Taking stock in Turkey/Can Islamists and secularists work together?

Turkey’s general and presidential elections just might re-establish a tenuous balance of power between warring secularists and Islamists, reducing regime tensions at the expense of creating a less stable, and possibly more natıonalist, government. Whatever the outcome, Turkey will retain its contradictions—and an economy closely attuned to global liquidity conditions.

The catalyst for this test of strength has been the expiry of the term of Turkey's president, Ahmet Necdet Sezer, a 65-year-old former judge. By now, since his term ran out on May 16th, Mr Sezer should be relaxing in the bright spring sunshine on the balcony of his retirement home in a lakeside suburb of Ankara. Instead, he remains in the presidential palace—his home for the past seven years—overlooking the city centre. No date been fixed for his move.

The president is not complaining. Alongside the armed forces, the universities and the main opposition Republican People’s Party (CHP), he has been a mainstay of the secularist camp confronting the governing Justice and Development Party (AKP), a party of Islamist roots. He is therefore unlikely to have been disappointed by the May 1st ruling of the Constitutional Court (of which he is a former president) which has, in effect, prevented the AKP from choosing his successor.

The Court issued its controversial judgment only days after the sole candidate Abdullah Gul, the foreign minister, had won the first round of voting--and after the armed forces had demanded a president committed to the secularist values of modern Turkey’s founder Mustafa Kemal Ataturk, lambasting the government for Islamicising education and social life. The judges upheld the opposition’s claim that two-thirds of MPs had to be present for a vote on a new head of state to be valid. With the CHP and the centre-right Motherland Party (ANAP) boycotting presidential ballots, the prime minister, Recep Tayyip Erdogan, the charismatic but abrasive AKP leader, had no choice but to bring forward November’s general election.
Election lottery

Polling will take place on July 22nd, and predicting the outcome is strictly for gamblers. The Elections Law prevents parties winning less than 10% of the national vote from taking up seats in parliament. In 2002, 45% of the electorate voted for parties that won no seats. The five best losers took 9%, 8%, 7%, 6% and 5% of the vote respectively. In consequence, the AKP won 363 of the 550 seats with 34% of the votes, and the CHP won 178 with 19%. Independents took nine seats. Some parties, notably ANAP, which scored only 5%, later established a parliamentary presence by transferring MPs from other parties.

Until April, financial analysts were looking forward to a repeat performance this year. A renewed overall majority for the AKP, it was assumed, would guarantee the continuation of tight fiscal policy, the privatisation programme and other IMF-backed reforms. But massive demonstrations staged in Ankara, Istanbul and Izmir on April 14th, April 29th and May 13th have attested to the depth of public concern, especially among women, about Turkey’s alleged Islamist drift, reinforcing the die-hard determination of the secularist camp. In these circumstances, monopolisation of power by the AKP has come to be seen as a risk, and political stability can no longer be equated with single-party government. Conversely, a more representative parliament and a broader-based government could mitigate social tensions.
New balance?

An AKP-led coalition looks worth a small bet. Mr Erdogan’s outfit is still the party to beat. It is backed by Sunni Islamic sects and charities, conservative businessmen, Islamist media organs and a swathe of the urban poor. It has a strong power base in local government. It has distributed jobs, contracts and food parcels. In contrast to the financial crisis and recession of 2001, it can boast a five-year record of 7.5% annual GDP growth—although few employees or farmers will admit to having seen any benefits. At the same time, other parties could increase—or at least consolidate—their support. The alliance recently forged with the small Democratic Left Party (DSP) may help CHP leader Deniz Baykal to overcome disenchantment with his narrowly-focused leadership. Meanwhile, the ANAP leader, Erkan Mumcu, has announced a merger with the True Path Party (DYP), the fellow centre-right party now led by ex-Interior Minister Mehmet Agar, which came third in 2002. The merged entity, to be known as the Democrat Party (DP), could attract support from big business and the mainstream media, which are no longer comfortable with the AKP. It will be the AKP’s most likely coalition partner.

Any coalition could bicker, procrastinate and eventually dissolve. It might also have to respond to public cynicism about Ankara’s EU, Cyprus and Iraq policies, and to criticisms of the overvalued lira and the high 17.5% overnight rate—a combination widely believed to favour financial investors at the expense of national industry and jobs. Issues such as these have contributed more than is often recognised to anti-AKP sentiment.

By way of complications, the far right Nationalist Action Party (MHP), fourth placed in 2002, is hoping to re-enter parliament. So are Kurdish nationalists—anathema to the MHP—who plan to circumvent the 10% rule by standing as independents. Kurdish nationalist PKK insurgents still regularly kill and are killed by conscript soldiers in the mainly Kurdish-populated Southeast, and plant bombs in other cities and tourist resorts. There have been no Kurdish nationalist MPs since thirteen were hounded from their seats in 1994. This year’s candidates can expect obstruction and harassment.
Holding firm

For all its fault lines and weaknesses, Turkey is not on the eve of collapse or revolution. Support for an outright military coup is minimal. Polling, as usual, will be largely free and fair. Similarly, whatever wild pledges they may make to the electorate over the next two months, none of the major parties are in principle opposed to the open free-market economy, fiscal rectitude or to attempts to lure foreign capital.

For now, the economy is riding a flood of global liquidity. The trade and current account deficits are said to be the fourth and sixth largest in the world respectively. But foreign lending and investment are financing them with ease. This week the lira firmed further to about YTL1.32:US$1, notwithstanding stubborn 10% inflation and data releases that underlined the ongoing slowdown in growth.

The solid fiscal performance of recent years may worsen in 2007 due to sluggish tax revenues, higher interest costs and some pre-election loosening by the government. However, privatisation is generating revenues (the recent offer for sale of Petkim, a petrochemical producer has attracted 19 bids), and a resurrection of debt sustainability doubts is some way off. A disruptively sharp currency correction is unlikely unless global tides turn or politics tests the nerves of the markets and domestic savers more severely. Eight years of IMF standby accords seem to be drawing safely to a close.
Electing the president

As for Mr. Sezer, he could help to clarify his retirement date this week by approving a package of drastic constitutional amendments which the AKP and ANAP have hastily pushed through Parliament. The amendments introduce direct election of the president in a “French-style” double ballot, cut the presidential term from seven years to five, permit a sitting president to be re-elected and space general elections every four years instead of every five. The president has until May 26th to make up his mind. Most likely, he will return the package to parliament for further consideration. If parliament then insists, he can also put it to a referendum.

In a nutshell, the new head of state may be elected by the people or parliament, with or without a referendum (which may or may not coincide with the general election). The AKP is standing by Mr Gul, but if it is to remain in government, a figure acceptable to the secularists would be a wiser choice for the sake of stability.
May 21st 2007
From the Economist Intelligence Unit ViewsWire