Populist economics on the up as Turkish ruling party expects closure

By bne IntelliNews May 23, 2008

Nicholas Birch in Istanbul -

Increasingly convinced it will be closed down by the courts for anti-secular activities, Turkey's governing AK Party looks to be preparing the ground for early elections later this year, unnerving investors with a string of populist economic measures.

Amid rumours farming subsidies might be on the way, the latest piece of fiscal relaxation came late last week, when parliament approved an employment package including an amnesty for employers falling behind on social security payments. The International Monetary Fund (IMF), whose $10bn stand-by agreement with Turkey expired on May 10, described the move as "regrettable."

The move "runs counter to the... medium-term economic programme" that the AKP announced earlier this month, the IMF's Turkey director Lorenzo Giorgianni complained on May 21, describing the move as "a backward step."

Consigned to its fate

Coming a fortnight after the government announced cuts to the primary surplus target to free up money for investment in the impoverished southeast, the amnesty has widely been interpreted in Turkey as evidence AK is resigned to closure and early elections. "The argument is that if you know you're on the way out, there's less reason for you to keep budget discipline", says Erkan Savran, research head for the brokers AK Securities. "Plus you're looking to sweeten up your electorate."

Pessimism certainly appears dominant inside AKP, whose efforts to seek inter-party agreement on constitutional changes making it more difficult for courts to close parties down were sharply rebuffed by opposition party heads. Interviewed this week by Reuters, an unnamed cabinet minister said, "the AKP will be closed, [PM Tayyip] Erdogan is expected to be banned and some other members too. This view is shared by many in the cabinet."

The date of early elections would depend on the date of the court's decision, which could come any time between July and November. Descended from a more traditional Islamist party closed down by the courts, AKP would stand under a new name.

Apart from closure, the only realistic option facing AKP is for the staunchly secularist 11-judge Constitutional Court to vote 6 to 5 against it. With 7 votes needed for closure, such a result would represent a serious warning but nothing more. Following comments made this weekend by the court's head about a ruling that would strengthen "democracy, secularism and law", many speculated a 6-5 decision was on the way. Given another senior judge attacked the government on May 22 for trying to influence the judiciary, that seems less likely.


Send comments to The Editor


Related Articles

Turkey approaches day of reckoning on economic reform

Kivanc Dundar in Istanbul -   The unexpected success of President Recep Tayyip Erdogan’s Justice and Development Party (AKP) in this month’s general election should bring much-desired political ... more

Macedonia kept on hold as Balkans edges towards EU goal

Clare Nuttall in Bucharest -   Macedonia’s EU accession progress remains stalled amid the country’s worst political crisis in 14 years, while most countries in the Southeast Europe region have ... more

Turkey and America seen on course for confrontation in Syria war

John Davison of Exaro - Military action by Turkey against Kurdish rebel forces in Syria raises the prospect of a direct clash with the ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss