Global Courant 2023-05-12 12:08:47
Turkish President and Justice and Development Party (AK) leader Recep Tayyip Erdogan speaks as he and his wife Emine Erdogan attend an election rally in Mardin, Turkiye on May 10, 2023.
Turkish Presidency | Handout | Anadolu Agency | Getty Images
Turkey is holding both its presidential and parliamentary elections on May 14, and it could hardly come at a more polarized time for the country of 85 million.
Just three months after devastating earthquakes killed more than 50,000 people there, the country that boasts The second largest army in NATOhouses 50 US nuclear warheads, takes in 4 million refugees and arrested one important role in the mediation between Russia and Ukraine looks at an economic crisis that has been years in the making.
Incumbent President Recep Tayyip Erdogan is fighting for his political life after two decades in power, having served as Prime Minister of Turkey from 2003 to 2014 and as President since 2014. He rose to prominence as mayor of Istanbul in the 1990s, and was celebrated in the first decade of the new millennium for transforming Turkey’s economy into an emerging market power.
But recent years have been far less rosy for the religiously conservative leader, whose own economic policies have created a cost-of-living crisis. Tensions between Turkey and the West are regularly rising, with both international and domestic voices sounding the alarm that Turkish democracy is looking less democratic by the day.
“Under Erdogan’s leadership, Turkey has provided perhaps the most vivid example of how a state with plausible, functioning institutions and a relatively effective rule of law can be subsumed under the will of first a ruling party and ultimately a single individual,” said Hussein Ibish. , a senior resident scientist at the Arab Gulf States Institute in Washington, told CNBC.
‘A moment of high anxiety’
The frequent arrests of journalists, the forced closure of many independent media outlets, and the tough crackdown on protest movements in the past — as well as a constitutional referendum in 2017 that vastly expanded Erdogan’s presidential powers — all point to what many believe is a drift toward autocracy.
Now, given the recent slump in support for Erdogan, some fear he will play dirty to secure his grip on power. His main competitor is opposition leader Kemal Kilicdaroglu, leader of the center-left Republican People’s Party (CHP), who is running for the unity of six different parties that all want to see Erdogan removed from power.
“This will definitely be the biggest electoral battle Erdogan has faced since he came to power in 2002,” said Ryan Bohl, senior analyst for the Middle East and North Africa at Rane.
There is also anger at the government for its slow response to a series of devastating earthquakes in February that killed more than 50,000 people in both Turkey and Syria, especially over corrupt practices that allowed construction companies to circumvent building safety regulations. But the vast majority of Turks in the affected areas are longtime supporters of Erdogan’s party, the AKP, and seem confident in Erdogan’s promise to rebuild those cities within a year, analysts say.
The stakes are high for the whole country and, more generally, for global geopolitics – and the mood on the ground is tense. Polls are very close and most show Kilicdaroglu right now, but not much. Many ask: if Erdogan loses, will he actually leave?
Turkish President Recep Tayyip Erdogan addresses the press after earthquakes measuring 7.7 and 7.6 on the Richter scale struck Turkey’s southern provinces on February 7, 2023 in Ankara, Turkey.
Mustafa Kamaci | Anadolu Agency | Getty Images
“I am very concerned that (Erdogan) will use underhanded tactics, deception and even violence,” Ibish said. “That can of course provoke extreme measures from the other side. So it is a moment of great fear.”
CNBC has reached out to the Turkish presidency office for comment.
The presidential election has two rounds. If no candidate wins more than 50% of the vote in the first round – which is widely expected – the vote moves to a second round to be held two weeks later.
Turkey’s economy: a reckoning
The Turkish economy has been in a downward spiral for the past five years, in which the currency, the liralost 77% of its value against the dollars, inflation has exploded and unemployment has largely worsened. Turkey’s official inflation rate is over 50%, although economists say it is actually over 100%.
“The economy is at the top of the agenda of ordinary Turks and is the driving force behind the declining support for the government,” said Bohl van Rane. “If Erdogan and the AKP lose power, it will be almost entirely on economic grounds.”
Erdogan has largely refused to raise interest rates despite rising inflation, insisting against all economic orthodoxy that rate hikes exacerbate inflation, rather than the other way around. This, along with costly interventions by the central bank to prop up the lira, which has led to dwindling foreign exchange reserves, has sent Turkey’s foreign investors running for the hills in recent years.
The current monetary tools that Erdogan’s government is using to give the economy a semblance of stability are unsustainable, economists warn, and will have to be discontinued after the election — likely leading to serious volatility.
“The currency must collapse if he (Erdogan) wins, because there will be no confidence and he has created this artificial scenario that cannot be sustained for an extended period of time,” Mike Harris, founder of Cribstone Strategic Macro, boldly predicted. in February.
If the election goes smoothly, “I think we will see an increase in investment in Turkey,” said George Dyson, a senior analyst at Control Risks, adding: “This will be particularly the case if the opposition wins – it will show off with Turkey’s democratic credentials. and allay concerns about the rule of law.”
But a number of challenges loom: A potential breakup of the opposition alliance, if they win, could “create negative momentum in the economy,” Dyson warned. And worse, if the election results are contested by the loser, with claims of voter fraud, confidence in the economy will deteriorate dramatically, he predicted.
View over the tourist area of Istanbul, Turkey, on October 27, 2022.
Rita Franca | Nurphoto | Getty Images
Kilicdaroglu and his opposition coalition are proposing a very different economic path if they win.
“Importantly for investors, the opposition wants to return to an orthodox monetary system versus the heterodox policymaking of the incumbent government,” Goldman Sachs analysts wrote in a research note Thursday.
But in either case, “one should not expect miracles overnight, as attempts to contain inflation with higher rates are likely to cause currency shocks in the near term,” warned Hakan Akbas, general manager of strategic advisory services, based between Istanbul and Washington. . “However,” he added, “a new political leadership with a credible, capable economic team will gain more support and patience from investors.”
What next for NATO-Ukraine relations?
Despite Turkey being a long-standing member of NATO, a trademark of Erdogan’s has been sparring with his Western counterparts, criticizing them at home and strengthening ties with Russia. His frequent anti-Western rhetoric and continued opposition to Sweden’s bid to join NATO has increased tensions with European and US leaders – something Kilicdaroglu promises to reverse.
“Turkey is a member of the Western Alliance and NATO and Putin knows this well,” said Kilicdaroglu told the Wall Street Journal in an interview this week. “Turkey must abide by NATO decisions.”
Kilicdaroglu also wants to “prioritize close economic relations with Europe in particular, while the current nonaligned policy stance of the incumbent government is likely to continue,” Goldman Sachs analysts wrote in their note.
Turkish President Recep Tayyip Erdogan (L) meets with Russian President Vladimir Putin (R) at the 22nd Meeting of the Shanghai Cooperation Organization (SCO) Leaders’ Summit in Samarkand, Uzbekistan on September 16, 2022.
Anadolu Agency | Anadolu Agency | Getty Images
Still, Turkey’s leading role in negotiating the UN-brokered Black Sea Grains Agreement, which has helped vital Ukrainian food exports reach the countries they need, is likely to continue regardless of who takes power. Country analysts also believe that if Erdogan wins, he will eventually agree to Sweden’s NATO membership and continue to try to mediate between Ukraine and Russia.
But the strength of Erdogan’s nationalism and popularity in Turkey means that “even if he loses, his national presence and political influence will not have disappeared,” Ibish said.
“If Erdogan wins, we can of course expect more of the same: a continuation on uneasy terms of Turkey’s membership of NATO and relations with European and other Western states. But it won’t be pretty.”
