Investors Think Erdogan Could Call an Early Vote Because His War Is Popular

Recep Tayyip Erdogan is riding a wave of domestic support for his army’s incursion into Syria, leading investors to fret that the Turkish president will seek to capitalize by calling an early election.

That’s something Erdogan’s party has never done during its 15 years in power — and officials insist there are no plans to go to the polls before the scheduled date in November 2019. Still, some Turkey-watchers — pointing to an economy that looks like it’s on a campaign footing — suspect that the pattern may be broken this time. That would add a new layer of uncertainty in an emerging market next door to the world’s most dangerous war.

“I do now think there is a high chance of early elections in Turkey this year — likely around the anniversary of the July 2016 failed coup attempt,” said Tim Ash, a senior emerging market strategist at BlueBay Asset Management LLC in London. Erdogan’s government “is running the economy on full throttle, trying to maximize growth, job creation, and letting inflation and the current account take the strain.”

A fiscal boost helped Turkey’s economy grow more than 11 percent in the third quarter of 2017, the fastest pace among G-20 economies. Meanwhile, the president is in talks with conservative and nationalist parties over an election alliance. He’s been touring the country at weekends, promising new airports, railways and hospitals.

Nationalist Rifts

The army’s operation against Kurdish fighters threatens to blow up Turkey’s ties with the U.S., but Erdogan’s approval ratings are on the up. Most Turks see the U.S.-backed Kurds in Syria as an extension of a terrorist group that’s fought a bloody struggle for autonomy inside Turkey for decades. The owner of polling firm A&G Arastirma, Adil Gur, said 90 percent of Turks support the offensive, Sabah newspaper reported on Feb. 12.

Thousands of Turkish troops, reinforced from the air by F-16 warplanes and attack helicopters, have captured villages and hilltop positions held by Kurdish forces since the operation began Jan. 20.