Page 70 - BNE_magazine_12_2019 dec19

70 Opinion
bne December 2019
TURKEY AT A CROSSROADS:
Erdogan administration facing possibly decisive economic and political horizons
Timothy Ash
Notes from BlueBay Asset Management economist
Timothy Ash on his latest visit to Turkey.
I visited Istanbul and Ankara and met various officials from
the Treasury, CBRT [Central Bank of Republic of Turkey], international financial institutions, banks, politicians, journalists, diplomats, analysts – the usual suspects, you know who you are! Here are my Turkey trip notes.
Political setting
The ruling AKP administration is still smarting/coming to terms with their losses earlier in the year in the municipal elections – Istanbul, Ankara, Izmir, et al. These elections seem to have energised the opposition both inside and outside the ruling AKP. Indeed, within, or now without the AKP, encouraging high profile departures from the AKP, including former PM Ahmet Davutoglu and former first deputy prime minister Ali Babacan. Both are now trying
to forge political parties/forces to challenge the ruling AKP. Many spoke about the mood within the ruling AKP towards greater criticism of the leadership – open dissent against the party line.
The repeat Istanbul elections were perhaps most significant though as they proved to many that the AKP, and particularly President Recep Tayyip Erdogan, is beatable in a political campaign. I think they also proved to many that democracy is alive and kicking in Turkey, given widespread prior concern about the over-concentration of power around Erdogan and his executive presidency. The elections were free, albeit given state control of much of the media, not necessarily that fair. And in my view, while there might be concern around rising populist policies and autocracy globally, the political mood in Turkey seems to have now turned against that, and the next political iteration is most likely to be a reversal of this – an iteration to the likes of [opposition party Mayor of Istanbul Ekrem] Imamoglu or even Babacan. The longer term trend seems to be positive in terms of politics. The population have seen the vision of centralised leadership and have come to the conclusion that they don’t really want that – they actually
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Ash found the mood in Ankara (pictured) and Istanbul indicated that the Turkish population "have seen the vision of centralised leadership and have come to the conclusion that they don’t really want that".
prefer the concept of Western liberal democracy and came out in their millions to vote for candidates representing that in the municipal elections.
The ruling AKP seemed to be rocked initially by the municipal elections, and opinion polls showed a decline in popularity which some suggested might be terminal – and the AKP alliance with the nationalist MHP showed the vulnerability
of the ruling party and its fear of failing to secure outright majorities in its own right.
Some of the swagger of the ruling party has been restored
by Turkey’s successful intervention in northern Syria, and by Erdogan’s apparent out-witting of President Trump therein. Recent opinion polls have suggested a modest bounce in support for the AKP – up 2-3% but still sub-40%. But whether this bounce will prove enduring will depend still on how the ceasefire in northern Syria plays out. I fear that the ceasefire deal will prove short-lived, and as is, Turkey does not have control over the 400km-plus buffer zone it initially targeted. It hence was only a partial and perhaps temporary win.
Peace on Turkey’s border with Syria, and indeed in its own southeast region might only come with a broader settlement with the Kurds both within and outside its borders. Erdogan proved in the past he can deliver this, but after a bitter upsurge in conflict over the past four years or so, the mood in the country does not yet seem right for such an iteration for Erdogan – albeit it could bring big political wins for Erdogan both at home and abroad, particularly with the US and the West.
The biggest near-term challenge to Erdogan likely will come from his coalition with Devlet Bahceli and the MHP. Bahceli has recently suffered ill health, and questions surround the durability of the AKP-MHP coalition in a scenario where Bahceli is no longer able to remain as leader of the MHP. Could Erdogan forge a lasting coalition with a future leader of the MHP, would he seek new coalition partners, for example with Meral Aksener and the Iyi Party (Good Party), or even go for early elections? All are possible.