Obama's Success Hinges on Turkey's Upcoming Election

What the June 12 Turkish elections mean for the Middle East and global finance

Istanbul—President Barack Obama outlined a number of goals for rebranding America to the Muslim world in his recent State Department speech, including the completion of Arab Spring democratic reforms and a bold position supporting a two-state solution in Israel-Palestine based on pre-1967 borders.

But if Washington is going to be successful, it is going to need Ankara on its side, as Turkey—and especially its Prime Minister Recep Tayyip Erdo?an—is increasing looked to as a leader in the Muslim world. And much of that depends on the outcome of next month's Turkish parliamentary elections on June 12.

Turkey is a hive of buzzing political activity these days. Banners are strung across nearly every street blazing the logos of Turkey's leading parties—the ruling Justice and Development Party (AKP), the opposition Republican People's Party (CHP), and the Nationalist Action Party (MHP).

Large busses roll up and down the streets and highways blasting propaganda and patriotic music and displaying the smiling faces of candidates. And pictures of party leaders Erdo?an (AKP) and Kemal K?l?cdaro?lu (CHP) staring solemnly into the distance adorn billboards, old palace walls, and signs along busy roads.

All and all, the swarm of political literature and advertising makes U.S. presidential elections look like a race for county treasurer. And this is despite the fact that there is little question as to who will win the election.

The AKP, a more Islamic oriented party than the others, has a commanding 45 to 48 percent lead in opinion polls and is easily projected to win at least the 276 seats in parliament required for a majority. The CHP, staunchly secular and suspicious of an Iranian-style Islamic revolution, has about a quarter of the population behind it. And the MHP, Turkish nationalists who want little to do with the EU or other foreigners, is estimated to have between 10 and 15 percent of the vote.

The real issue is whether the AK Party will get to 367 seats, the threshold for a supermajority, so that it can change the Turkish constitution without the approval of the public via referendum. And the AKP has big changes in mind—many of which are also significant for American regional interests, the future of global finance, and Israel.

Erdo?an's party wants to write a whole new constitution and change the parliamentary system in a way that might allow him to remain in power as much as a decade longer than the current governance structure allows. Given Erdo?an's popularity in the Middle East, this would keep him a key figure when it comes to issues ranging from Iranian nuclear weapons to democratic reforms in Syria, Libya, Egypt, and elsewhere in the Arab world, not to mention Israel.

A separate proposed constitutional change would allow the Turkish central bank to move from Ankara to Istanbul. In the wake of Dubai's financial struggles, the financial capital of the Middle East is up for grabs. Istanbul is working to position itself as a gateway between Arab money and European investment opportunities. Turkish leaders have worked hard to bring investors to the former Byzantine and Ottoman capital and foreign direct investment has increased 154.4 percent from the first quarter of 2010 to this year.

Turkey is already the 15th largest economy in the world, according to the World Bank, with its eyes set on being in the top 10 by 2023, its 100th anniversary.

Another part of the plan for a global financial hub in Turkey has been the relocation of Turkish banks and regulatory agencies from Ankara to Istanbul. A constitutional change would allow this process to move forward and create a larger opportunity for Istanbul, and Turkey, to be at the middle of future capital flows between Europe and Asia. If successful, this would increase Turkey's clout at the G20, and thus increase its prominence in world affairs.

The Israel-Palestine conflict will be another area where the Turkish election outcome could dramatically impact U.S. foreign relations. Turkey worked closely with Israel for much of the last decade on a peace deal with Syria and Palestine, but things have been rocky of late, particularly in the wake of the Israeli Defense Force's killing of nine Turks last May while they were trying to deliver humanitarian aid to refugees in the Gaza Strip.

However, this Turkish-Israeli tension has created a high level of credibility for Erdo?an in the eyes of the Muslim world. And as the tension is primarily diplomatic, not religious (as it is with some of the Arab states), there is hope for resolution. With Turkey as an ally, U.S. negotiations for a Palestinian state would carry significant standing.

And as Erdo?an and Turkish Foreign Minister Ahmet Davuto?lu have called for open negotiations with Hamas, while at the same time condemning terrorist violence towards civilians, the AKP therefore has a relationship with the Palestinians that Washington could take advantage of.

The path to a supermajority for the AK Party is not without obstacles however. The party faces stern criticism for what is seen as excessive restrictions on freedom of speech and expression. The websites Blogger and Blogspot were banned in Turkey a few months ago when one site violated copyright laws, and only in the past six months has a ban on YouTube been lifted. The video sharing site was barred for several years because of videos uploaded by foreign users deriding the founder of the Turkish Republic, Mustafa Kemal Ataturk.

Many pornographic sites are banned in Turkey as well, and Erdo?an recently called Facebook an "ugly technology" because it does not censor immoral material or encourage moral restraint. More disturbing has been the arrest of dozens of reporters, the suppression of negative views of the leading party on state owned media, and nearly $3 billion in fines imposed on Do?an Holding, the owner of a newspaper, Hürriyet, which has been critical of the government.

Unfortunately, an election victory for the AKP will likely mean continued policies that restrict freedom of speech. And that means that if Turkey under the AKP is considered a model of reform for nations like Egypt, we might see the rise of a mutant form of democracy with elected leaders appointing a judiciary that limits freedom based on the ruling party's views of propriety and honor in society.

Many Turks believe these factors and other problems for the AKP—including a cheating scandal on a university entrance exam and excessively harsh treatment of former military officials that were planning a coup known as Ergenekon—will prevent the party from reaching a supermajority.

However, the other parties are not presenting a very attractive alternative. Support for MHP, the third leg of Turkish politics, has been flagging in recent weeks as 10 leaders have resigned just this month in the wake of a sex tape scandal, leaving them with too few seats to qualify for parliament. And the ability of independent Kurdish candidates for the Grand National Assembly to win seats currently held by the AKP has been overshadowed by increased violence from Kurdish terrorists.

So while the AKP is certain to have a majority in the coming government, it remains unclear whether it will be able to unilaterally remold the future of Turkish politics and Turkish influence in the Arab Peninsula. But one thing is certain: The future of Obama's Middle East agenda rests in part on the outcome of next month's Turkish elections.

Anthony Randazzo is director of economic research at Reason Foundation.