The referendum is over: what next in Turkey?

The recent referendum in Turkey changed its system from a parliamentary government to a presidential one. The newly empowered president will be able to appoint all ministers and head the Council of Ministers, issue decrees, and directly appoint or nominate almost all judicial members at the Constitutional Court and the High Council of Judges and Prosecutors. Opposition parties argue that the new constitution gives too much power to a single person, violating the principle of separation of powers and creating a de-facto dictatorship. The governing party insists that it guarantees a more stable and efficient government, which is required to effectively deal with today’s problems.

However, to the dismay of the current president, Recep Tayyip Erdogan, who was expecting a landslide victory, the new constitution was only approved by a 51-49 percent slim majority, leading many opposition groups to question its popular legitimacy. In addition, the Organization of Security and Cooperation in Europe (OSCE) and the Council of Europe stated in their post-referendum reports that the referendum fell short of meeting democratic standards. In fact, it was held under a state of emergency rule, all the means of the state were put in the service of “yes” campaigners by the government, and the Supreme Election Board changed the referendum rules in favour of the yes-side while the voting was still going on.

Erdogan adopted a very harsh rhetoric in his referendum campaign and called some European countries as “Nazis” and “Fascists” and the opposition as “terrorist allies.” He frequently stated that Turkey is surrounded by internal and external “enemies” that want a “weak Turkey” and for that reason oppose his rule. His main goal was to reach and mobilize the nationalist/conservative bloc in Turkey. The first public opinion survey following the referendum suggests an inverse relationship between education level and yes-votes. Accordingly, 70 percent of primary school graduates said yes in the referendum, while the same rate was only 39 percent for university graduates.  Erdogan’s supporters were concentrated in rural areas. He lost in commercial, industrial and coastal cities that suffer from the deteriorating relations with Europe and the declining economy most. In short, Erdogan’s anti-Europe, nationalist and harsh rhetoric did not appeal to voters living in urban areas but it did to voters in rural regions where small-scale farming is the primary source of income and people tend to be less-educated but more conservative, nationalist and pious.

In January 2017, the Turkish lira experienced a sharp drop, with the dollar/lira parity reaching to 3.9 lira per 1 dollar. The Financial Times wrote on January 10, 2017, that “Turkey appears closer to a full-blown currency crisis than at any point since the ruling AK party (Erdogan’s Justice and Development Party) took power in 2002.” Rising interest rates in the United States, high government spending in Turkey and a confidence decline in the country’s economy drop the value of the lira. However, Erdogan declared that it is the usual “internal and external enemies” that cause the decline. He even called all Turkish citizens to sell their dollars and euros, stating that those who have foreign currencies in their hands are not different from terrorists who carry guns and bullets. A dramatic interest rate increase would probably stabilize the currency and restore some of the lost confidence in the economy, but Erdogan strongly opposed it because an interest rate increase would further slow down economic growth while further increasing the already high unemployment level (currently 13 percent) and could therefore cost him the referendum.

Erdogan needs to make politically risky decisions to save the economy. He needs to improve relations with the West, reduce the political tension at home, adopt a more conciliatory rhetoric, encourage foreign direct investment, increase interest rates and cut government spending. But in his victory speech after the referendum, he actually promised to hold another referendum to reinstate the capital punishment, which violates the Copenhagen criteria and ends Turkey’s EU accession talks. Although the referendum is over, it appears that Erdogan still appeals to his conservative/nationalist/pious voter base and aims to keep them mobilized. He may in fact have plans for an early election, instead of the one scheduled in 2019. It seems likely that political tensions will remain high in Turkey and economic policies will be subordinate to domestic political calculations in the near future.