Davutoglu’s resignation sparks uncertainty for Turkey

Davutoglu’s resignation sparks uncertainty for Turkey

On Wednesday May 4th, a meeting was held between Prime Minister Ahmet Davutoğlu and President Erdoğan. The outcome of this meeting would determine the future of the Justice and Development Party (AKP) and, quintessentially, the direction of Turkey in the foreseeable future. After the meeting it was clear that PM Davutoğlu would resign and a new Prime Minister would be elected, this time someone closer to the wishes of the President.

The moderate resigns

On the 5th of May, Prime Minister Davutoğlu announced his resignation to the Turkish nation with a heavy heart. He commented that he had been a good PM to the best of his abilities and had led a ‘strong’ AKP government since its election in November 2015. However, he said that the decision to resign was not ‘ a choice, but a necessity’, after party officials stripped him of powers to appoint provincial party leaders last week.

A controversial document (the “Pelican Brief”) discrediting the PM also appeared on the internet, which claimed that Davutoğlu was trying to overthrow the government. Many saw this as an attempt to delegitimise Davutoğlu.  The growing tension between Davutoğlu and Erdoğan had been apparent for some time and the increasing rifts between the two, while not public, were starting to show cracks in the insurmountable political machine that is the AKP. His resignation from the PM post adds to an ever-increasing consolidation of power by Erdoğan and his loyalists.

Davutoğlu, the former foreign minister and academic was seen as a moderate force within the AKP government. He is well-known for his failed policy of ‘Zero Problems with Neighbours’ and a ‘Neo-Ottomanist’ approach to foreign affairs. However, during his tenure as PM, he had acted as a balancing and mediating force to the President’s erratic behaviour.

The rift began in the beginnings of his premiership, when Davutoğlu proposed legislation aimed at tackling corruption. After the quashing of the 2013 corruption scandal where many prominent members of the AKP were implicated, this legislation was withdrawn.

Davutoğlu also pursued a more moderate approach to the Kurdish issue and differed with the President on the issue of pre-trial detentions of journalists and academics. However, what was perceived as a growing independence in policy decisions was seen as the primary motivating factor that led to the current situation.

The final nail in the coffin was the reluctance of Davutoğlu to support the push towards an executive presidency that accumulates all power in the President’s hands. Instead of checks and balances, Erdoğan has promoted a ‘harmonization’ of state institutions under his control. However, Davutoğlu never really challenged the President and was a docile figure despite policy differences.  He will now become the scapegoat for the failure of Turkey’s domestic mistakes and foreign policy in Syria.

Leadership crisis shakes market confidence

The departure of Davutoğlu spells trouble for Turkey. With an AKP convention set to be held on the 22nd of May, many believe that whomever takes the Prime Ministership will be close to the President and will not challenge his authority. Erdoğan Loyalists such as Binali Yıldırım, Bekir Bozdağ, or Erdogan’s son-in-law Berat Albayrak have been touted for the position. Regardless of who comes to the forefront, there is the talk of a snap election in the next coming months.

Both the possible removal of immunity against People’s Democratic Party (HDP) deputies and a leadership crisis in the Nationalist People’s Party (MHP) could combine to grant the AKP a super-majority in an upcoming election, which could pass the necessary changes to the constitution for an executive presidency. Either way, Erdoğan has fundamentally made himself the centre of political power in Turkey with no significant opposition in sight.

However, the continuing political instability and leadership crisis has markets worried.  On Wednesday, Turkish stocks tumbled and the Lira sank 4% to 2.95tl to the US dollar, although it has managed to regain 1.2% after Davutoğlu resigned quietly. Davutoğlu had always been one who offered a more orthodox approach to monetary policy and preserved market confidence in the independence of the Central Bank.

Now however, many investors are questioning whether the Central Bank will be under significant pressure to change its policy to cut rates. The spectre of another election, the third in 18 months, does nothing to minimize this doubt despite what the President’s aides say. Turkey is entering into unknown territory and it is not yet known whether it will be able to regain the confidence of international markets as political uncertainty plagues the Turkish political and economic climate.

Future stability unclear

Also on the rocks is the EU-Turkey deal. Europe found it easier to deal with Davutoğlu as an interlocutor in its approach to refugees. The visa deal was seen as a success for Davutoğlu, but it was too little, too late. The President is not as keen on European membership and has lambasted Europe on its refugee stance in order to increase his national appeal.

Many are wondering whether Turkey will renege on the deal or try to extort Europe for more benefits and cash. This also means that it is highly unlikely that Turkey will meet the last necessary requirements to obtain visa-free travel. Overall, it appears that there may be frosty relations between the EU and Turkey in the future if the appointed PM is not EU-friendly.

The drumbeat has started and the march towards authoritarianism has begun for the Turkish parliamentary system. Turkey is in a period of political and economic instability. Its security situation is deteriorating, with increased suicide bombings by ISIS and PKK groups and no end in sight to the conflict in the East. Investors are worried about increasing risks and tourism is at an all-time low.

It is hard to say whether stability will increase in the coming months, let alone the next few years. All the signs are pointing towards a snap poll in the coming months. Even if Erdoğan does not gain the necessary number of seats in a snap election to change to a Presidential system, he will still rule as if there has been. He has significant near-almost control over the judiciary, military, and now political system. One thing is sure now after Davutoğlu’s resignation: in Turkey, it is Erdoğan who holds all the cards.

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