How Turkey’s Local Elections Became a Vote on Erdogan

(Bloomberg) -- Turkish leader Recep Tayyip Erdogan won a fresh mandate with sweeping new powers in a double victory in parliamentary and presidential elections last summer. Now, less than a year into his five-year term, he faces a referendum of sorts on his management of the state. With the nation in an economic downturn, Erdogan's opponents are working together against his Islamist-rooted movement in local elections March 31, threatening its hold on the capital Ankara and the commercial hub Istanbul. With the outcome uncertain, Erdogan moved to stop a slide in the currency ahead of the vote, roiling Turkey's financial markets.

1. What makes this election special?

Turkey's opposition parties rarely coordinate strategy. But this time, the second largest opposition group in parliament, the People's Democratic Party, or HDP, which stresses minority rights, opted to sit out significant municipal races beyond its stronghold in the southeast, where Turkey's Kurdish minority is concentrated. Instead, it is supporting candidates from an opposition bloc led by the larger Republican People's Party, or CHP. That's led to competitive races in Ankara and Istanbul that threaten the quarter century-long hold on the two cities by Erdogan's Justice and Development Party and its predecessors.

2. What's behind the HDP's move?

It seeks to win back about 100 municipalities in the southeast in which elected mayors have been ousted by the government and hundreds of Kurdish politicians have been jailed for alleged ties to the outlawed Kurdistan Workers' Party, or PKK. The PKK, which the Turkish government, the U.S. and European Union consider a terrorist organization, has battled for an autonomous Kurdish region inside Turkey on and off since 1984. Kurds make up nearly a fifth of Turkey's population. The HDP has faced a broad crackdown since it won enough votes to enter parliament in 2015.

3. How has Erdogan responded?

As in past elections, Erdogan has appealed to nationalist sentiment with warnings that separatist aspirations among Kurds threaten Turkey's integrity. In a thinly veiled message to Kurdish politicians, he threatened to replace any municipal official involved in terrorism or a criminal act. Erdogan himself was removed from his office as mayor of Istanbul in 1998 after being convicted of inciting religious hatred, for which he served four months in jail. He has also said that “Ankara is too important to be handed over to people mired in shady businesses,” a reference to allegations by a prosecutor that CHP mayoral candidate Mansur Yavas abused his duty as a lawyer. Yavas has denied any wrongdoing.

4. How bad is the economy?

The country is experiencing its first recession in a decade. Unemployment at the end of 2018 was 13.5 percent, a nine-year high. Rampant inflation forced the government to open food stalls selling discounted goods to insulate the poor from the impact of a currency crash last year. The rout was fueled by a diplomatic standoff with the U.S. over the future of American-backed Kurdish forces in Syria and an American pastor held in Turkey on terrorism charges. Consumer sentiment is at its lowest since the 2008 global financial crisis.

5. How is the election playing out in financial markets?

Turkey's currency swung wildly in the week before the vote. Local banks were ordered to clamp down on liquidity, making it more difficult to bet on a decline in the lira, and even trapping investors in trades they wanted to exit. Overnight interest rates fluctuated between 24 percent and 1,300 percent. The lira squeeze roiled trading in Turkish assets, including the $210 billion bond market, which has attracted foreign investors because it has the highest yields among emerging markets. The financial drama was a fitting end to a campaign that saw the government strong-arm businesses including banks and food retailers.

The Reference Shelf

• Related QuickTakes on Turkey's political, religious and geographical divides, U.S.-Turkey strains, Turkey's military expansionism, and the Kurds.
• A Congressional Research Service report on Turkey.
• An International Crisis Group report on the Turkey-PKK conflict.

To contact the reporter on this story: Selcan Hacaoglu in Ankara at shacaoglu@bloomberg.net

To contact the editors responsible for this story: Onur Ant at oant@bloomberg.net, Lisa Beyer

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