Foreign investors who may have thrown their eggs into the Erdogan basket--or the group of dynasties loosely connection to Turkish Prime Minister Recep Tayyip Erdogan, can breathe a temporary sigh of relief. Erdogan’s Justice and Development Party (AKP) won a very unexpected 45% of the vote in 30 March local elections.
These elections were largely a barometer for whether Erdogan’s time in power was up, and whether he could win the power struggle against his allies-turned-enemies. The AKP was worried—for a short spell—that the very public and hard-hitting corruption probe focused on companies close to Erdogan and the party would diminish their support base. To that end, in late February/early March, the party downgraded its election goal from 50% of the votes to 28%. So when it won over 45% on 30 March, it came as quite a surprise—not least to the opposition and its supporters who are now protesting on allegations of fraud. Indeed, the election results were even better than the last local elections when the AKP won 39%, which means that the party has somehow emerged stronger for the corruption investigations.
If the party had failed to win at least 28%, or lost power in Istanbul or Ankara, it would have severely diminished Erdogan’s capacity to continue to quash the corruption probe. As it stands, however, the corruption probe will continue to be suppressed, and the Internet censorship helping that along will continue, though there was a minor victory this week for those in Turkey who believe this is going too far: Access to Twitter was blocked on 21 March ahead of local elections, but a constitutional court ruling lifted the Twitter ban today, saying it breached freedom of expression and prompting harsh criticism from Erdogan.
Certainly, what Erdogan has gained in power, he has lost in democratic credentials. What we expect now is a much more aggressive offensive against his enemies, to include a full-spectrum purge of Gulenist rivals from state institutions. The protests won’t go away, and this reprieve for Erdogan and the AKP won’t last forever—but for now, this should be perceived as a major victory for the ruling elite, and this means protection for those in the inner circle facing corruption charges.
What does it mean for energy? Well, we expect movement now on some big deals that have been delayed ostensibly for geopolitical reasons, but also because Erdogan was waiting to see how much power he would be privy to in the future based on local election results.
One deal we’re watching closely is that between Israel and Turkey for an underwater pipeline that would transit Israeli gas from the Mediterranean’s Levant Basin to Turkey, from whence it could be distributed throughout Europe. There are still plenty of geopolitical hurdles to such a deal, not the least of which is Turkey’s relationship with the island nation of Cyprus, but we just may see movement with Israel now that the Turkish government has a bit of political breathing space.