dominance disappears.
This is not only a financial but also a political contraction.
Now let's put the question clearly:
Should the state use the revenue from Istanbul's mandatory transit line for social policy?
Or should this income be used as collateral for financing contracts?
This is not technical.
This is an ideological choice.
And this choice has been made systematically in favor of financialization in the post-2000 period.
Infrastructure has grown.
But the income regime has been marketized.
The state has ceased to be a producer.
It has become a guarantor state.
At this point, the system has become the following:
In new projects, the risk is public and the return is contractual.
In older projects, a ready-made revenue stream is the subject of the circuit.
In other words, both future income and present income are tied to the contract mechanism.
This is no longer a discussion of individual projects.
This is an income regime transformation.
And here the debate has to become even more fierce.
Because this model cannot be explained solely by the preference of the government.
It should also be discussed whether the opposition has been able to build a clear alternative to this regime.
The Rent Regime, the Opposition's Breaking Moment and the Problem of No Alternative
It must now be named: The infrastructure model in Turkey is a rent regime.
Rent is a guaranteed income stream that is independent of production risk.
If you're in a project;
If demand falls, the public pays,
If the exchange rate increases, the public pays,
If the cost of financing is high, the public covers the difference,
But if revenues exceed expectations, the profits remain in the private sector,
there is no classic market risk there.
There is publicly secured rent.
The Osmangazi Bridge and the 1915 Çanakkale Bridge are typical examples of this mechanism.
But it is not only about these projects.
If the operating rights of depreciated and demand-guaranteed public assets such as the July 15th Martyrs' Bridge and the Fatih Sultan Mehmet Bridge are being transferred, have been transferred, or are being considered for transfer, this is not an investment model, but a contractualization of the ready flow of rent.
At this point, the technical debate ends and the political debate begins.
In the post-2002 period, the government led by Recep Tayyip Erdoğan used infrastructure as an engine of growth. But it also tied long-term revenue streams to financial contracts. This was a conscious choice. The public assumed risk to accelerate the pace of investment.
But this choice put fiscal sustainability on the back burner.
The problem is this:
Is this model development or contractual income transfer?
And now to the more difficult question.
What did the opposition do?
Under Kemal Kilicdaroglu, the CHP has been paying guarantee payments and “gang of five” and brought the discourse to the agenda in a strong way. The criticisms were justified. The public burden was made visible.
It went even further.
Kilicdaroglu ‘We will nationalize BOTs’ He said.
For the first time, this was a political statement targeting the model itself. Because expropriation means taking back the sovereignty of income. This is not only a criticism of the contract, but a criticism of the regime.
However, the alliance partners at the time did not support this approach.
Some alliance components, including Ali Babacan and Meral Akşener, opposed the nationalization discourse. The arguments cited included the risk of international arbitration, investor confidence, legal sanctions and economic stability.
There was a break at this point.
Model criticism withdrawn.
The rhetoric of expropriation has been softened.
The debate boiled down to the cost of the contract.
But the issue was not the cost, it was the system.
This retreat showed that:
Opposition actors could criticize,
But it could not put forward an institutional and clear alternative to the financialized infrastructure regime.
Afterwards, the new CHP leadership did not raise this issue again strongly.
This silence is no coincidence.
Because it is not just about guarantee payments. It is about the income regime.
Unless it is said that depreciated strategic infrastructures will remain in the public sector,
Unless it is said that FX-based guarantee contracts will be structurally banned,
Unless it is said that public operating capacity will be re-established,
Unless the primacy of public interest over contractual supremacy is explicitly advocated,
the regime continues.
Power can change.
But the rent regime remains.
The fundamental question here is this:
Will Turkey see infrastructure as a showcase for growth?,
or as a fundamental element of income sovereignty?
Will the state become a guarantor of long-term revenue streams to financial markets?,
or is it a public actor that produces, operates and uses the income for social balance?
At this point, the Manifesto of Publicist Republican Infrastructure becomes imperative.
Strategic and depreciated assets cannot be transferred.
July 15th Martyrs Bridge
Fatih Sultan Mehmet Bridge
These bridges are no longer investments.
These are public assets that generate regular revenues.
This type of infrastructure has no alternatives, its demand is close to guaranteed, its cost has been recovered and it generates continuous revenue.
The long-term transfer of the right to operate these assets is not a transfer of risk, but a transfer of rent.
Foreign exchange guaranteed contracts should be banned.
Osmangazi Bridge
1915 Çanakkale Bridge
FX guarantees shift the exchange rate risk to the public sector.
A currency shock multiplies the fiscal burden.
This model protects the investor; it makes the public vulnerable.
If investment is to be made, demand risk will be shared, an upper bound mechanism for exchange rate shocks will be put in place and surplus revenue will be shared with the public.
Public operating capacity must be rebuilt.
State management is not an ideological choice but a fiscal rationality.
If the state can borrow at a cost of 8 percent, being dependent on financing at a cost of 14 percent is working at public expense.
A Public Infrastructure Fund should be established.
Strategic infrastructure revenues should not be made invisible.
It should be collected in a transparent, auditable fund structure.
Revenues should be used to finance social policy.
New projects should be financed by their own revenues.
Intergenerational fiscal balance must be maintained.
Contracts should be publicly available.
Renegotiation mechanisms should be put in place in times of currency shocks and crises.
Because in the constitutional order, it is the public interest, not the contract, that prevails.
The outcome is clear.
Infrastructure size can be an indicator of development.
But the income regime of infrastructure shows the character of the regime.
If the risk remains public and the gain remains private;
if long-term revenue streams are traded for short-term budgetary comfort;
if public operating capacity is being deliberately weakened;
There is not a technical but an ideological preference.
This preference is a rent regime in name only.
The nationalist Republican model is not romanticism.
This model is fiscal sanity.
This model is sovereignty.
This model is the social state.
Bridges can be concrete.
But the income regime is political.
And politics determines whose side the state stands on.