President Recep Tayyip Erdogan’s decision to call early elections on June 24 reflects his sense of urgency, bordering on panic. The reason is simple: the Turkish economy is on the verge of a currency crisis. Erdogan’s winning formula in politics has always been strong economic performance coupled with nationalism. In the absence of the former, he will have to increasingly rely on the latter. The victim will once again be relations with the European Union and the United States, Turkish democracy – or the little that is left from it – and the country’s worsening Kurdish problem.
Given Turkey’s crumbling finances, early elections were unavoidable. The Turkish lira has depreciated more than 25 percent in the last eight months. Inflation is at a record high of 13 percent and the mismanagement of monetary policy has led rating agencies to cut Turkey’s sovereign rating into junk territory. The economy is in dire need of monetary tightening and structural reforms. Erdogan’s populist public spending led to an overheating of the economy. The country keeps growing at high rates only thanks to excessive government funding and mounting debt. As a result, of all emerging markets, Turkey has the highest current account deficit, the highest inflation and the most vulnerable currency. Clearly, this was an unsustainable situation.
The only way out of this crisis-prone financial situation is to raise interest rates and cut spending. But Erdogan is loath to do so because his electoral performance since he came to power in 2002 has always depended on a strong economy and consumer confidence, fueled mainly by public-sector projects, socio-economic services and the boom in the construction sector thanks to low interest rates. As Turkish living standards improved so did Erdogan’s electoral fortunes. You don’t need to be a Marxist steeped in economic determinism to say that Turks, like most mortals, cast their votes based on bread-and-butter issues. As a famous American once said: it’s the economy, stupid!
Erdogan is a lucky man. His economic strategy based on high spending and borrowing in the last 15 years greatly benefited from favorable global liquidity. Now, the tide is finally turning. External financial dynamics are shifting from monetary expansion to tightening. With Europe and the United States showing robust signs of economic recovery, the US Federal Reserve and the European Central Bank have signaled their readiness to raise interest rates. In the absence of easy money and global liquidity, Turkey’s weakness has been exposed. Dwindling capital flows coupled with growing domestic instability, regional geopolitical risk and the mismanagement of the economy led to a steady erosion of consumer confidence, high inflation and mounting deficits.
This is the economic context that led Erdogan to call “urgent” elections on June 24, almost a year and a half before the scheduled date in November 2019. Erdogan correctly understood that time was not on his side and that waiting until late next year would amount to going to polls in the midst of a financial meltdown. Yet even now, electoral victory is far from certain. Given the weakness in the economy and the potential of a unified opposition against him, Erdogan will have to rely on the second dimension of his winning formula in politics: populist nationalism. Erdogan clearly wants to capitalize on the nationalist sentiment that peaked after Turkey’s military incursion into the northern Syrian Kurdish enclave of Afrin. Some public opinion polls suggest that the ruling Justice and Development Party, or AKP, increased its standing by four points since it launched the incursion. Nothing galvanizes Turkish nationalism more than fighting Kurdish separatism. Most polls show that when a cross-border operation targets the PKK, a Kurdish nationalist movement fighting for self-rule, the Turkish public’s approval never goes below 80 percent. Of course, Erdogan and his AKP are perfectly aware of this; hence Ankara is likely to continue such operations against the PKK in the coming weeks.
In the last few months, Turkey’s worsening relations with Greece have provided Erdogan an additional source to exploit and mobilize nationalism. On March 27, two Greek soldiers were denied bail by a Turkish court after crossing the border with Turkey. Ankara charged them with espionage, even though the soldiers say they strayed into Turkish territory by mistake because of snow and fog. The Greek foreign ministry accused Erdogan of behaving like a sultan by turning the Greek soldiers into hostages. Ankara has indeed an axe to grind with Athens. Erdogan is furious with Greece for failing to extradite eight Turkish soldiers who fled across the Aegean after the failed coup in 2016.
Add to these tense dynamics the long-standing Turkish-Greek disputes over air space, maritime borders, uninhabited islands in the Aegean and more recent conflicts about discovery of natural gas reserves in the Eastern Mediterranean near Cyprus, and you have the making of a hot nationalist electoral season this summer. Assuming that elections will be free and fair – which is a big assumption given the presence of an emergency law, restrictions on the freedom of speech and assembly and the lack of an independent news media – Erdogan will need all the support he can get from nationalists. With his economy in the doldrums, Erdogan will do his best to distract voters from domestic problems.
Ömer Taşpınar is a senior fellow at the Brookings Institution and a professor of national-security strategy at the National Defense University in Washington.
AFP PHOTO/YASIN AKGUL