Erdogan – Ozel feud: A temporary reprieve

TURKEY - In Brief 02 Jul 2025 by Atilla Yesilada

---

Contrary to expectations of a majority of experts, the court postponed its ruling on the CHP convention fraud case to 8 September which evoked new thinking about potential outcomes and timing. Is Erdogan making a peace offer to Ozel, or is this just a tactical pause? Spoiler alert, it is the latter. Yet, the adjournment of the court without a final ruling changes expectations about 8 September hearing, which will have major ramifications for TL assets, which is the angle I’m tackling the subject in this Market Brief. Apropos Turkish assets, I offer an unsolicited but constructive short-term view. To set the stage for our casual reader, let me quote myself at length from our Sunday Weekly: “Court postpones ruling to autumn months (30%): This scenario has several advantages for Erdogan: • Any confidence shocks from an adverse ruling will be delayed, allowing CBRT to cut rates in July, as well as increasing the chances of more foreign financial flows and a portion of FX depositors to de-dollarize. • Ozel’s pro-Imamoglu rallies are slowly losing momentum, which may reach the point of public apathy in summer months. Erdogan can attack later, when street are calm, inflation is lower and CBRT has ample ammo to fend off runs on TL. • Erdogan can thus focus on the Peace Process, with PKK having little excuse not to disarm. Ankara insiders opine that Erdogan expects Trump to finish the withdrawal of US soldiers from Syria, which will increase Turkey’s leverage over Syrian Kurds to disarm, or merge with the National Army. • Finally, he may trade a reprieve for CHP with the latter’s participation in the constitutional process. Recall that Ozel refuses to join the constitutional ta...