“The US Dollar broke a historical record over the TL”.
As soon as the coalition tables are scatter and the mists ahead of the elections are removed, we were exposed once again to the above sentence that we hardly missed. The sentence was followed by classics like “will the Exchange rate climb to 3 or reach 3.30?” and etc. We will continue seeing expressions like this.
Actually, currencies from many economies, from India to Russia, Brazil to Indonesia, are presenting similar tendencies. The decreasing charm of developing countries and the domestic dynamics are serving this trend together. This is also valid for Turkey. While foreign factors are reflecting its negativities, we are climbing the stairs of risk with political stability and security worries, which reached an advanced stage inside.
In short, in this period, which is brought forward by the election results and pestered by terror, the economy is associating itself with the worries of the country. As for the present phase, where the coalition possibility is lost, I'm of the opinion that the next steps should be evaluated with a general view, as well as questioning it with the stock market. Because, what should be questioned essentially is; whether the net benefit from the early elections (I'm referring to the benefit minus cost) will be bigger than the net benefit of the postponed coalition option.
The answer to this question will be given by us, the citizens, in the early elections and then by the politicians. However, it's possible to make estimations already.
If the coalition was successful
First of all, let's approach the “what would have happened today if the coalition was successful?” matter; the most obvious benefit in the short time would have been the positive impact related with stability in the markets. In the mid-term, we would have faced with the adaptability issue between the sides. In this sense, the lowness level of the adaptability level increased the possibility for the coalition, which heralded stability in short term, to perform instability before long. There is no doubt that this risk, which will be reflected in the mid and long term, will enter the equation by affecting the success level of economy policies.
On top of that; the security, foreign policy and other related policies would have brought various pros and cons to the coalition formula. Thus, the size of the net benefit from the scenario we've left behind is unbeknown; however, the matter we will be focusing on is different after all. Will the next scenario manage to go beyond it?
What would the elections say?
Then, let's look ahead. There are 2 basic scenarios for the post-election period. First one is the single party government, while the other is coalition pursuits once again… The common cost for both situations is; extra time loss.
Why is it important? First of all; because it's postponing the reforms we require. However, an even faster negativity is; the cost of reinforcing the instability perception in the related time interval. This amounts to causing nuisances, from the point of capital inflow and product markets, and fluctuation in many indicators, especially exchange rates, in the forthcoming months, where the FED process will attain sensitivity and credit rating agencies will be queuing up to give grades.
Besides, in the case that the early elections result with coalition, then this short-term cost will increase further as the time interval is prolonged. Then, it's difficult to see something other than cost increase between forming the coalition now and a couple months later. If we push the matter of “what will be the extra benefit”, then the only hope will be for the parties to face the reality, take responsibility and try to have a longwinded progress. Within this context, the other impact can be observed if the formula today and tomorrow are different.
Let's also approach the single party scenario. We don't know how possible it is; however, if the nation decides in this direction, then what benefit can we expect after the cost we'll undertake until the day the government is formed? The first factor that comes to our mind is a longwinded stability that has a stronger adaptation than the coalition government. In relation to the high adaptation level – in the case a proper prescription is applied – with faster and more effective reforms, the acceleration can be increased in the mid-term.
Of course, let's also add that it will be difficult to overcome the harms in the short-term.
The term difference
Thus, when we compare the scenarios, we can say that the magic word that might create a difference is “term difference”. Besides, let's even add that the success level in the mid-term will also have reflections in the long-term. As for the possible results;
1-In the name of protecting the rights of voters and acquire the healthiest result for our future, all the parties should find a solution to the nuisances experienced in June 7th and should enter the re-elections in this manner. The matter of safety of the elections in the East of Turkey is topping that list. As for another example; placing “independent candidates” on the voting papers that will confuse all the voters.
2-All these factors should be taken into consideration and the elections should be conducted as swiftly as possible.
3-If the results point at the single party rulership, then in the name of providing the domestic and outer security and write a real story, AK Party should realize their convulsion expression in a radical way. They should remember that this responsibility is not only for their own voter base, but also for the mission, which had been assumed once, and beyond that for Turkey. In this sense, AK Party should give strong signals for change already. From top to bottom…
4-If a coalition comes out of the elections, in order to avoid exaggerating the losses, parties should take risks, find a way to reach an agreement and decide on a reformist government.
As for the footnotes;
1-In this article, the net benefits that will be acquired by the parties in the above scenarios were not taken into consideration. However, the possibility for the coalition to melt the party, which is a candidate for the single party government, can also brought along Turkey's future's imprisonment to coalitions and in the long run might negatively affect the economic development.
2-The basis of the suppositions, whether related to this estimation or the above mid- and long-term coalition performance, is the undeniable outputs of our previous bad coalition experiences. Of course, if you ask, “Did we reach a better level today?”, then I can say “I wish” with all my heart. Then, I'll turn back and look at the previous weeks.
Finally, let me add that the mid-term consequences in the parties' scenarios are factors that complicate the equation even further. On top of that, the above results are valid in any case, and they are quite critical…. Because, our mutual future is on the line. It's the future of our Turkey.