The calling of early elections in Turkey has very much to do with the economy. In particular, with the increasing problems of the Turkish economy which is incapable of stopping the devaluation of its currency and the increase in inflation, which rose to 11% in April.
The general and presidential elections were initially scheduled for 3 November 2019, but they will now be held on 24 June 2018. Both elections will be held the same day for the first time in history.
In principle, everything indicates that this is not the best moment for the current president Recep Tayyip Erdogan. As a matter of fact, the last general elections confirmed a downward trend for his Justice and Development Party (AKP), while the most recent reform of the constitution promoted by himself was approved by an adjusted 51.41%.
Despite everything, from this shore of the Mediterranean we see an even stronger Erdogan because of his authoritarianism and the fact that he represses any movement that could overshadow his power. But nothing is eternal. His current broad popular support that allows him to exercise a high degree of repression with the certitude that it won’t provoke a popular uprising, will not last forever. Especially when the threat of a severe economic crisis is looming over the country.
Because of that, the question is not if Erdogan should wait and keep the elections as originally planned in order to try to restore part of his lost popularity. In the 2011 general elections, the AKP won 50% of the votes and 60% of the seats. The point is that the current president is in a hurry. He wants to be re-elected as soon as possible in anticipation of a very pessimistic economic scenario. He wants to seize this opportunity of relative calm before the storm. Everything points out that, in the coming months, the economic situation will worsen and the popularity of his party will fall irretrievably.
The current president knows that the more time his rivals have, the more likely their support at the polls will grow. Because of that he called for snap elections, taking the opponents by surprise. The opposition parties have had to improvise their candidates and the election campaign.
The biggest threat to Erdogan’s re-election is candidate Meral Aksener, an ex-minister of the Interior running for the ultranationalist party MHP. Less than a year ago, Aksener founded her own party, İyi Party (The Good Party). Her discourse is on conservatism, the fight against the corruption and the recovery of democratic freedoms.
Aksener most likely won’t be able to culminate a successful campaign because she will lack the time to convince the voters. It also likely that, when the moment arrives, the losers in the elections will denounce the drift of the Turkish economy from the opposition and will try to benefit from the popular unrest provoked by the economic crisis. But once Erdogan has revalidated his post, it will be very difficult to attack him and to erode his power. By then, Erdogan will be too powerful. As a matter of fact, the one who wins the presidential elections will monopolize the prerogatives that until now were shared between the head of State and the head of the government.
Constitutional reform and state of emergency
In April 2017, the Turks approved in a referendum a constitutional reform that allows the president to assume the control of the government. This change substitutes the Turkish parliamentary system for a presidential one. As a matter of fact, the figure of the prime minister will disappear. From 24 June, the prime minister will become the vice president. As for the president, he will assume both the functions of the head of the State and the executive. In this sense, the president will have executive, legislative and judicial powers: he will be responsible for appointing vice presidents, ministers, high ranking officials and twelve of the fifteen magistrates of the Constitutional Court. He will also be able to dissolve the parliament and impose a state of emergency.
The constitutional reform ensures that Erdogan will directly control a substantial part of the structures of the State. Regarding the control of the streets and civil society, the elections will be held under the state of emergency and the environment of repression imposed in July 2016 after an attempted coup in which 300 persons died. The circumstances of the failed coup attempt have not been clarified yet but undoubtedly benefited Erdogan the most.
The government counter-attacked the following day with a repressive campaign. Opposition sources assure that it had been prepared for quite a long time.According to a report by the European Commission, since then 150,000 people have been arrested, 78,000 imprisoned and more than 110,000 public employees have lost their jobs. More than 150 media outlets have also been shut down.
From a growing economy to crisis in a year
In 2017, the Turkish economy grew above predictions. The injection of money that looked for the high performance of the Turkish Lira improved economic momentum. But for the past few months, because of the growth of the dollar induced by several interest rate increases decreed by the Federal Reserve of the United States, the emergent countries have suffered a significant depreciation of their currencies. As a consequence of this, they have seen how this money moved towards safer countries and more profitable currencies. In the case of the Turkish Lira, this year it has fallen more than 11% with respect to the dollar.
Erdogan worsened the situation by announcing that he would lower the high interest rates, because, according to him, they are the cause of the problem. Actually, the rise of the interest rate is the consequence of the devaluation. And a proof of this is the fact that, against the opinion of Erdogan, the Central Bank raised the interests in trying to stop the depreciation of the Lira.
Trade does not show optimistic figures either. In 2017, the trade deficit of Turkey was about 67,000 million Euro, which represents 8.99% of its GDP. The deficit in trade balances amounted to 5% and continues to raise. Everything points out that this trend will not be able to be reverted in short-term. Moreover, the commercial difference has been compensated until now with foreign funding, which is becoming more and more scarce.
The fall in the value of the Lira is already beginning to have an impact beyond the Turkish borders. The economy of the neighbouring country of the Turkish Republic of Northern Cyprus is being dragged. This entity appeared in 1975 as a result of a Turkish military invasion of Cyprus and it depends on the credits and financial help offered by Ankara. The prime minister of this territory that is only recognized by Turkey, Tufan Erhürman, has stated that his government does not rule out the possibility to adopt another currency if the depreciation continues.
The last precursor
Not even twenty years ago, Turkey suffered a severe crisis that ended with hyperinflation. It also forced the creation of a new currency because the State was unable to meet the sums due. The huge budget deficit that Turkey suffered during the nineties forced the government to issue great amounts of bonds with very high interest. The arrival of foreign capital increased inflation. Then, a period of political instability started and many foreign investors left the country for good.
The Turkish banks, which had assumed an important part of the bonds, could not compensate the flight of capital because the State could not proceed with the refund of the bonds. Finally, in the year 2003, the Turkish authorities had no other option than to finish the currency. A new Lira was put into circulation. The exchange rate was 1M old Lira to 1 new Lira.
Erdogan tries to justify the terrible situation to his voters by assuring that every awful thing related to their currency “is the result of the international situation”. For his part, the government’s spokesman and Erdogan’s economic advisor have assured that movements in the financial markets are induced by “puppets that use them to overthrow the president” or to weaken him.
However, this is a major internal problem in Turkey, because next year it has to repay 150,000M euro to their foreign creditors. The problem is also for the European banks that have been funding the economic growth of Turkey for years. Now, with the Lira’s fall, they are waiting anxiously the return of their investments and that the government emerging from the 24 June elections has the courage to implement the necessary measures to straighten the economy of the country.
Jordi Llaonart is an Arabist and expert journalist on Islam and the Middle East. He has studied at the Universities of Tunis and Damascus. He has covered electoral processes in Iran, Yemen, Kuwait, Bahrain, Lebanon, Syria, Sri Lanka and Nepal, and has interviewed the Taliban and Iraqi insurgents influenced by Saddam Hussein.
Autor: Jordi Llaonart (MésEconomia.cat)