From 2002 onwards, the AK party won a majority in every Turkish election. Erdoğan always won comfortably, whether in national elections, local votes, or the more recent presidential one. However, the party lost its parliamentary majority and saw its share of the vote fall in the June 7 Parliamentary elections.

The results proved that democracy is not just a ballot box victory. According to the results, Turkey’s political landscape has changed dramatically. Although the AK Party is still the leading party, it cannot form the government alone. Turkey now has two options to choose from: coalition or calling a fresh election. Whatever happens, it must be accepted that what is done is done. Now, there are two aspects of this election to consider: market economy and democracy.

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Image: Daily Sabah

Market Economy

The best result for foreign investors was Erdoğan’s loss and Davutoğlu’s victory. Frankly speaking, neither did they want the AK Party to get enough support to change the constitution, nor did they want the party  to lose  its majority. But, the results were surprising and the markets reacted immediately to the AK Party’s loss of  its parliamentary majority. The uncertainty has pummelled the Turkish lira.  It is  well known that the Turkish lira is extremely sensitive to developments on the political scene, and it  plunged 5%  against the dollar. In addition, Turkey’s main stock index is down almost 6%. Furthermore,  market strategists expect the lira to head towards TL3.20 by the end of the year. In debt markets, the yield on the country’s benchmark two-year government bond surged to 10.43%.

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The composition of the Turkish parliament in terms of seats since 2002. Image: Anadolu Agency

There is no doubt that investors in emerging markets like certainty. However, that is exactly what Turkey is now lacking. In this climate, because of philosophical differences between the parties, a coalition may not provide the certainty which markets are seeking. In this sense, it would not be wrong to claim that difficult times  lie ahead for Turkey.

Democracy

Despite having dominated Turkish political life for almost twelve years, the AK Party failed to get a majority in the Turkish  election on June 7th, 2015. During the last decade, Erdoğan  has been considered  the main architect of the normalisation of civil-military relations. Next, he aimed to get the globally active Muslim community-movement (the Gülen Movement) out of  politics.   After the achievement of pushing the army out of  politics,  it was the Gülen Movement’s turn and Erdoğan has made every effort to prevent them  from forming a parallel state. However, these efforts were perceived by some parts of the community as authoritarianism and political expediency.

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The number of votes received by each party since 2002. Image: Anadolu Agency

Representation of approximately 95 percent of voters in the Turkish Grand National Assembly (TGNA) is a decisive moment for Turkish political life. The Turkish public has not seen  this since  the introduction of the 10% threshold.

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Total seats gained by each party since 2002. Image: Anadolu Agency

It is widely accepted that the  electorate have sounded a warning to the AK Party. Yet, the uncertainty, as the AK Party has lost the majority to form a government, makes people uncomfortable and the range of future possibilities very broad. In particular, the idea of forming a coalition, floated in public discussions, makes people nervous and makes forecasting difficult for the markets.