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Analysis
Turkish uncertainty after election

Turkish uncertainty after election

Voters reject Erdoğan's ambitions

by David Tonge

Mon 8 Jun 2015

Where next for Turkey? The electorate has turned its back on the vaulting ambitions of President Recep Tayyip Erdoğan and welcomed the pro-Kurdish HDP (People's Democratic Party) to the Grand National Assembly. But no party has a majority. Will Erdoğan's ex-party, the AKP or Justice and Development Party, form a minority government, with HDP abstaining? Will it form a coalition with one of its opponents who today refuse the idea? Will the opposition attempt to form a coalition, and would Erdoğan allow it? Or will there be a fresh general election?

For the 59% of Turks who voted against AKP, it was a good result. But the markets saw it differently. The Turkish lira opened today 4%-5% down against the dollar and the Turkish lira-denominated Istanbul stock exchange index was down 8%. Weeks of uncertainty lie ahead. Can the economy handle this?

It has been a heated period, culminating in a bomb attack on a HDP rally two days before the voting which left two people dead and 100 injured. This was one of some 70 attacks on the HDP.

The election process was far from fair. The President flaunted Article 101 of the constitution which requires him to sever his relations with political parties and campaigned tirelessly in its favour. Media coverage was stacked in AKP's favour.

But, helped by the presence of 200,000 distrustful volunteer monitors, the count seems to have been relatively unbiased and the results were clear. AKP saw its share of the vote fall from 49.9% in 2011 to 40.8%. There was not one province where AKP's vote had not fallen compared with 2011. And HDP vaulted the 10% threshold, winning 78 seats which would otherwise have mostly been awarded to AKP.

In the municipal elections of March 2014, the Turkish electorate had seemed to set little store on the corruption allegations which had just forced the resignation of four ministers and lapped at Erdoğan himself. AKP still won 43.9% of the votes cast. The further fall seems a response to the slowing in the economy, the boorish, hectoring demands by Erdoğan for more powers for his Presidency, and his increasingly erratic behaviour.

It also reflected the hopes engendered by HDP and its charismatic leader, Selahattin Demirtaş. This cool-headed 42-year-old lawyer gathered the votes of many religious Kurds who had been voting for AKP and of others disturbed by Erdoğan’s long refusal to help the Kurds in Syria. And he became a focus for the many ‘white Turks’ – traditional secularists – who wanted to deny Erdoğan the seats which would allow him to reinforce the powers of the President, seeing him more as a putative Putin than an Obama or Hollande. Memories of the feared Abdullah Öcalan, the imprisoned leader of the PKK (Kurdistan Workers' Party), were buried – though Demirtaş was to thank him in his own post-election speech.
The mathematics are daunting. AKP has around 258 seats (18 short of a majority of the Assembly’s 550 seats), the traditional Republican People’s Party 132, the nationalist MHP (Nationalist Movement Party) 80 and HDP 80.

The initial statements by the parties about their willingness to enter a coalition are all negative. Their negotiations are unlikely to be facilitated by the President, who has his own agenda. Further, AKP may face its own internal battles, with Erdoğan possibly seeking to displace his anointed successor, Ahmet Davutoğlu, and Abdullah Gül, the former President, possibly emerging from the shadows.

None of this is good for the economy. Growth has slowed to around 3% this year, with the International Monetary Fund forecasting 3.6% for 2016. These are good rates compared with the EU but well below the 5.3% of the golden years of Erdoğan from 2003-10.

True, the construction industry has benefited under Erdoğan, but other sectors have fared less well. The current account deficit has grown and bodies such as the IMF and World Bank warn that preventing a further worsening requires a reduction in Turkey’s future growth.
June may prove a long month in Turkish politics. But the autumn may prove longer with Minister of State Ali Babacan no longer around to reassure investors and his friend, Dr Erdem Başçı, under pressure at the central bank.

David Tonge, a member of the OMFIF Advisory Board, is managing director of IBS Research & Consultancy.

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