ISTANBUL BLOG: Erdogan uses chaos to advance his cause

ISTANBUL BLOG: Erdogan uses chaos to advance his cause
Turkish demonstrators gather to protest against the bombing wave.
By bne IntelliNews June 10, 2016

Generally, when chaos reigns and violence escalates, political leaders’ popularity declines as people start to question their competence. But this is not the case in Turkey and this is definitely not true for President Recep Tayyip Erdogan, who is now marching fast towards an authoritarian, one-man rule, capitalising on every single event to cement his argument for a stronger presidency.

Turkey has been rocked by terror attacks this week in the heart of Istanbul and the south-eastern town of Midyat, both targeting police, though civilians also lost their lives. The government has blamed the outlawed Kurdistan Workers’ Party (PKK) responsible for the blasts.

Erdogan and his government have used the terror attacks to try to discredit the pro-Kurdish opposition party HDP. On June 7, on the day a car bomb attack on a police bus killed 11 people in Istanbul, Erdogan signed a controversial immunity bill that critics say will tighten his grip on power by removing the HDP from parliament. Meanwhile investors have just shrugged off the political risks: the stock market and the currency have been stable.

Erdogan’s master plan

One can criticise Erdogan’s style and methods and even may find them unethical but one cannot deny his skills as a brilliant political tactician and strategist. After the June elections last year, when Erdogan’s ruling Justice and Development Party (AKP) lost its majority in parliament, the government intensified the military campaign against the PKK in the country’s south east. Security forces started to clash with PKK militants in the streets of Kurdish towns, curfews were imposed in a number of provinces, houses were bombed and demolished, and human rights violations were widely reported.

Some analysts had thought at that time that the escalation of violence would erode the support for the AKP. They were dead wrong. Just as Erdogan wanted – and probably predicted – the AKP, riding on the wave of nationalist sentiment, stole votes from the nationalist party MHP, and the HDP’s votes declined sharply in the following November’s polls.

The AKP regained the majority but it did not win enough seats to push through constitutional amendments in parliament that would give Erdogan more executive powers. The opposition parties refused to  support Erdogan’s plans for an executive presidential system.

Erdogan needed to unlock the deadlock in parliament and, according to some analysts, he came up with the idea of lifting the immunity of lawmakers. The bill, in theory, applies to all deputies, but the pro-Kurdish HDP is convinced that it is the main target of the legislation that aims at excluding the party from politics and parliament.

According to the HDP, Erdogan hates them, because when the party secured 13.1% of the vote in the June election, it dashed Erdogan’s hopes of turning the country into a presidential system. Now, Erdogan can hit two birds with one stone: with the immunity bill he settles score with the party, and at the same time he will clear the path for the executive presidency.

Erdogan accuses the pro-Kurdish party of being the political extension of the PKK and has called for the prosecution of its MPs. Fifty of HDP's 59 lawmakers may now face trials. The bill also targets 51 lawmakers from the main opposition party CHP, who could face prosecutions on a range of charges, including insulting Erdogan.

Atilla Yesilada, analyst at GlobalSource Partners Turkey, told bne IntelliNews recently that Erdogan may wait for the courts to arrest 28 or more HDP deputies, which would trigger automatic by-elections, hoping AKP would steal at least 15 of their seats. According to the constitution, in cases where the number of vacant seats reaches 5% of the total number of seats (550), by-elections should be held within three months.

Given the government’s control over the judiciary, the accused lawmakers could face the threat of arbitrary detentions and may not receive a fair trial. HDP’s co-chair Selahattin Demirtas previously said that HDP lawmakers would defy calls to appear before courts if they face charges, signalling serious tensions in the period ahead.

The HDP claimed in a statement that the timing of the recent replacement and reappointments of thousands of judges and prosecutors cannot be a coincidence.

“Turkey has witnessed a wave of reshuffles in the judiciary, one of the most extensive decrees in the history of the modern Turkish Republic, with the government replacing more than 3,700 judges and prosecutors,” the Hurriyet Daily News reported. “We suspect that Erdogan ratified the bill only after making the necessary arrangements in the judiciary so that he could control the legal process regarding the prosecution of MPs with the help of judges and prosecutors sympathetic to himself and the AKP,” the HDP said.

If the government throws HDP lawmakers into jail, this may only provoke and radicalise the country’s Kurds and, as this week’s attacks have shown, the violence could spread to other cities. Demirtas, who has vowed to fight on in parliament till the end, even warned in a recent interview with the Economist that the conflict could spiral into a civil war.

More oppression, less opposition

So who will stop Erdogan and who will save Turkey’s decaying democracy? Turkey’s opposition parties are ineffective and powerless, and people critical of Erdogan and the AKP government seem to have lost any hope.

Some analysts previously thought that Erdogan could call yet another snap poll to increase his majority in parliament when the opposition remains weak and fragmented. Public support for the main opposition secularist Republican People’s Party (CHP) is stuck at around 25%. Meanwhile the HDP and MHP are currently both below the 10% threshold required to win seats in the parliament.

A survey by polling company Gezici found in April that support for the HDP stands at 7.3%, down from the 10.8% of the vote the Kurdish party garnered in the November elections.

The nationalist MHP has been in turmoil since the November elections in which the share of the party’s vote plunged to 11.9% from 16.3% in the June snap elections. According to a Gezici survey, support for the MHP has declined to 8.9% since then.

A weak MHP led by Devlet Bahceli suits Erdogan. But the MHP will hold a congress in the next few weeks to elects its leader and Bahceli may lose this race. Meral Aksener, who served as interior minister in the 1990s, is one of the leading figures challenging Bahceli’s leadership. A recent survey showed that the MHP could boost its support to up to 20% if Aksener heads the party.

“The special MHP party congress, which might see the ousting of its leader Bahceli, could make early parliamentary elections trickier for the AKP”, Tim Ash at Nomura commented. Ismet Akca, associate professor of political science and international relations at Yildiz Technical University, agrees. Akca rules out the possibility of another election, because he says “people have ‘election fatigue’ and Erdogan probably won’t take the risk”.

 “At the moment, Erdogan is consolidating his supporter base by using his same old tactics: polarising the country, and intensifying the war on the PKK,” Akca told bne IntelliNews.

He sends a message to his supporters that Turkey is going through very challenging times and he is the only leader who could find solutions to the country’s problems, Akca added. But at the same time, Erdogan is sharpening his Islamic rhetoric, according to Akca.

In Besiktas, a stronghold of the CHP in Istanbul, 31-year-old Ahmet, who declined to give his full name, says “all I am seeing is the fast track Islamisation of the country, and this is bad, pitching the 50% of the population against the other 50%”. He runs a café that mostly students frequent. “People are depressed”, he says.

26-year-old union organiser Ayse agrees. “As a woman, I feel the pressure on women. I am now more careful about what I am wearing. Erdogan has created a new culture based on Islam and conservative, pious people who now think they have the right to interfere with our lifestyles”.  “And all this has happened gradually and that’s why people are getting used to it. That’s very disturbing,” she says. According to Ayse, social polarisation has reached the point that people do not go to local stores for shopping if they think the owner belongs to the “other side”.

Both Ahmet and Ayse agree that the general mood among anti-AKP people is hopelessness and deep sense of defeat, and this mood has grown larger especially after the November elections. They do not think a repeat of the Gezi protests back in 2013 that rocked the AKP government is possible.

“Most of my friends just want to leave the country, because they are fed up”, says a 22-old political sciences student who uses the pseudonym Faruk. He lost an eye during the Gezi protests from a rubber bullet fired by the police. “I’ll stay and fight. But, I have no idea how we can mobilise people against the AKP”, he admits. “And honestly, I tell you, I am really scared of this man (Erdogan),” Faruk says.

The political situation in Turkey has become more complex as Erdogan pushes for gaining absolute power, making the future even more uncertain. “Erdogan's obsession with an executive presidency seems to be accentuating broader political uncertainty and instability. Prospects of a referendum and another election are unsettling for markets, and a distraction for policy makers,” according to Tim Ash.

Erdogan next move is difficult to predict as he probably needs more time to test the waters.

“As the MHP has now been given the green light to hold an extraordinary congress that will challenge the current MHP leadership, the AKP is possibly set to face a revamped MHP that could reduce its chances to gain more seats at either by-elections or any early elections,” Commerzbank analysts think. “In any case, any of the election options would take up to three months to actually happen, which means that Q4 could be a very busy political period.”

Sanguine markets

Investors’ reactions to all this political noise, violence and uncertainty have been remarkably muted. Stocks and the lira have been virtually flat since the Istanbul attack on May 7. The lira was trading at 2.8962 per dollar on Thursday, down from 2.9175 on June 3.

This week, the World Bank predicted that growth in Turkey’s $720bn economy will slow to 3.5% this year from last year’s 4%, citing falling tourism, weak external demand and trade restrictions with Russia. The bank also expects political uncertainty to weigh on confidence.

The bank is more optimistic about Turkey’s economic outlook for 2018, when growth should accelerate to 3.6%, a 0.2 percentage point improvement from its January projection. The bank notes that modest but ongoing growth in advanced economies and low energy prices are supporting activity, particularly in parts of Europe and Central Asia, including Turkey, and relieving pressure on the balance of payments.

The bank also stressed that inflation pressures resulting from exchange rate depreciation in 2015 are abating, but core inflation remains above target.

Morgan Stanley in a recent report noted the neutral stance of investors on Turkish assets despite the recent development. “We were a bit surprised to see the relatively complacent stance of investors against the background of rising political risks”, it said following a meeting with investors in London in late May.

The bank cites four reasons why investors are not changing their positions: “Turkey is still performing relatively better compared to most of its peers in terms of macro indicators; Mehmet Simsek's continuation as deputy PM is a signal that there should not be major changes in monetary and fiscal policy in the foreseeable future; locals' FX sales during volatile times proved to be an effective anchor against excessive TRY depreciation; and the base scenario in politics is a public referendum and it is mostly not seen as a game-changer.”

However, investors told Morgan Stanley that they could change their views and positions to negative if they see an ongoing rise in energy prices, political developments increasing the chance of early elections, a further deterioration in the tourism sector, increasing efforts to restructure loans  – signalling rising problems in the real sector amid a combination of repercussions of currency depreciation and declining sales – and the central bank's ongoing easing cycle and its inability to respond effectively and in a timely way when conditions turn more negative in the future.