Municipal Elections in Turkey and the Future

I have been following the Turkish elections with renewed attention. Although they were for local administrations and municipalities, the recent corruption leaks about PM Erdogan turned them into a referendum of sorts.

They also showed Erdogan's unmatched political skills.

Remember how Karl Rove took a draft-dodger from an upper crust East Coast dynasty and turned him into a good-ol' boy from Texas with working class roots and tastes (and his war hero opponent into an effete Boston Brahmin)?

Well, Erdogan would have made him proud with these elections in Turkey.

When it became evident that he and his family were involved in a massive corruption scandal, just like Rove, he went into offensive and started accusing "the parallel structure" (referring to the Gulen movement) of plotting against him and his followers. He hijacked the agenda and effectively put the opposition on the defensive. They could barely catch up with him. Every day he fed the news cycle with new accusations and bombarded them with sound bites.

When Gulen movement responded with new embarrassing leaks, he countered by banning their rebroadcast and discussion in traditional media. Eventually, he even shut down Twitter and YouTube to ensure that only the technically savvy people (those using VPNs) could access the damaging material. There were many such people on the opposition side but very few within the AKP's constituency. And that was the point.

In short, he successfully prevented a wider discussion of the corruption allegations: his supporters heard too little to feel ambivalent about him and his opponents could find no stable medium or convincing message to challenge him. When they tried, the AKP pundits shut them up with glee. It was like Rove making Bush's dismal service record disappear and keep the narrative on the superficiality of John Kerry's war wounds.

When he won 43-44 percent of the votes, his opponents were so disheartened that the only thing they could do was to lash out at the lemmings-like tendencies of the electorate.

I think that is a facile and somewhat elitist verdict.

Let me first explain why the AKP was victorious despite these serious allegations. I will then try to outline a likely roadmap for the rest of the year.

The AKP: A Unique Political Profile

The AKP is an interesting coalition which defies easy categorization, especially if you use some kind of Western political party affiliation framework.

The party has an Islamist constituency at its core but that core is far from being monolithic. There are moderate Islamists that you could compare to the supporters of Christian Democratic parties of Western Europe. There are also religious nationalists who hold their Turkish identity as dear as their Muslim identity (and that is something quite unique in the Islamic world). There are pious people who believe in the primacy of charitable works and who suspect that capitalism may be corrupting the souls of Muslims. If you have to, you could liken them to Social Catholics. There are regular corporate conservatives who give priority to deregulation and free markets. You know, your basic Mitt Romney folks without the Mormon outlook. And there are social conservatives who cherish a patriarchal society where everyone has a predetermined position within a traditional gender division of labor. A version of the Christian right in the US.

Erdogan's genius was to leverage these disparate forces to occupy the center left, the center and the center right of the political spectrum.

This is much harder than it sounds. In fact, the AKP might be the only conservative party in the world to initiate massive social assistance programs to help the poor and the marginal. Whereas most Western conservative parties currently try to cut down social assistance and feed the poor to the volcanoes, the AKP created massive domestic aid programs: there are close to 12 million people receiving social assistance in Turkey. And there were practically none before they came to power.

Besides social assistance, the party invested in hospitals, schools and universities. They improved municipal services wherever they came to power. More importantly, they made these services essentially free. They also reduced corruption for basic services to individuals and channeled the graft for large projects and permits to (Islamist) charitable works.

For instance, the Islamic precept to bury your dead before the next sunset, previously made the funeral procedures ripe for corruption. When the AKP took over local governments, they streamlined the process and eliminated bribes completely. Even now, they distribute basic staples like flour and dried legumes free of charge in many poor neighborhoods. Consequently, from the perspective of the poor and disaffected, they are directly responsible for a marked improvement in their standards of living and their daily life.

In that context, you could think of Erdogan as a right wing Chavez (but a much better operator than the late El Commandante).

At the same time, the party implemented large scale deregulation and privatization schemes and allowed private sector companies to take over many state-owned businesses like telecommunications. Under AKP rule, private sector prospered like never before. Besides dramatically expanding in the domestic market, Turkish companies became a major force in the Middle East, Russia and Southeast Asia.

Having covered the center-left and center-right economically, the AKP similarly positioned itself socially. On the one hand, it vigorously defended the yearning of its supporters to incorporate Islamic symbols and principles into daily life (the most prominent ones being lifting the headscarf ban and limiting the consumption of alcohol). And Erdogan used a rather polarizing discourse in the process. But his government never fully implemented concrete measures to enshrine these symbols into daily life. Headscarves came to be widely tolerated and there were some minor restrictions on alcohol consumption in public.

This way, for its supporters, the party became the guarantor of these symbols for as long as it was in power but it prevented the other side from claiming that they were turning Turkey into Saudi Arabia. It was a shrewd tactic.

However, there was one crucial problem with all that: this massive economic boom, which enabled Erdogan to maintain capitalist and social democratic policies simultaneously, was based on the twin pillars of construction and consumer spending. As we all know from the US experience (not to mention the GIIPS), such booms are bubbles waiting to burst.

When the economy began to slow down (just before the Occupy Istanbul incidents) Erdogan and his lieutenants quickly realized that they could no longer maintain their benevolence vis-a-vis the poor and their redistributive largess vis-a-vis the business classes.

At the time, I suggested that, at the heart of the Occupy Istanbul discontent was a conflict over the distribution of the existing pie and the only solution under the circumstances was to apply more authoritarian and polarizing approaches.

In that sense, it was an easy decision for Erdogan to go back to what Rove called 50-percent-plus-one strategy. Since then, he has been in every city in the country decrying the effete West Coast liberal and claiming to be the hero of the heartland. And after the corruption allegations, he also took over the mantle of martyrdom. As you might remember from US political scene, nothing is more effective than playing the victim card in limiting the discursive options of your opponents.

Not surprisingly, his message resonates with the poor masses who instinctively dislike those godless liberals and who credit him for the undeniable improvements in their daily lives.

But in the process, he made a fatal mistake: He listened to the advise of his spy chief, Hakan Fidan and, instead of trying to solve the Kurdish problem, as he should have, he exacerbated it by supplying arms to Jihadis in Syria and by harassing the PKK's Syrian offshoot, the PYD.

That turned the Syrian conflict into a long and protracted civil war with no clear winners and made the Kurdish issue much harder to solve.

More importantly, it really upset the Obama administration.

What Will Happen Next?

Erdogan has two elections ahead of him.

The first one is the presidential elections in August as the President will be elected by popular vote for the first time in the history of the Republic. The other is the general elections that will take place sometimes in mid-2015. The AKP's bylaws do not allow their members to stand elections for the same position for more than three times and the 2015 elections will be Erdogan's fourth as an MP (and Prime Minister as well).

For that reason, he expressed his desire to become President. It was assumed that the incumbent Abdullah Gul might withdraw from the race in Erdogan's favor. But right now, this does not look like a done deal.

As I outlined before, Gul has been rebranding himself and might have different plans about the Presidency. But a lot of those plans depend on what Erdogan will do next.

Erdogan has two options.

Option 1: Stay the Course and Pursue Domestic Polarization and Regional Isolation

Erdogan might persist with his defiant attitude and might try to control events through heavy-handed and authoritarian policies. This includes the intransigent Syria policy and its Kurdish component, the purge of state apparatus of Gulen sympathizers and the disastrous foreign policy in the Middle East.

Most Turkish pundits think this is the most likely choice.

If that happens, I predict that, electoral successes notwithstanding, he will be forced to retire from politics in the foreseeable future.

Under that scenario, one of the first things that will happen is a massive capital exodus. Turkey has a significantly large current account deficit and is very vulnerable to such a move. Erdogan does not have many alternatives to fix that problem. His volatile and incompetent foreign policy in the last couple of years alienated the Saudis and the Gulf countries. So, he cannot not expect any influx of capital from them. Western hedge funds and institutional investors stay away from Turkey because of the instability caused by Erdogan's polarizing rhetoric and authoritarian policies. Russia might have helped, as it did in the past, but because of the Crimean crisis, Putin is in an economic bind himself and cannot afford such gestures.

In short, under that scenario, I expect a very severe economic crisis.

There is very little doubt that if the economy takes a nosedive, his support will quickly vanish. For instance, in 2009, right after the 2008 crisis, when the economy slowed down, the 47 percent the AKP received in the 2007 elections was reduced to 38 percent according to contemporary opinion polls. And if the crisis continued, the AKP would have shrunk to its core Islamist constituency, which is estimated to be around 20 to 25 percent (including the ultra-conservative Muslims of the Felicity Party and the Gulenist).

If and when that happens, the AKP coalition will unravel and a serious intra-party power struggle will ensue.

Secondly, most observers believe that there are a lot more damaging recordings that were not made public before the elections. If Erdogan maintains his current course of action, these tapes are likely to become public in dizzying succession. Sooner or later, the allegations will start creating doubts in the mind of his supporters. Especially, if they take place in an adverse economic climate.

Some observers assume that he can actually manage additional allegations as he now controls most media outlets, the judiciary and the police. But there is one component of the graft scandal over which he has no say.

The $4.5 million found in shoe boxes on December 17 belonged to the CEO of a state controlled bank called Halkbank. Halkbank was involved in a gold-for-gas scheme with Iran to circumvent US imposed sanctions. They used an Azeri-Iranian businessman by the name of Reza Zarrab (who was naturalized under the name of Riza Sarraf). It is alleged that Zarrab moved over $13 billion in gold through individuals to ensure compliance with the sanctions. The setup was pretty complicated:

A system was hatched to bypass SWIFT queries by setting up front companies in China. Then, money was transferred from Iran with falsified documents to bank accounts opened in the names of those companies in the guise of reimbursements for imports from China. The money was immediately transferred to the accounts of real or front companies in Turkey as payment for exports, and used to purchase gold. The gold was then sent via couriers to Iran, or to Dubai to be forwarded to Iran.

So far so good.

Right after the raids in Turkey, in late December, President Rouhani ordered that the investigation of former Vice-President and top Ahmadinejad aid Reza Rahimi be fast-tracked. Reza Rahimi has shady dealings with Iranian tycoon Babak Zanjani.

Zanjani’s name also emerged in Turkey’s graft probe as the alleged partner of Iranian-origin Iran in exchange for money via state-run Halkbank.
businessman and gold dealer Reza Zarrab, the key suspect in the case, who is accused of illegal transfers of gold to

 The Turkish connection is the most sensitive part of the investigation for Erdogan:

The English-language Turkish Daily News quoted an Iranian parliamentarian as saying that an Iranian judicial team would travel to Turkey to try to uncover secret assets of Zanjani and his alleged business partner, Reza Zarrab, who is a suspect in a high-level graft probe in Turkey.

This is critically important for Rouhani. Ahmadinejad had appointed the head of the Islamic Revolutionary Guards (known as Sepāh-e Pāsdārān-e Enqelāb-e Eslāmi or Sepah for short) Brig-Gen Rostam Ghasemi as the oil minister. The alleged corruption would weaken both Sepah and Ahmadinejad. And the
conservative Mullahs who supported them.

Which means that Rouhani is unlikely to give this up. In the Rouhani-Ahmadinejad power struggle, Zanjani could make a deal to avoid prosecution and provide damning evidence against Zarrab. And by extension senior AKP politicians.

That is not something Erdogan can control.

For these reasons, I suspect that we will witness a major shift in attitude and policy.

Option 2: Adopt a Conciliatory Foreign Policy Along While Maintaining the Authoritarian Domestic Approach

That major policy shift I find likely will be in the foreign policy area.

Erdogan and his top aid know that they can no longer continue to help the Jihadis in Syria. Besides alienating the US, they are beginning to realize that these hardened radicals are not easy to control and they might create all sorts of problems in Turkey.

Erdogan also needs Kurdish votes if he stands for election for the position of President. Without their support, the opposition parties could easily get a single candidate elected to the Presidency. Even if Erdogan decides not to run for president, he still needs Kurdish votes to shore up his waning support.

All of these variables mean that Erdogan and his team will have to start dealing with the PKK and its jailed leader Abdullah Ocalan.

In the coming months, I expect Erdogan to relaunch the peace initiative with Ocalan and perhaps even provide some indirect support to PYD in Syria (depending on the evolution of the talks).

This could dramatically alter the course of the war of attrition in Syria. As I claimed from the beginning, Kurds are the key to the Syrian conflict.

The second olive branch will be towards Iran. There are already burgeoning efforts in that respect and Erdogan himself visited Tehran in January. He rightly fears the Reza Zarrab investigation could engulf his administration and he will try to find a way to placate Rouhani. He does not have many carrots he can offer him but he has no other options. Rouhani, for his part, is happy to be the rising star in the region and he just announced that he will be visiting Turkey shortly.

The third (and not as certain) component of a conciliatory foreign policy would be to start normalizing relations with Israel. Although I maintained that the initial kerfuffle was a kabuki theater, in the last year or so, Erdogan seems to have gone off the deep end. His top aids are likely to try to pull him back. Such a move would ease the US anger, might bolster investor confidence and might even help Turkey reclaim the "honest broker" role it once tried to play n regional politics.

Finally, Turkey might try to persuade Saudi Arabia to give up its policy to undermine Iran and its slow burning feud with Qatar. It is about the only country in the region with sufficient economic power and military might to convince the Saudis that they cannot achieve their goals with their current policies.

If these measures work, Turkey might regain some of its regional stature and might find its economic footing to avert the looming economic and social disaster.

In short, I expect a very busy diplomatic season for FM Davutoglu and probably for Erdogan himself.

As for the domestic scene, some observers said that Erdogan might surprise everyone by adopting a unifying rhetoric and more liberal attitude.

Personally, I don't see him taking this possibility too seriously. In the upcoming period of economic and social turmoil, a liberal approach would not help him much. It would not appease his opponents and it would not please his supporters.

My take is that he will maintain his strident rhetoric and attacks on the opposition, he will continue the purge of Gulen supporters in the judiciary and the security apparatus and he will try to control social media as much as he can.

In the process, he will have to deal with corruption allegations, as more direct and convincing evidences of corruption will surface in the coming months. He will either have to try to block their investigation or let friendly prosecutors perform a perfunctory inquest.

This brings me to the question whether he will try to become President or change his party's bylaws to remain Prime Minister.

If my predictions are valid, Erdogan will need a lot of administrative and political leverage to perform these tasks. The President of the Republic is more than a symbolic figurehead but his powers are dwarfed by the powers of the Prime Minister. After all, it is a Cabinet-centric parliamentary system. Erdogan would be better off if he stayed Prime Minister.

This has two additional advantages for him.

One, he would not have to ask his former fellow Islamist warrior Abdullah Gul to give up his own candidacy. Gul relishes his role as President of the Republic and he is a lot more popular among the opposition than Erdogan and his top lieutenants. There is also the possibility of Gul refusing to step down and to become Erdogan's rival for the presidency.

Secondly, partly as a result of Erdogan's polarizing rhetoric, the opposition hates him with such passion that they might simply unify behind a single candidate and defeat him for the presidential elections. This is a much more likely outcome than it was six months ago. It is hard to predict whether the opposition could stay unified long enough but after the defeat in recent local elections they might have no other option if they want to get rid of Erdogan.

If he loses the presidential elections, it would be a lot harder for him to change the bylaws of his party to stand for the general elections in 2015. He would look desperate and petty.

For all these reasons, I think Erdogan will simply ask his party's general congress to change the bylaws to become a candidate for the fourth time. He will pretend that he detests such overtures but he will eventually let them convince him that he cannot abandon the country at such a critical juncture.

Especially, he will add, when the opposition is so obviously incapable of handling these problems. And reluctantly, he will accept the party's invitation to stand for more terms as Prime Minister.

Some people suspect that he might call early elections to combine them with the presidential ballot. I am not convinced. But if does that this would be another indication that he is eyeing his current post rather than the presidency.