Markets may rally to support Gül presidency
Posted by meb at April 25th, 2007
The markets had always preferred plan B — that PM Recep Tayyip Erdoğan remain at the head of his party to fight the next election and that he nominate as president someone who would not ruffle the feathers of the country’s powerful secular establishment.They had, however, already factored in plan A, that Erdoğan might find the lure of the presidency just too great, so there were no serious twitches at yesterday’s announcement that the prime minister was nominating his alter ego FM Abdullah Gül for the top job.
“It’s a good choice. Abdullah Gül is non-confrontational and is respected both abroad and in parliament,” said Yarkın Cebeci, chief economist in Turkey for JP Morgan Chase & Co.
“Investors are more concerned about the outcome of the pending general election and are therefore relieved that Tayyip Erdoğan will be leading a united party to the next polls,” according to Mehmet Gerz, head of research and sales at the Istanbul-based brokerage house Yapı Kredi Yatırım.
He explained that the markets were less pro-Justice and Development Party (AK Party) than anti-uncertainty. Had Mr. Erdoğan himself opted for the presidency, the chances of political turmoil lasting until the ballot would have been that much greater. Foreign investors in particular would react with caution to the prospect of a return to weak coalition governments.
Even so, there are some murmurings that Gül would himself prove controversial. Although regarded as the most centrist member of the ill-fated 1996-7 Welfare Party (RP) led coalition, his wife Hayrünnisa also wears a headscarf.
“So far the reaction is market-neutral but I think many secularists — especially the military — regard him as the more dangerous character,” said one senior consultant who asked to remain anonymous.
Yesterday’s conventional wisdom was that the prime minister was left with little doubt from the conservative wing of his own party that he had to confront the headscarf issue head on. Of all the candidates whose wives wear an Islamic head covering, Gül’s name was by far the most acceptable.
The key question for many is whether Gül and Erdoğan will exercise their accumulated clout to move the political movement they lead closer to the political center. Most agree they will give priority to trying to attract foreign capital.
Many attributed the slight drop in the morning session of the İstanbul Stock Exchange (İMKB) 100-Index as having less to do with the presidential announcement than increased oil prices. The afternoon started stronger on quiet trading.
There is a plan C brewing in some investors’ minds. Gül has a history of keeping the seat warm. In an unprecedented act of political good will, he relinquished the prime minister’s job in 2003 when Erdoğan was able to satisfy the legal requirements to enter parliament.
One scenario suggests that he might have agreed in advance to vacate the presidential office when this year’s general elections are safely over. Another, equally speculative, calculation is that Mr. Erdoğan is counting on winning two-thirds of the seats at that that election to be able to change the Constitution. He would then strengthen the powers of the presidential office and stand as the candidate in 2014.
source: Today’s Zaman - Andrew Finkel
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