Erdogan’s rival Kilicdaroglu is having a hard time as the economy suffers

The outcome of the first round of Turkey’s presidential elections was a blow to the opposition, which had high hopes of ousting President Recep Tayyip Erdogan after 20 years in power.

Challenger Kemal Kilicdaroglu, 74, soft-spoken and bookish, is running as a candidate for change, promising economic reform, a reversal of Erdogan’s policies many describe as authoritarian, and closer ties with NATO and the West.

Turkish opinion polls – released ahead of Sunday’s vote – indicated a clear lead for Kilicdaroglu. But by Monday, with nearly all the votes counted, the 69-year-old Erdogan finished with a solid lead of 49.5% of the vote. Kilicdaroglu received 44.9%. Since none of the candidates won more than 50% of the vote, the election will take place in a run-off on May 28.

With a population of about 85 million, Turkey lies at the geographical crossroads between east and west. It boasts having the second largest army in NATO, is home to four million refugees and plays a pivotal role in geopolitics by mediating the Russo-Ukraine war.

The election results show that the situation is more divided than ever.

They also reveal that despite Turkey’s current economic turmoil, tens of millions of Turks still consider Erdogan their only viable leader.

Turkey is facing a cost-of-living crisis, with inflation dropping by about 50% and its national currency, the lira, more than 75% against the dollar in the past five years — thanks in large part to Erdogan’s persistent interest rate cuts despite skyrocketing. Inflation and shrinking foreign exchange reserves.

Erdoğan served as Prime Minister of Turkey from 2003 to 2014 and President from 2014 onwards, after he became mayor of Istanbul in the 1990s. It was celebrated in the first decade of the new millennium for transforming Turkey into an emerging market economic powerhouse.

He presided over many of the country’s national accomplishments, championed national pride, security, and respect for the Islamic faith, frequently held out against the West, and won the loyal support of many Turks—as well as non-Turks—around the Muslim world.

In a confrontation with Erdogan, Kilicdaroglu vowed to return to basic democratic values ​​and economic orthodoxy after his rival’s outsized influence over Turkey’s central bank sent foreign investors running.

He and his supporters accuse Erdogan of pushing the country toward authoritarianism. Over the years, Erdogan’s reforms have centralized his presidential power, and his government has overseen heavy crackdowns on protest movements and the forced closure of several independent media outlets.

Despite all this, Kilicdaroglu and the six-party alliance he represents failed. People point to a variety of reasons: his shortcomings as a candidate, the inaccuracy of pollsters, the Erdogan government preventing a more viable opposition, and the enduring popularity of Erdogan himself.

Kilicdaroglu is a “substandard candidate,” Mike Harris, founder of consulting firm Cribstone Strategic Macro, told CNBC Monday, “but he should still be able to win this thing, given how big Erdogan’s downsides are, and what economic disaster.”

Once Kilicdaroglu was selected as a candidate, Harris said, “This mistake was made, these are the cards we have to deal with. And it looks like the outcome – it will be close.”

Kilicdaroglu’s party, the Republican People’s Party, pursues the fiercely secular leadership model first established by Mustafa Kemal Ataturk, the founder of the modern Turkish state. It is known to have historically been more hostile towards religious Muslims, who make up a large part of the Turkish electorate, although the CHP under Kilicdaroglu has softened its stance and even former members of the Islamic Party have joined it.

People who criticize the opposition’s choice of candidate point to the fact that the CHP has repeatedly lost elections to Erdogan’s conservative and religious AKP since becoming Kilicdaroglu. that it Leader of the CHP in 2010. The CHP’s six-party platform is also an alliance of wildly diverse parties, which has raised concerns about the risk of splintering once in power.

There has been hope in recent years that the famous Istanbul mayor, Ekrem Imamoglu, a member of the Republican People’s Party and an outspoken critic of Erdogan, will be the next president of Turkey. But in late 2022, Imamoglu was unexpectedly sentenced to nearly three years in prison and banned from politics for what a court described as an insult to the judges of the country’s Supreme Election Council.

Imamoglu and his supporters say that the accusations are political, and Erdogan and his party direct them to sabotage Imamoglu’s political ambitions, which the Justice and Development Party denies.

For many observers, the story is emblematic of Erdogan’s seemingly unwavering grip on power.

In 2018, Selim Sazak, an advisor to one of Turkey’s small opposition parties, said, books: “Confronting Erdoğan was always an honorable but doomed effort. Opposition groups faced insurmountable odds. Erdoğan used every advantage to hold office; he had all the resources of the state at his disposal and the media was almost entirely under his control.”

Many observers now see the opposition’s prospects as bleak.

“I don’t think the opposition will gain any ground on May 28,” Arda Tunca, a columnist for Turkish news site PolitikYol, told CNBC.

Erdogan’s Justice and Development Party also won a majority in Turkey’s parliamentary elections on Sunday, meaning that “Erdogan has the advantage of convincing voters that if the opposition leader is the winner, he will be a weak president because parliament is shaped by the incumbent government,” Tunca said. . So the power is on the side of the government in Parliament ».

Still, Kilicdaroglu’s 44.9% of the vote is the highest ever received by any opposition candidate, Orkun Selcuk, associate professor of political science at Luther College in Iowa, said on Twitter. “It is clear that the opposition did not meet expectations, but it would be wrong to say that the opposition’s coordination failed. There are important gains, but they are not enough,” he added.

Kilicdaroglu promised an overhaul of economic policies, something many investors had hoped for.

However, that hope turned into anxiety after Sunday’s result, with a 6% drop in the Istanbul Stock Exchange, a nearly 10% drop in bank stocks, and the largest percentage drop for the lira against the dollar in six months.

Unfortunately it seems [what] As many as 49% of Turks voted for an economic crisis, Harris said..the next two weeks we could see the currency collapse.

Economists have warned that the monetary tools the Erdoğan administration is using to give the economy some form of stability are unsustainable, and will have to stop after the election — likely leading to extreme volatility.

“Erdogan’s big first-round performance represents one of the worst-case scenarios for Turkish assets and the lira,” said Brendan McKenna, an emerging markets expert at Wells Fargo.

He expects the lira, which is currently trading at 19.75 to the dollar, to witness “significant selling” in the near future and expects it to drop to 23 against the dollar by the end of June.

Beata Javorcik, chief economist at the European Bank for Reconstruction and Development, told CNBC that Erdogan “prioritized growth over macroeconomic stability.”

“There’s a limit to how long you can pretend that the basic laws of economics don’t apply,” she said. “So there are going to be some tough choices that the government in Turkey will have to make, regardless of who is leading that government.”

An unexpected kingmaker also emerged in the form of Sinan Ogan, the ultra-nationalist Third Party candidate who beat expectations with more than 5% of the vote. Whom his voters support in the second round could determine the final outcome – and he is unlikely to throw their support behind Kilicdaroglu.

Meanwhile, Kilicdaroglu has reshuffled his campaign team, reportedly firing some staff and emphasizing that the fate of the elections is yet to be decided. “I’m here until the end,” he said in one of the videos, slamming his fist on a table. But critics point out that he has not yet spoken publicly to his supporters, and say he lacks a clear strategy for the tour.

“Kilicdaroglu’s lack of appearance on Monday and the calm mood of his camp dealt a heavy blow to his base,” Racib Soylu, Turkey director for Middle East Eye, wrote on Tuesday.