The first round of Turkey’s presidential election took place on 14 May 2023, resulting in no candidate securing a majority. A runoff election was held on 28 May 2023. In the runoff, incumbent President Erdogan defeated his challenger, Kemal Kilicdaroglu, winning 52 percent of the vote. The election victory meant that Erdogan will have governed Turkey for over 20 years.
Responding to his election victory, President Erdogan stated that “we are not the only ones who have won, Turkey has won […] our democracy has won”. In contrast, Kemal Kilicdaroglu described the election as “the most unfair election in years”, arguing that the country had mobilised its resources for Erdogan ahead of the election. For example, analysis by Turkey’s broadcast watchdog found that Erdogan received more than 32 hours of television coverage on one state television channel, whilst his challenger received 32 minutes.
Since 2018, Turkey’s economy has faced many challenges, including high inflation, currency depreciation and high levels of foreign debt. Furthermore, in February 2023, Turkey suffered an earthquake killing more than 50,000 people and causing immediate damage estimated to have reportedly cost the country US$34bn. In an attempt to address these economic challenges, President Erdogan instructed the country’s central bank to reduce interest rates, arguing that high rates were responsible for inflation.
Following Erdogan’s re-election, some commentators have speculated that he will continue with his economic policy.
Speaking to Al Jazeera in May 2023, the Europe director at the Eurasia Group, Emre Peker, said that Erdogan was likely to interpret his election victory as an endorsement of his economic policies. Peker also stated that he expected the next three or four months to be “relatively calm” for the country’s economy, with revenue from summer tourism contributing to the country’s cash flow and a weakened Lira making exports more competitive. However, he warned that Turkey’s current economic dynamics would struggle to meet the country’s needs, particularly with negative interest rates.
Providing a similar warning, Mehmet Ozalp, an associate professor in Islamic Studies at Charles Sturt University in Australia, argued that the “economic suffocation” of the country was “likely to get worse”. In an article in the Conversation in May 2023, Ozalp stated that the country’s economy had experienced a “significant downturn” over the past three years, with the Lira “plummet[ing] in value”, resulting in a shift towards a dollar-based economy. He further noted that the central bank had kept the economy afloat by “emptying its reserves” in the months leading up to the election, running a current account deficit of US$8–10bn each month, which had seen the bank’s reserves fall into the negative for the first time since 2002. Ozalp concluded that Erdogan now faces the challenge of finding funding, potentially resorting to high-interest foreign loans. He argued that the uncertainty surrounding the success of these efforts could push the economy into a recession, leading to significant unemployment and a decline in the standard of living for the people of Turkey.
However, there is speculation that Erdogan may shift economic policies. This speculation arose after Erdogan appointed Mehmet Simsek, a former prime minister and finance minister, as the country’s finance minister in June 2023. Following his appointment, Mr Simsek stated that Turkey had “no choice but to return to rational ground” and that the government “will prioritise macro financial stability”.
Speaking to the Financial Times (£) in June 2023, the chief economist at Istanbul-based brokerage Dinamik Yatırım Menkul Degerler, Enver Erkan, said that the exchange rate was “heavily suppressed by alternative financial measures before the election”. He also estimated that the Turkish government would adopt a more liberal approach in this regard and would “create a situation that will enable the lira to get closer to its real value”.
Similarly, in an article for the Washington Post (£) in the same month, Mohamed A El-Erian, a chief economic adviser at Allianz SE, agreed that a focus on macro financial stability was “not only correct but also long overdue”. However, El-Erian cautioned that the success of Mr Simsek’s economic agenda was dependent on market patience, domestic confidence, external assistance and, “most critically”, President Erdogan’s “continuous public backing”.
2. Relationship with Russia and NATO
Erdogan’s re-election has also raised speculation as to what the result means for Turkey’s relationship with other nations and alliances. This includes whether Erdogan’s ties with Russian President Vladimir Putin would strengthen further, and the potential implications that this could have for the North Atlantic Treaty Organisation (NATO).
In an article for Time magazine in May 2023, Yasmeen Serhan highlighted Turkey’s complex relationship with Russia and NATO. She noted that despite Turkey’s NATO membership, Erdogan’s actions have often strained its alliance with the Western bloc. This includes maintaining business ties with Russia, despite sanctions imposed by most countries, initially opposing Finland’s accession to NATO, and its current veto of Sweden’s entry into the organisation.
Gonul Tol, author of ‘Erdogan’s War: A Strongman’s Struggle at Home and in Syria’, warned that Erdogan’s upcoming term would see a further strengthening of his relationship with Putin. Tol argued that Erdogan had been leveraging Finland and Sweden’s interest in joining NATO as a “trump card to extract concessions from the Western world”.
Although there is presently a veto on Sweden’s NATO membership, some commentators anticipate that Erdogan may approve it either before NATO’s Vilnius summit in July or by the end of 2023. Also speaking to Time magazine, Galip Dalay, an associate fellow at Chatham House, said that Erdogan “cherishes” Turkey’s presence in NATO because “he thinks it gives him further leverage in international affairs”. Serhan echoed this view, stating that Erdogan had “sought to portray Turkey as a valuable diplomatic mediator” between Russia and the West, having pushed to convene peace talks between Russia and Ukraine and helped broker a grain export deal between the two countries in November 2022.
Cover image from Wikimedia Commons.