Page 10 - TURKRptJun19

“When was the last summer that Turkey didn't have a crisis? I'm thinking 2012,” academic Howard Eissenstat of St Lawrence University in New York State observed on Twitter. Whatever result the Istanbul revote delivers, there have to be expectations that a snap general election can be expected not too far ahead. After the High Election Board (YSK) on May 6 after the market close announced its decision to rerun the Istanbul vote, the Turkish lira (TRY) threw a wobbly, sinking as far as 6.20 against the USD on the following morning. The Borsa Istanbul’s benchmark BIST-100 index tested the 90,000s. The day also saw 5-year credit default swaps (CDS) for Turkey rise by 27bp to 461, levels last seen during the tense run-up to the March 31 local elections. Meanwhile, the yield on benchmark 10-year domestic government bonds hit 20% for the first time since last August. Eurobonds also fell, declining by between 1.6 and 1.8 cents.
“Erdogan has a huge TRY short, I’m telling you,” Paul McNamara of GAM said in a wry comment on Twitter, responding to the YSK’s decision.
“Turkish Lira reacted badly to news of an election redo, as foreign investors fear this election—like the one in March & the one in 2018—sets the stage for another credit boom to boost growth at the cost of the BoP & Lira. China- US trade tensions add to EM stress more broadly,” Robin Brooks of the Institute of International Finance (IIF) tweeted.
“It did not require the prognosticative ability of Nostradamus to foresee the YSK decision to order a fresh vote in Istanbul's mayoral elections because its committee was handpicked by [E]rdogan for its unthinking obedience and unwavering servility and it has fulfilled its unspoken contractual obligations,” Julian Rimmer of Investec said on May 7 in an emailed note to investors. It is notable—truly most instructively notable under the current conditions in “Not Free” Turkey—that the YSK detected some irregularities in the voting for the head of the Istanbul municipality but no irregularities in the voting for the city’s assembly, district heads and district assemblies—yet all four votes in the Istanbul contests were placed in the same envelope. That’s probably enough to note for now—why would you also wish to bother yourself with the minor fact that the alliance of Erdogan’s AKP and the MHP ultra-nationalists won 26 of the 39 district head contests, while the AKP took a landslide majority in the city assembly.
“Interesting this morning to read of the death of democracy in Turkey, as if it were still alive until yesterday. The view from this parish was and remains relentlessly pessimistic but democracy died in Turkey on the night of the failed What's App coup in 2016 (about which fiasco I still have my suspicions. Despite not ever having organised so much as a pi$$-up in a brewery I think I would have organised a more effective putsch from my desk at work than that orchestrated by FET[O] or Weirdogan himself) and it (democracy, that is) was in recession since Gezi Park in 2013,” Rimmer added. “It was cute of the govt to arrange for an AKP representative to take over the mayoral duties until the 23rd June repeat election, which presumably ensures that all back-handers/ informal arrangements/ greasing of palms/ paying of tributes and cronyism can continue unabated until then. Also, be in no doubt: after the humiliation of March 31st, there is no way the Tyrannical Tache will rearrange this election to promptly lose it again. All the stops will be pulled out this time, no ballot box left unstuffed, to ensure the correct result. Some Kurd-bashing, the discovery of some more FET[O] militants in the cupboard and under the bed, a nationalist crisis provoked somewhere, all the usual paraphernalia of the managed democracy will be deployed.” “I was in Istanbul a year ago this week, having as close to a lovely time as I ever manage, but have cancelled all plans to visit this year. Imagine depending on Jeremy Hunt to extract you from a Turkish slammer?” Rimmer also said.
Murkier, darker. The cancellation of the humiliating Erdogan defeat makes Turkey’s twilight zone murkier and darker. The first question mark is over the Kurdish conflict. Erdogan allowed imprisoned Kurdistan Workers’ Party (PKK) leader Abdullah Ocalan’s lawyers to visit their client on May 2, a
10 TURKEY Country Report June 2019 www.intellinews.com