Turkish President Tayyip Erdogan at a rally in Mardin, in southeastern Turkey. Goran Tomasevic / Reuters
Turkish President Tayyip Erdogan at a rally in Mardin, in southeastern Turkey. Goran Tomasevic / Reuters
Turkish President Tayyip Erdogan at a rally in Mardin, in southeastern Turkey. Goran Tomasevic / Reuters
Turkish President Tayyip Erdogan at a rally in Mardin, in southeastern Turkey. Goran Tomasevic / Reuters

Turkish Election: Erdogan's victory is likely, but size of margin will have far-reaching consequences


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In June 2015, Recep Tayyip Erdogan's AKP party failed to secure an outright majority in national elections – for the first time since 2002. In response, Turkey's pugnacious president called another, restoring his majority less than five months later amid an uptick in violence and tension. On Sunday, Turks will again go to the polls in a consequential snap election. If victorious, Mr Erdogan will be afforded vast new powers, concluding the most profound constitutional transformation since the foundation of the modern Turkish republic.

But as he sits on the threshold of supreme power, Mr Erdogan has rarely looked so exposed. While his ultimate victory is likely, it is the size of the margin that will set the trend for post-election developments. Having been largely dismissed, Turkey's opposition now has a real chance of eliminating Mr Erdogan's parliamentary majority and even pushing him into a second round run-off. But many observers in Europe and elsewhere fear that Mr Erdogan simply will not tolerate such defeat. In the aftermath of a failed coup in 2016, Mr Erdogan orchestrated a vicious crackdown, rooting out thousands of alleged conspirators and implementing an ongoing state of emergency. His response to electoral embarrassment could be equally ferocious.

Sunday's elections were designed to fortify Mr Erdogan's authority. Brought forward from late 2019 to catch his divided opponents off guard, Turks would vote, Mr Erdogan surmised, in a favourable economic climate and following pride-inducing military victories in northern Syria. However, against the odds, disparate opposition groups have quickly united to bruise the Turkish president. An unlikely alliance has materialised between the nationalist IYI party, the primary opposition CHP – led by Muharrem Ince – a small Islamist party and even the Kurdish People's Democratic party (HDP). Indeed, huge crowds turned out last week to greet Mr Ince in the Kurdish-majority city of Diyarbakir. It appears opposition to Mr Erdogan's constitutional overhaul has become a major uniting force.

Meanwhile, 12 per cent inflation, high unemployment and a currency crisis engulfing the Turkish lira has challenged Mr Erdogan's notion that he alone can guarantee stability and prosperity. Eccentric monetary policy driven by Mr Erdogan himself has spooked international investors, upon whom the Turkish economy depends. And relations with the European Union and the US have seldom been more estranged.

Mr Erdogan is still adored across much of the country, particularly among the rural poor. But as he has co-opted Turkish institutions and cracked down on dissent, the president’s detractors have swelled in number. With public gatherings limited, HDP candidate Selahattin Demirtas behind bars and fears of voter intimidation and fraud, there is little doubt that Mr Erdogan will win the upcoming elections. But if he is denied a majority by a galvanised opposition, or forced to contest a second round, the threat of his reaction should worry observers in Turkey and far beyond.

UAE currency: the story behind the money in your pockets

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Defence review at a glance

• Increase defence spending to 2.5% of GDP by 2027 but given “turbulent times it may be necessary to go faster”

• Prioritise a shift towards working with AI and autonomous systems

• Invest in the resilience of military space systems.

• Number of active reserves should be increased by 20%

• More F-35 fighter jets required in the next decade

• New “hybrid Navy” with AUKUS submarines and autonomous vessels

Indoor Cricket World Cup

Venue Insportz, Dubai, September 16-23

UAE squad Saqib Nazir (captain), Aaqib Malik, Fahad Al Hashmi, Isuru Umesh, Nadir Hussain, Sachin Talwar, Nashwan Nasir, Prashath Kumara, Ramveer Rai, Sameer Nayyak, Umar Shah, Vikrant Shetty

What are the GCSE grade equivalents?
 
  • Grade 9 = above an A*
  • Grade 8 = between grades A* and A
  • Grade 7 = grade A
  • Grade 6 = just above a grade B
  • Grade 5 = between grades B and C
  • Grade 4 = grade C
  • Grade 3 = between grades D and E
  • Grade 2 = between grades E and F
  • Grade 1 = between grades F and G