Country Risk

Turkish ruling party loses key municipalities in local elections, posing moderate alteration, cancellation risks to municipal contracts

02 April 2019

The main opposition Republican People's Party (Cumhuriyet Halk Partisi: CHP) candidate for Istanbul mayor, Ekrem Imamoglu, is greeted by supporters on 1 April, celebrating his preliminary victory against the ruling party candidate. Source: Yasin Akgul/AFP/Getty Images
  • It is more likely than not that Turkish President Recep Tayyip Erdoğan will eventually accept the AKP's loss of the Istanbul and Ankara municipalities. According to provisional official results from the High Election Board (Yüksek Seçim Kurulu: YSK), the opposition gained more votes in numerous municipalities previously controlled by the AKP, including Istanbul, Bolu, Ankara, Antalya, Adana, and Artvin. Although various AKP figures have disputed the results, particularly in Istanbul, where the opposition won by just 28,000 votes, President Erdoğan is likely to accept the electoral outcome, seeking at least to benefit from an improvement in international perception regarding the democratic process in Turkey. In provinces where the opposition has gained control of municipalities from the AKP, there will be an elevated risk of alteration and cancellation of municipal contracts committed to by the previous AKP administrations.
  • The election result reflects voter discontent over rampant inflation and rising unemployment following Turkey's currency crisis in late 2018. The AKP still won 44% of the overall vote, with a particularly strong showing in the central and rural parts of the country. With more than four years until the next round of elections -unprecedented since the AKP came to power - the government is now likely to seek a reformist policy agenda; following the election, Erdoğan stated that his government would "implement a strong economic reform programme … adhering to the rules of a free-market economy". This agenda is likely to be frustrated, however, by what will likely be a diplomatic stand-off with the United States over Turkey's purchase of Russian S-400s missile defence systems. More broadly, the government's dependence on its ultranationalist junior coalition partner, the Nationalist Movement Party (Milliyetçi Hareket Partisi: MHP), for a majority in parliament will likely preclude any attempt at normalisation of relations with the European Union and the US.

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