“Yağdır, Mevlam, Yağdır”*
To our surprise, Saudi Arabia and Qatar chose to bankroll President Erdogan’s election campaign with generous financial donations. In return, Erdogan promised to meet Assad and shook hands with Sisi. However, neither U-turn signals substantial policy change. Financial aid from Gulf countries possibly to be matched by Putin reduces the risk of a “currency event”, but thanks to Ankara’s predilection to use the funds to double up on existing policies, doesn’t eliminate it. At this point, we also don’t see much of a positive spillover from foreign donations to election dynamics.
Fitch just put out the first Turkish election forecast that we are aware of, assigning Erdogan a 55% chance of re-election, though the ratings agency largely concurs with our view that the parliament will fall to the control of the Table of Six (ToS). Despite reports of “the West” being largely reconciled to living with Erdogan for the foreseeable future, we remain unrepentant in our contrarian view, which has the very “insignificant” advantage of being fully backed by polls.
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