What Does Erdogan’s Reelection Mean for the New Cold War?

Turkish President Recep Tayyip Erdogan has another five years in power after defeating opposition leader Kemal Kilicdaroglu in Sunday’s runoff election.

Kilicdaroglu was in the impossible position of trying to make up ground by simultaneously keeping the pro-Kurdish Peoples’ Democratic Party voters on board and attracting the voters of nationalist candidates from the first round.

It didn’t work.

While Umit Ozdag backed Kilicdaroglu, another nationalist candidate went for Erdogan. Both candidates’ pet issue was the repatriation of the 3 million-plus Syrian refugees in Turkiye (as well as millions from other countries) – even doing it by force if necessary.

While both Erdogan and Kilicdaroglu were in favor of repatriation, neither had previously gone that far. Kilicdaroglu tried to talk tough on the issue in the two weeks between the election and the runoff, calling for the urgent expulsion of “10 million refugees” in the country, but while his new stance wasn’t enough to win him the election, it did provide a bipartisan blessing for the anti-refugee stance.

One reason Erdogan has been so successful at remaining in power is his ability to move with public opinion. If he continues to do so, Turkiye might see a more dramatic turn to the right. While Erdogan beat expectations in the presidential vote, his party lost seats at the parliamentary level as nationalist parties outflanking him on the refugee issue were the big winners in the elections.

The Nationalist Movement Party gained one spot in the 600-seat Turkish parliament and is now at 10.4 percent – a high amount for a party that has ties to the Ulku Ocaklari, or Grey Wolves, an ultra-nationalist group long associated with political violence.

All in all, far right parties got more than 30 percent of the parliamentary vote as working class and low income voters in both urban and rural areas opted for nationalist and/or Islamist candidates. Duvar reports:

As one of the most crucial elections of modern Turkey’s history ends, the Turkish parliament now hosts plenty of far-fight MPs while the vote share of the far-right parties is even higher than in the previous elections. …

Turkey has been experiencing a similar path with its global counterparts. The leftist and center parties struggle to capture the voters who have been facing detrimental consequences of the economic crisis and allured by the far-right discourse.

As Turkiye’s inflation began to take off in recent years and Erdogan’s government followed an unorthodox policy by continuing to slash rates, purchasing power has been severely eroded as the inflation rate was 44 percent in April and as high as 85 percent last October.

At the same time frustration has risen with the enormous number of refugees and migrants in the country, mostly as a result of the war in Syria. Although Erdogan’s previous support for the overthrow of Syrian President Bashar Assad al-Assad helped create the problem, he ultimately didn’t pay the price at the ballot box. But he will be under even more pressure now to undo the situation his Syrian escapades brought about.

Turkiye has been building housing in areas of Syria occupied by the Turkish army and wants to resettle Syrian Arabs there – possibly to dilute the Kurdish population. Ankara, with the support of Russia, is also working to improve relations with Assad. At the same time, Erdogan’s foreign affairs minister Mevlut Cavusoglu is saying that some Syrian refugees will remain as a source of cheap labor.

Resentment towards refugees and migrants is likely to only grow as Turkiye’s economy faces a perilous path ahead. Erdogan went on a generous spending spree in recent months, moving roughly 500,000 public employees from temporary contracts to permanent positions with strong benefits, hiking pension payments, extended cheap credit for small businesses, and offered early retirement benefits to more than 2 million Turks. The government also raised the minimum wage. The problem is that the country’s runaway inflation lessens the impact of such policies while the long term finances continue to take a hit.

Turkiye had a budget deficit of roughly $12.9 billion over the first three months of this year, and it’s possible it reaches six percent of GDP or higher by year’s end. Turkiye’s hard currency reserves were further drained ahead of the election, which was likely an Erdpogan attempt to boost the lira before voters went to the polls. The country’s foreign currency reserves are possibly in negative territory now. The earthquakes that hit southern Turkey in February will require massive spending, exacerbating these trends.

Pressure in the financial markets continued to build in the days between the May 14 election and Sunday’s runoff. Turkiye’s central bank was forced to ask some lenders to step in and buy the country’s dollar bonds. The country’s sovereign dollar bonds and equities have fallen off a cliff, and the cost of insuring exposure to Turkish debt has jumped.

Should Turkiye’s economy continue to flounder, resentment of the refugees will likely only grow.

The lira began to hit turbulence back in August 2018 when the US imposed sanctions on Turkish exports, and the Erdogan administration has continued to cut interest rates despite the record-breaking inflation.

The rough economic road ahead combined with the refugee situation could help the nationalists continue to add support and is  food for thought when thinking about who could potentially succeed the 69-year-old Erdogan if he doesn’t seek reelection in 2028. From Al-Monitor:

Had they contested the elections as a united bloc, they would have become the second-largest force in parliament after the AKP. In a viral tweet after the May 14 vote, Tugrul Turkes, a prominent nationalist figure who joined the AKP in 2015, declared that “Turkish nationalism is the only true winner of the elections.” It could become the country’s largest political force in the next elections, he continued, if the scattered nationalist groups come together.

New Cold War Status Quo?

One of the few things going right for the Turkish economy is how it has navigated the conflict between the West and Russia. Ankara has refused to join sanctions against Moscow and has instead only grown closer to its neighbor across the Black Sea.

Exports from Germany to Turkey jumped nearly 37 percent during the first quarter of this year compared to last. Most of those goods are believed to make their way to Russia as a sanctions workaround. Turkey has been in a customs union with the EU since 1995, and the economic relationship is strengthening despite the EU’s public hand wringing over Ankara’s trade with Moscow:

Unless the West unwisely forces Turkiye’s hand (which of course can’t be ruled out), this arrangement will almost certainly continue under Erdogan’s new term.

There were reasons to believe the opposition would have chosen a different course. In previous posts I wrote about the opposition’s mixed signals on Russia and Kilicdaroglu’s odd decision to tour the US and UK last year. It appears Moscow was of the believe the a Kilicdaroglu presidency would have moved Turkiye towards the West. From WSWS:

A commentary in the pro-Kremlin newspaper Vzglyad explained why Erdoğan, maneuvering between NATO and Russia, was preferred by Moscow: “In terms of personalities, most Russian experts were rooting for Erdoğan… there were serious reasons to suppose that in case Kilicdaroglu wins, Turkey will join Western policy of blockading Russia.”

It continued: “That is, simply put, it would abandon Erdogan’s ‘both ours and yours’ line, after which it would rigidly enforce anti-Russian sanctions, supply more weapons to Ukraine and foment the Russian periphery.”

Erdogan often painted Kilicdaroglu as a western stooge during the campaign – a description that was given more weight when the latter accused Moscow of interfering in the election with deep fake videos despite his charge lacking evidence and commonsense. This likely damaged Kilicdaroglu’s prospects since taking the side of the West in the new Cold War is a toxic position in Turkiye. A December poll by the Turkish company Gezici found that 72.8 percent of Turkish citizens polled were in favor of good relations with Russia. Compare that to the nearly 90 percent who think the US is a hostile country.

Kilicdaroglu also claimed Western money would pour into Turkiye should he win – a claim backed by western financial institutions. According to Bloomberg, “Vanguard Says Erdogan Loss Would Make Turkey Bonds Loved Again.”

Alas, it was not to be.

It remains to be seen how Washington and Europe will react to Erdogan’s victory. It was made clear the West wanted him gone – from Biden’s declaration during his 2020 election campaign that Washington should help the Turkish opposition “take on and defeat Erdogan” to the recent Economist cover with the title “The Most Important Election of 2023” with the tags “Save Democracy” and “Erdoğan Must Go.”

The US has in recent years tried various forms of pressure against Erdogan and Turkiye (sanctions, threat of sanctions, strengthening Greece, arming Cyprus, etc.) all to no avail. The EU has also kicked around the idea of secondary sanctions to stop Turkiye’s role as a go between.

Could we see the West double down on those efforts now? While such policies would only serve to drive Turkiye closer to Russia and China, it’s difficult to rule out any self-defeating policy by the West. The rise in Turkish nationalism demonstrated by the elections will mean even less patience for Washington’s pressure campaigns.

Erdogan will likely continue to try to navigate the middle ground as it’s a profitable space to be. Russia, for its part, continues to offer carrots.

Moscow has helped Ankara prop up its foreign currency reserves with the purchase of Turkish bonds via a scheme involving the construction and development of Turkey‘s Akkuyu nuclear power plant.

On Thursday, Erdogan also said that Gulf states recently sent funding to Turkiye, briefly helping relieve the central bank and markets, and he added that Ankara will show them gratitude after the election.

Another recent agreement between Ankara and Moscow allows Turkiye to postpone up to $4 billion in energy payments to Russia until next year, both sources told Reuters under condition of anonymity. Ankara has already deferred payment of a $600 million natural gas bill. (Prior to the election Erdogan enacted a policy to provide free natural gas to households for a month.) A deal for Turkiye to pay for Russian gas in rubles has also helped Ankara reduce its foreign-currency demand.

Elsewhere, Erdogan could face increased pressure from the more nationalist parliament to take more military action against Kurdish groups in Syria and Iraq, although this would complicate relations with Moscow and Damascus.

Sweden’s path to joining NATO also likely got more difficult. Erdogan has hinted that his opposition to Sweden’s NATO membership application would continue until Stockholm extradites dozens of Kurdish exiles who Turkiye accuses of being terrorists. The strengthened nationalist forces in the Turkish parliament makes it even less likely to ratify Sweden’s accession.

Long term, the nationalists are likely to gain even more power as there are no easy fixes to Turkiye’s economic troubles nor a quick solution to its refugee crisis.

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  1. Piotr Berman

    So Turkey had to choose from typically unappetizing selection of political blocks (hard to tell that the menu in USA, Germany etc. is much better), and settled on AKP + nationalist allies. And it is hard to argue that they chose a larger evil, in part because the opposition is fracture and the consensus of that opposition slippery in a bad way. I did not watch news from Turkey much, hard to do given the grip of the government over the media, but

    Erdogan convinced majority of Turks that the West does not want them to prosper and manipulates financial situation with that aim, and as Turks are not isolated from the west, huge connection to expatriates in Western Europe, he got necessary help with American anti-Turkish vituperations, something that Russia never did.

    As a result, Russia is more popular in Turkey than USA, so Kilijdaroglu claimed to maintain foreign and trade policies. And then, kaboom, he blames “Russian meddling” in the style copied from American Democrats, but it flied like a lead balloon. This is what I observed.

    Besides, the opposition tends to be slippery in many ways. Do they want a major reconciliation with Turkish Kurds or not? Do they want ambitious economic program (promising and executing them is Erdogan forte) or have a realistic plan to stabilize the economy? Do they want to reconcile with Syria, breaking from Western sanctions, to enable Syrians to go back, or not (Erdogan is slippery here too, I guess). Hard to tell because the opposition has many opinions and Kilijdaroglu never looked like a reliable person.

    A little comment on the data point from the article: “Exports from Germany to Turkey jumped nearly 37 percent during the first quarter of this year compared to last. Most of those goods are believed to make their way to Russia as a sanctions workaround.” I am guessing that Turkey developed appetite for car parts and similar products, to the relief of German manufacturers.

    1. Roland

      Newsweek can’t even remember that Turkey and Russia were on the verge of war in early 2020. Pathetic.

  2. Bemildred

    Nice analysis. Best I have seen for Turkey, & Erdogan.

    I expect Putin will continue to support Erdogan, it has been a very useful relationship to them both.

    1. NotTimothyGeithner

      Without Erdogan’s neo ottoman dreams, they are similar countries with a great deal in common. If you can get past trying to squeeze the other guy, they and Iran are fellow travelers.

  3. eg

    I’m not entirely sold on the narrative that Turkey’s inflation is primarily a function of its monetary policy — Mosler points out the counterfactual of Argentina where both interest rates AND inflation are very, very high (not to mention the decades of Japanese evidence).

    The simplistic neoclassical orthodox model whereby higher interest rates mechanically result in lower inflation is clearly nonsense.

  4. The Rev Kev

    This is great analysis this. If Erdogan can succeed in making peace with Syria, then that will open the way to repatriate a lot of those Syrian refugees back to Syria which will please the home crowd. Of course the ICC might take out an international warrant on Erdogan for sending refugees back to devastated Syria and the US and other countries have been opposing this happening for years now but that will not worry him I suspect. Then add in the energy flows from the new Russian-built nuclear power station into the economy as well as new trade deals with the east, things may start to ease up for him and leave him in five years time with a popular legacy.

  5. Michael

    It’s worth noting Robin Brooks is ex Golden Slacks. “…whims of Putin..” , “markets” etc
    Agree Erdogan excels in navigating east-west conflict. More conservative Nationalists may strengthen his hand.
    Not that long ago he was aspiring to be the new Ottoman ruler and championing the return of empire.
    Great writing Conor.

    1. Mikel

      The current leader in Byzantium/Constantinople/Istanbul excels in east-west conflict. Not surprising.

    2. NotTimothyGeithner

      He might have learned his place. I wouldn’t vote for Putin, but he’s a great man, following Yeltsin was a great act. Erdogan is sitting on a similar situation. It’s time for Troy to roar again. Seizing scraps because the Ottomans were there isn’t the future. Getting into Chinese moon missions is.

  6. Lex

    I agree with Bemildred and appreciate the excellent rundown of the situation.

    For Russia every result of this election would have been complicated. It wasn’t that long ago that Russia and Turkiye almost went to war. But clearly Erdogan is a better result than someone promising to turn fully to the west.

  7. Jeremy Grimm

    “A December poll by the Turkish company Gezici found that 72.8 percent of Turkish citizens polled were in favor of good relations with Russia. Compare that to the nearly 90 percent who think the US is a hostile count.”

    “It was made clear the West wanted him[Erdogan] gone – from Biden’s declaration during his 2020 election campaign that Washington should help the Turkish opposition ‘take on and defeat Erdogan’ to the recent Economist cover with the title “The Most Important Election of 2023” with the tags ‘Save Democracy’ and ‘Erdoğan Must Go.’”

    Putting these two statements from the post together it sounds like the Biden Regime helped get Erdogan elected by opposing him.

  8. ChrisRUEcon

    “Erdogan often painted Kilicdaroglu as a western stooge during the campaign – a description that was given more weight when the latter accused Moscow of interfering in the election with deep fake videos despite his charge lacking evidence and commonsense


    So “RussiaGate” failed in Turkiye … #Good

  9. spud

    was this statement issued as comic relief, or was this guy actually serious!

    “Turkey’s booming trade links with Russia carry big risk. The dependence on Russian energy (black) means growing exposure to the whims of Putin, while the rise in exports carries substantial sanctions risk (blue). US sanctions in 2018 pushed Turkey into recession. Not worth it…”

    so it was either stand up comedy, and he was sharpening is skills, or he completely ignores the whims of the globalist free traders.

  10. cousinAdam

    A superb post, Connor! I rarely open anything before links but I knew this is going to be juicy. Succinct and lean – and the commentariat is stepping up with all manner of tasty side dishes. I love this place!

  11. eg

    The AP story about the election result is larded with boiler-plate adjectives evocative of the dismay of the Western chattering classes — their tears are delicious …

  12. Young

    Isn’t it amazing that they counted ALL 50+ million votes before midnight, twice in two weeks?

    And, the participation rate was more than eighty percent.

    I would say that is a democrasy worth to defend for the U.S. /s

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