What will happen after the elections?
on the outcome. It also depends IT DEPENDS on how the result is reached at. Will there be a narrow margin? Will there be doubts as to the integrity of the election process? Will there be a second tour and under which conditions? Would citizens and the world see the results as fair or would they be debatable? Amidst fears that the opposition parties will have a hard time to protect their votes once they are cast, i.e. suspicion of widespread fraud, the only thing that is certain is that elections will be held. Notwithstanding these concerns, will the opposition be able to win this time? After all, if the Party of Six (PoS) can’t win under conditions of economic duress, how and when can they? Yet there is also winning and “winning” – and ‘winning ’. Suppose the PoS secures 45%. Suppose HDP gets another 10%. It looks like the opposition in toto has the upper hand, but under the new electoral law there is a chance that the number of MPs will be very close to each other even if the opposition leads the popular vote. Suppose they win by a narrow margin and also win the presidential election –by far the most important issue. Yet having only 270 MPs + HDP’s 70 MPs wouldn’t do the trick. Return to the parliamentary system requires 360 MPs for a referendum to be held.
ONLY A BINARY CHOICE̞LIKE FORECAST IS POSSIBLE
We can safely conjecture that should the incumbent bloc win, there won’t be a drastic economic policy change, nor will euphoria reign in the markets. The most likely direct effect is sharp exchange rate depreciation. Because there is no FX reserve left, and because there is massive FX debt and the current account deficit soars, and all the FX that goes to the CBRT vault is somehow sold in order to keep the FX market calm ahead of elections, a re-alignment is likely. The current policy is unsustainable and the CBRT is possibly at great pain to make sure the exchange rate doesn’t jump all of a sudden. The horizon is mid-May, until the elections. After that, if the exchange rate jumps there will be a new inflation wave with disastrous consequences because the current inflation cycle isn’t yet over. After that episode, because the exchange rate-protected TL deposit scheme is also unsustainable, interest rates will go up further. This is probably the only certainty we got. Interest rates will go up further in both credit and asset markets, whether because inflation will rise again or because the new policy team would try to conquer inflation. We can also bet on the likelihood that the rise in interest rates will be gradual. Actually, deposit rates hover between 25% and 30% for small accounts, and for large FX-protected accounts 25% guaranteed TL interest-cum-exchange rate protection is quite common. So, what does the unduly low (8.5%) CBRT policy rate actually do – or what is its purpose- is another matter. If Kılıçdaroğlu becomes president, there will be a gradual but surely positive reaction in overseas markets. Let’s not exaggerate though: all the money that left Turkish financial markets after 2018 won’t be back shortly. Yet, as credibility builds up and as the new economic team of experts of international reputation work their way out, things will be normalised. In that case, the exchange rate will possibly go up by 20-25% so as to appease exporters, and reach equilibrium of some sort and stay there. Actually, towards the end of the year TL could appreciate even nominally as regular FX capital inflows pour in. There will be a whole new world. Monetary policy will be rendered Orthodox and understandable by educated folks. Sustainability will be the order of the day. Fiscal policy can help that because there is still slack to accommodate popular demands –for e.g. higher religious holiday bonuses have already been promised.
BUT WHO WILL WIN?
I have been at pains to explain why the opposition candidate could win only under
extreme circumstances. On the one hand, the popular vote and the number of seats could well be two different things now. It depends on the choice of opposition parties under the PoS: should they run separately there would be many seats lost to AKP and MHP. They know that but the fact that some of them are new parties, they want to see if their endeavour is worth pursuing. Yet more importantly a Kılıçdaroğlu win in the presidential race is also far from being a practical certainty. It is possible, even likely, but just how probable it is? 50%? 30? I would say, short of a landslide, the odds are even. İnce’s candidacy is likely to provide a thinly veiled edge to Erdoğan. With four candidates, things are more uncertain, and a second tour is a distinct possibility.
PAST POLITICAL CAMPAIGNS ̣AN EXAMPLE ̜1930̝
Although there have been many elections held since 1930, and the incident of SCF (Free Republican Party, FRP) as opposed to CHF (Atatürk’s party, RPP) isn’t exactly the zenith of democracy, it is nonetheless indicative of later electoral campaigns. During the campaign FRP has been constantly portrayed as the avatar of foreign powers, the linchpin of overseas capital –i.e. British and French imperialisms, the spearhead of religious reaction and bigotry etc. Although Mustafa Kemal Pasha himself had ordered the establishment of a second party so there can be inter-party competition as in Western democracies, he didn’t like what he saw after that. He thought the second party acted with an irresponsible resolve and flirted with the enemies of the young Republic. He took the opportunity to observe what was going on in the deep layers of the social fabric, and toured the country for 90 days after the FRP was dismantled. He probably found that people weren’t sanguine about his project for modernity and prosperity. They weren’t well-informed about Republican reforms that amounted to nothing short of a cultural revolution. A state-driven wave of investments ensued, and in the 1930s the young Republic achieved a lot of things in the economic sphere due to étatism. Governments, and not markets, were leading the way everywhere in the 1930s. Turks were no different. [Political cartoons of the 1930 campaign are borrowed from Gökçen Başaran İnce, “The Free Republican Party in the political cartoons of the 1930s”, New Perspectives on Turkey, no. 53 (2015): 93–136.]
The propaganda armour of the 1930 campaign is filled with ideological overtones that will be incessantly repeated in the coming years. The opposing camp has always been accused of not being nationalistic or religious enough or by being traitors to some cause, i.e. like the fifth column of the enemy. Although there isn’t much to be surprised given that the entire Cold War was full of similar propaganda, it is awkward that this attitude endures even in 2023. What Greeks, Italians, Spaniards have left behind we couldn’t get rid of yet.
CARL SCHMITT WATCHES US
There exists a natural Turkish generalization of Carl Schmitt’s idea that politics isn’t rivalry, but a keen struggle with the enemy. The Schmittian friend/foe distinction makes any political forecast difficult. It serves the incumbent bloc because such alliances typically rely on a carefully cemented 30% core constituency. With a ready-made always faithful 30% it is easier to build on and remain competitive no matter what. Ordinarily, with inflation hitting sky-high levels and all other problems, there would be a complete reversal. After the 2001 Crisis, people were frustrated. Although the Derviş-IMF programme was already bearing fruit, people quit old parties. As a new party AKP got 34.7% of the 2002 November election votes whereas old parties were left out of parliament. There was an almost total political re-alignment. Nothing of that sort is happening now. At the very least we don’t observe the signs of a perfect storm yet. The race will be a close call. Anything can happen.