Unofficial results show that changes to Turkey’s constitution have been approved in Sunday’s referendum by a narrow majority, handing President Erdoğan sweeping new powers and ending the parliamentary system in Turkey. The yes campaign won 51.41% votes cast while the no campaign won the 48.59% of the cast votes. In the new presidential system, the president of the country retains ties with the ruling party and remains as a key person in appointing majority of members of judiciary and high courts, as well as appointing the head of the political party constituting majority of the seats in the Parliament.
Politics and Society
The president now has the power to enact laws by decree, which has already become a common practice of passing laws in the aftermath of the July coup attempt as part of the state of emergency that has been in place since. The president also has the power to dismiss the parliament, appoint vice presidents and ministers out of the parliament. The parliament has a very limited power to investigate or impeach the president. In a nutshell, this new presidential system puts state institutions and the parliament under direct or indirect control of the President without any effective checks and balances on the president’s power and institutionalises the anti-democratic practice of power by President Erdoğan in recent years.
President Erdoğan has remained as an important figure in the referendum campaign and successfully put himself forward and diverted attentions from the proposed changes by the government, turning the referendum into voting not on the Constitution but on himself.
Although the narrow margin of approval in the referendum results creates a hope for compromise in the implementation of constitutional changes, we expect to see more repression and exclusionary politics. The political discourse of the yes campaign has already reinforced the amalgamation of religion and nationalism in the country. Therefore, it is highly possible that Erdoğan will continue to exclude and even demonise the remaining opposition with the intention of further marginalising and eliminating the chance for the emergence of an effective and organised opposition in the country.
It is important to understand that the AKP’s and President Erdoğan’s desire for more power is not without a clear purpose. We do not expect to see a direct incorporation of “Sharia” in Turkey as many critiques of the the Justice and Development Party (AKP) may fear. That said, we do, however, expect to see an increasingly less public visibility of secularism and constitution of a new national identity based on Turkish nationalism and Islamic understanding of the AKP and imagination of a new Turkish society based on these values.
With the already established authoritarianism in the country and the dominant populist language that creates ‘us’ (representative of religious Islam) versus ‘other,’ Christian West/Europe, Turkey is not only losing its capacity for being an exemplary Muslim majority country but also risks its own social cohesion within by embarking on a journey of religious nationalism.
Turkey has become an unpredictable member of NATO due to the government’s policy of flirting with other centres of power and mobilising the Turkish population in European countries, using Syrian refugees in Turkey as bargaining chips and demonising the West/Europe for its populist purposes. This unpredictable yet intentional foreign policy approach is expected to continue under the new regime.
There is little reason to expect a coherent foreign policy given the anti-Western sentiments in the country and the political gain it generates for the ruling party. The Erdoğan regime would go further and continue to blame any crisis in economy or politics on the West. The dismemberment of Turkey from international bodies with the capacity to hold the government accountable or reduction of such bodies’ functions is an option that the new regime is likely to seek.
Turkey will continue to get involved in and internalise regional problems. The established anti-Kurdish reflex of the state will continue to guide its Syrian policy.
Emergence of a Kurdish enclave in the north of Syria would continue to constitute a red line for the Turkish state and would also be an excuse to be present in Syria when it is seen necessary which can also make US-Turkey relations tense. However, when it comes to Iraq, it appears that economy and business would shape Turkey’s relations with Iraqi Kurds. Mutual benefit of transporting Kurdish oil to clients via Turkey and other economic opportunities in the Kurdish controlled area of Iraq would continue to be the core of the relations.
Authoritarianism, threatening the market, will keep negatively affecting investors. Seizing assets of business people in the aftermath of the coup attempt portrayed a very negative image for the Turkish economy and market especially for the West/Europe. The image of the Turkish market under a highly authoritarian regime is not appealing.
Europe has been Turkey’s major trading partner. Seven of the top ten trading partners of Turkey are European countries. In 2015 around 45% of Turkish exports (5th largest provider of imports) were delivered to EU countries while 38% of imports came from the EU countries (EU’s 4th largest export market). With this amount Europe has been both Turkey’s top export and import market.
Once the fastest growing economy in the G20 group of nations, Turkey is now dealing with a shrinking economy and a 12% unemployment rate.
The tourism sector that constitutes around 10% of Turkish economy has been declining since 2014. Since then the number of tourists visiting Turkey dropped from 42 million to 25 million in 2016.
The purge, particularly since the July 15 coup attempt, discouraged investments, particularly foreign investments. The economy is in need of foreign currency and the Turkish lira has been losing value as it reached the exchange rate of 3.67 against the US dollar. Turkish economy, which is a highly interdependent economy, would continue to go through an economic downturn which would probably turn into an economic crisis.
Such a situation would cause shortage of foreign currency. An economy relying on import would be in need of foreign currency and search for liquidity would lead to alternative sources, even unreliable sources.
Speaking to Turkey Institute, Prof Elvan Aktas of Valdosta State University commented on internal and external factors affecting current state and future trajectory of Turkish economy as follows.
There are many exogenous factors affecting Turkey’s economy negatively, as well as some internal structural problems.
- Money flowing back to the developed world, only selectively to “safe and stable” developing countries
- Free money regime (due to US FED policies) is over, borrowing costs for unstable economies is astronomical (i.e. double-digit interest rates where the whole world is facing zero or negative rates)
- Turkey’s region (both developed EU-zone and troubling Middle East) is facing growing political and war risks. Turkey’s most valuable asset is its location, consequently it benefits from regional trade. Now, that asset is becoming a huge liability.
- International community is much less tolerant towards governments which get involved with illegal transactions, arms shipments, and terror financing.
- Misuse of the funds received during 2008-2009 financial crisis: almost all invested in construction which built a real estate bubble, instead of R&D, production capacity and education.
- Abandoning of EU membership bid, and the democratisation of the state institutions scared off foreign and domestic capital.
- There is no independent judicial process left in the country, i.e. corruption and crony capitalism, as well as intimidation of any opposition to the Islamist ruling party.
Please see the last item from global factors.
Both of the lists could be much longer and in more detail; these seem to be the most prominent factors related to the downturn of the economy.
Consequently, the result of the referendum is irrelevant to the progress and the potential solution of the economic problems of the country.