Erdogan wins Turkish elections
According to both the Supreme Election Council of Turkey and unofficial data from the state-run Anadolu Agency, Recep Tayyip Erdogan, the Turkish President, has emerged victorious in a closely contested run-off election. Following his inability to secure over 50 percent of the votes required for an outright victory in the initial round on May 14, the second round on Sunday saw Erdogan attain 52.14 percent of the votes after nearly all ballots had been counted. His opponent, Kemal Kilicdaroglu, secured 47.86 percent, as reported by the Supreme Election Council.
Confirmation of the result is expected in the upcoming days, solidifying Recep Tayyip Erdogan’s position in history as he extends his 20-year rule for an additional five years. Surpassing the 15-year presidency of Mustafa Kemal Ataturk, the founder of the Republic of Turkey, Erdogan declared the completion of the second round of presidential elections, expressing gratitude for the trust bestowed upon him by the people over the past 21 years.
In his address, Erdogan emphasized that all 85 million citizens of the country were the “victors” of the two rounds of voting held on May 14 and May 28. He held the main opposition Republican People’s Party (CHP) accountable for its candidate Kilicdaroglu’s unsatisfactory performance, pointing out the decrease in the number of CHP seats in parliament compared to the 2017 polls.
Following the announcement of his victory, Erdogan proceeded to address his supporters at the presidential palace in Ankara. Congratulating the enthusiastic crowds, he acknowledged that the pressing issue currently faced by the country was inflation. However, he expressed confidence in finding a solution, stating that it was not a challenging problem to resolve. Official data indicated that inflation in Turkey stood at 50.5 percent in March, down from a peak of 85.6 percent in October.
The election period witnessed a bitter campaign, marked by Erdogan repeatedly referring to his opponent as being backed by “terrorists” due to support from the main pro-Kurdish party, while Kilicdaroglu concluded the campaign by labeling Erdogan a “coward.” Nationalist rhetoric was increasingly prevalent, particularly from the opposition, which promised measures to repatriate Syrian and other refugee populations.
Sunday’s run-off vote marked the first occasion since the introduction of direct presidential elections in 2014 that the vote advanced to a second stage. Despite the call for citizens to vote again two weeks after the initial election on May 14, the turnout remained at approximately 85 percent.
The interpretation of results varied among Turkish citizens, depending on the news platform they followed. The state-run Anadolu news agency and the Anka agency, affiliated with the opposition, provided differing accounts. Two hours after the polls closed, with a quarter of the ballots counted, Anadolu reported Erdogan leading with 53.7 percent, while Anka showed Kilicdaroglu ahead at 50.1 percent. However, as the evening progressed, both sources converged, confirming Erdogan’s lead.
These elections, held alongside a parliamentary poll on May 14, were widely regarded as the most significant in recent Turkish history. Furthermore, they took place during the centenary year of the republic’s foundation.
Implications on economy
Erdogan’s re-election has many worried that Turkey’s recent economic woes may continue, assuming that the economic policy of maintaining interest rates does not change.
On Wednesday, the Turkish lira experienced a significant decline against the US dollar, reaching a new record low. This drop occurred as President Recep Tayyip Erdogan prepared to make decisions regarding his new cabinet and the direction of economic policies following a successful election outcome.
According to four senior officials, it is highly likely that Mehmet Simsek, a former economy chief known for his orthodox policy expertise, will be included in the cabinet either as the finance minister or as a vice president.
The potential appointment of Simsek could indicate a departure from Erdogan’s unorthodox policies, which have included interest rate cuts despite high inflation, leading to a continuous decline in the value of the lira.
The lira experienced its third consecutive day of losses, weakening by almost 1.6% to a record low of 20.75 against the US dollar. This brings the currency’s losses for the year to nearly 10%.
However, it later slightly rebounded and stood at 20.7150 at 1149 GMT.
The implied volatility gauges for the currency increased, with the one-year measure reaching 45.46%, the highest level in at least fifteen years, according to data from Fenics.
The focus now shifts to Erdogan’s upcoming announcement of the new cabinet appointments, particularly those related to top economic policy management, which is expected by Saturday at the latest.
Cagri Kutman from KNG Securities emphasized the importance of appointing credible individuals to the cabinet, stating that any reputable figure is crucial to signal to the market that there will be a change. Kutman stressed the significance of actions rather than intentions.
He further noted that if someone like Mehmet Simsek assumes a position of power, it would be a substantial move. However, the market would then be curious about the initial steps taken by the economic team. Will they adopt more orthodox policies, implement worse measures, or opt for temporary solutions to assess the situation?
Simsek was highly regarded by financial markets when he served as finance minister and deputy prime minister between 2009 and 2018.
Despite the challenges Turkey faces, such as February’s earthquakes, high inflation, and a cost of living crisis, the country’s first-quarter economic growth remained strong, with gross domestic product expanding by 4.0%. Additionally, GDP grew by 0.3% compared to the previous quarter.
In his post-election victory speech, Erdogan said: “We are designing an economy focused on investment and employment, with a finance management team that has an international reputation.”
Erdoğan underlined the government’s determination to take steps to compensate for the loss of welfare experienced by some segments of society.
“We are strictly committed to our policy of not allowing our citizens to be crushed by inflation. We have not made any concessions on this issue throughout our 21 years in power,” he said.
He pledged to lower the inflation to single digits again. “It was us who had lowered the inflation, which had plagued the Turkish economy for years, to single-digit figures, thereby easing our people’s burden. We will achieve the same in this period as well. We will inshallah see together the positive ramifications as the fluctuations in the global economy calm down,” he said.
Ankara has reinforced its bonds with the Turkic world, advanced its relations with the Islamic world, opened a new window to Asia through the initiative Asia Anew, built solid cooperations with the African peoples on a win-win basis, consolidated its presence in Latin America and developed close relations with all sides in the Balkans, Erdoğan stated.
“We have enhanced our dialogue with Western countries in line with common interests. We have shared the burden for the solution to the Russia-Ukraine crisis. With the grain shipment and prisoner exchange deals, we have shown that a diplomatic solution is possible. Most importantly, we have prevented Türkiye from becoming a party to a conflict that would end in disaster.”
It remains hard to predict the trajectory of Turkey’s volatile economy in the coming months, as much will depend on whether Erdogan changes his unorthodox approach and who is appointed in the cabinet.
Turkey’s new president faces urgent issues, including relations with Western partners and Sweden’s bid to join NATO. Only Turkey and Hungary are currently blocking Sweden’s accession, with expectations that the issue will be resolved by the NATO summit in July.
Erdogan has expressed opposition to Sweden joining, citing concerns over their stance on labeled “terrorist” groups. Delaying the decision could lead to a major crisis in relations with the West, but compromise is anticipated. Disputes over human rights and the release of imprisoned Kurdish politician Selahattin
Demirtas may also strain relations. On the domestic front, Erdogan must rebuild earthquake-affected provinces and address the desires for refugee repatriation. Strengthening ties with Gulf states and Egypt is also a priority for Turkey. This is a theme set to continue under Erdogan.
Turkey recognizes the strategic importance of fostering relationships with these countries to enhance economic and geopolitical stability in the Middle East.
Turkey’s efforts to build closer alliances with Gulf states, such as Saudi Arabia, the United Arab Emirates, Qatar, and others, aim to expand trade, investment, and cooperation across various sectors. These Gulf nations possess significant financial resources and play a vital role in the global energy market. Strengthening ties with them can create opportunities for economic growth, energy collaboration, and joint ventures in sectors like construction, tourism, finance, and technology.
Furthermore, Turkey seeks to improve relations with Egypt, a prominent regional power in North Africa. Over the past years, bilateral ties between Turkey and Egypt have experienced ups and downs due to political differences and regional conflicts. However, recent diplomatic efforts have aimed at mending relations and exploring avenues for cooperation. Economic collaboration between Turkey and Egypt can encompass trade, investment, infrastructure projects, and joint ventures in sectors such as energy, manufacturing, and agriculture.
By fostering closer ties with the Gulf states and Egypt, Turkey aims to establish a more stable and cooperative geopolitical climate in the Middle East. Enhanced regional cooperation can lead to increased economic opportunities, stronger diplomatic relations, and a more secure and prosperous future for Turkey and its neighboring countries.