Event

Recep Erdogan announced major political reforms which include, among others, a lowering of the 10% electoral threshold which currently prevents smaller parties (including the Kurdish) from being represented in parliament, a lifting of the ban on headscarf for civil servants, new Kurdish rights allowing for instance education to be provided in Kurdish in private schools and municipalities to take their native-language names, and the establishment of an anti- discrimination commission. Improving the rights of the Kurdish community is crucial to preserve the peace  process with Kurdish  rebels following  the  recent decision of Kurdish fighters to suspend their withdrawal as government failed to make political concessions to the Kurds. The peace process began at the beginning of this year when Kurdish Workers’ party (PKK) chief Abdullah Ocalan announced a ceasefire and the withdrawal of his PKK organisation fighters from Turkey after the three decade-long armed conflict between the Turkish state and Kurdish rebels. However, the announced political reforms package falls short to meet Kurds’ expectation. The democratisation package is more widely criticised as it does not address the rights of the Alevi religious minority and of freedom of expression in the press. Besides, the lifting of the headscarf ban is seen as another step in the Justice and Development (AKP) Party’s country islamisation.

Impact on country risk

2014 will be marked by local and presidential elections. Parliament election is scheduled in 2015. In this context, the democratisation package aims to restore Recep Erdogan’s reputation as a reformer, improve the ruling AKP party’s prospects for the forthcoming elections and revive the vacillating peace process with the PKK. However, as the announced reform falls short to meet Kurds’ expectations, the peace process with the Kurds could be curtailed and the PKK could resume insurgency. The lingering Kurdish question probably poses the main threat to domestic stability in Turkey. On the economic side, international market confidence is crucial for the Turkish economy as the country heavily relies on short-term capital inflows to finance its high and widening current account deficit. As illustrated mid-2013, a reversal of capital inflows has a direct impact on the domestic currency and more broadly on the economy.

Analyst: Pascaline della faille, p.dellafaille@credendogroup.com