No early election after slim referendum win for Erdogan
• Turkey’s government will focus on restoring political stability and stimulating growth, deputy prime minister says
Turkey will not call early elections to speed up the transfer of power to President Recep Tayyip Erdogan, the nation’s deputy prime minister, Mehmet Simsek, said after a narrow referendum that drew criticism from the EU.
Simsek said the government would focus on restoring political stability and stimulating growth after voters approved a shift from a parliamentary-led system to an executive presidency. The comments quelled speculation that the ruling AK party would hold a snap election, providing respite to an economy that has suffered from years of political turmoil.
Erdogan had made it “very clear” on Monday the next elections would be held in November 2019 and that there would be “a period of adjustment, a period of transition”, Simsek said. “So… [early] elections are not on the agenda.”
One of the reasons foreign investors have fled Turkey in recent years is the lack of political stability. Five national elections in just three years have damaged confidence in an economy that is also suffering under the weight of terror attacks and a government crackdown on opponents after an attempted coup in July 2016.
The lira was up 1.5% to 3.6541 per dollar at 2.37pm in Istanbul (1.37pm SA time), trimming its loss in the past year to 22%. The Borsa Istanbul 100 index of equities advanced 0.9%.
Simsek has long promised reforms to make Turkey’s $857bn economy grow faster and reduce a current-account deficit that leaves Turkey vulnerable to the swings of foreigncurrency inflows. The government has not tackled those reforms, including an overhaul of the tax system and labour policy, because the AKP has been preoccupied with fighting off electoral challenges. The success of a package of 18 changes to the constitution was narrow, with about 51.4% of Turks approving it. The result came at the end of a divisive two-month campaign during which Erdogan accused opponents of the vote of supporting “terrorists” and denounced as Nazi-like the decision of some EU countries to bar his ministers from lobbying the diaspora.
“The margin of the ‘yes’ camp’s victory does at least mean that Erdogan is unlikely to call early elections — which does provide an element of political stability for investors,” said Nigel Rendell, a senior analyst at Medley Global Advisors in London. Still, a market rally was likely to be more muted than expected, despite the reform talk as “most will only believe it when they see it”, he said.
One thing concerning investors is Turkey’s deteriorating relationship with key allies including the EU, which it has sought to join for half a century. Those concerns deepened on Sunday after Erdogan said the government might hold a referendum on reinstating the death penalty, which would end Turkey’s accession prospects, and a European Parliament official said the president’s sweeping new powers were not in line with European standards.
German Chancellor Angela Merkel urged Turkish leaders on Monday to open talks with opponents as opposition parties alleged fraud and demanded a recount after election officials accepted ballots without official stamps. France urged Erdogan not to use the result to bring back capital punishment.
Simsek said talk of a possible vote on capital punishment was still at an early stage. “The idea that it would derail Turkey-EU relations and allow Turkey to drift away, let’s not overdo it,” he said.