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Turkey launched a probe into the leader of the main opposition party for insulting President Recep Tayyip Erdoğan in the latest phase of a crackdown that has stoked investor fears about political instability and the government’s economic program.
The probe, which could result in the Republican People’s party (CHP) chair Özgür Özel being stripped of his parliamentary immunity, follows the arrest in March of star opposition politician Ekrem İmamoğlu, which led to mass protests, investor panic, and capital flight.
Turkish markets fell on Monday after prosecutors launched the probe late on Sunday.
In morning trading, the benchmark BIST 100 stock market index fell by 1.2 per cent, after gaining almost 10 per cent last week in a rally fueled by hopes of interest rate cuts and the postponement of a separate case that could decide the fate of the CHP, Turkey’s oldest party.
The Turkish currency briefly weakened past 40 lira to the US dollar, while the cost of insuring Turkish debt against default rose.
Özel, who has led energetic mass rallies around the country since İmamoğlu’s arrest and ratcheted up his criticism of Erdoğan, was charged with “insulting the President” and “insulting public officials”.
“Özel has crossed the boundaries of political courtesy with threatening and provocative statements,” Turkey’s communications chief Fahrettin Altun wrote in a social media post on Monday. “Democracy is strengthened through the will of the nation and the foundation of law.”
CHP spokesperson Deniz Yücel called the probe the latest “attempt to suppress freedom of expression and legitimate democratic politics”.
The investigation into Özel — who has accused Erdoğan of leading a “junta” and said that his government is staging a “creeping coup” — is the most recent escalation in a months-long campaign to weaken the opposition and curb dissent.
More than 120 people were detained last week in a sweeping corruption investigation in İzmir, a CHP stronghold and Turkey’s third-largest city. That was followed by the arrest on Saturday of three CHP mayors, also on corruption charges.
Four employees of the satirical LeMan magazine were arrested last week after publishing a cartoon that appeared to show the Prophet Mohammed, whose depiction is a deeply contentious issue in Islam. The magazine denied the allegations.
In some cases, authorities have stepped back from the crackdown, as happened last week when a landmark court case questioning the legitimacy of the CHP’s leadership was adjourned until the autumn.
“The government is very sensitive to how the economy is doing,” Kieran Curtis, head of emerging markets local currency debt at Aberdeen Investments, said. “They are also very consciously watching what the market makes of the crackdown, and are keen not to upset the market”.
The government insists the country’s judiciary is independent, but critics say the crackdown is an attempt to undermine the opposition after it made gains in last year’s municipal election at the expense of Erdoğan’s governing AK party.
Most polls show the AK party lagging behind the CHP and show most Turks believe the probes are unfair.
“Turkey’s main opposition CHP scored a historic win in the 2024 local elections. Now, Erdoğan is clawing those municipalities back through court rulings and jailing CHP mayors,” Gönül Tol, of the Middle East Institute think-tank in Washington, said.
One risk for the government, according to analysts, is that the crackdown could undermine investor confidence in its economic stabilization program, which could in turn prolong the country’s cost of living crisis by making it harder for the central bank to cut rates.
“I think the government is making plans as it goes along, seeing how it works out on the ground and if there is any popular pushback,” said Berk Esen, assistant professor of political science at Istanbul’s Sabancı University. “These steps have the potential to backfire. In some ways, they already have: that’s why interest rates have been kept high. But, so far, the government has managed to stabilize the situation.”
Foreign reserves have partially recovered since the financial panic sparked by İmamoğlu’s arrest, which forced the central bank to raise interest rates and burn through around $50bn. But gross foreign reserves remain about $25bn below their year high of around $175bn.
Inflation, although declining, is running at 35 per cent, while the central bank’s main policy rate is at 46 per cent, which has hurt companies’ ability to finance themselves.
Source: Financial Times (FT) Newsletter – Editor’s Digest
