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Turkish stocks rallied more than 5 per cent after a court adjourned a high-stakes case that could decide the fate of the country’s largest opposition party, a legal delay that gave momentary succour to investors worried about political instability.
The case, which questions the legitimacy of the Republican People’s party (CHP) leadership, follows the arrest in March of star opposition politician Ekrem İmamoğlu, which led to mass protests, investor panic and capital flight.
The next hearing in the proceedings, which critics see as further evidence of democratic backsliding under President Recep Tayyip Erdoğan, is now set for September 8.
By Monday afternoon, the benchmark Borsa Istanbul 100 index had gained more than 5 per cent, while the lira strengthened 0.3 per cent to the dollar to 39.8. Turkish stocks nonetheless remain slightly down for the year, even as other emerging European markets rallied strongly.
Analysts said the adjournment would give more time to the central bank to rebuild foreign reserves, which are still recovering from the sell-off that followed İmamoğlu’s arrest, while also bringing down interest rates as inflation falls.
The delay could also throw the opposition into disarray by leaving the court verdict hanging over its head through the summer.
“The postponement prolongs political uncertainty and risks deepening rifts within the CHP . . . Crucially, the delay works in Erdogan’s favour, providing time for the opposition’s momentum to fade,” said Wolfango Piccoli, co-president of Teneo, a consultancy.
The case centres on alleged irregularities in the 2023 convention that elected as the party’s new head Özgür Özel, a career politician who has energised the CHP, expanded its membership and led opposition rallies across the country since İmamoğlu’s arrest.
Özel, 50, called for supporters to rally in Istanbul on Tuesday, describing the case as “a politically motivated operation aimed at . . . halting our march to power and breaking our resolve”.
The Ankara court said on Monday that it had delayed the case because of competing claims as to whether it had jurisdiction over the matter.
It could yet rule that a government-appointed trustee be put in charge of the CHP, Turkey’s oldest party, which was established by Mustafa Kemal Atatürk, founder of the modern Turkish republic.
Alternatively, it could require that former CHP leader Kemal Kılıçdaroğlu, 76, who has led several failed electoral campaigns, be reinstated in Özel’s place.
Kılıçdaroğlu has not commented on that prospect. But it has dismayed most CHP members, who see it as a government-orchestrated move to divide the opposition — as evinced by the trending social media tag #KayyumKemal (kayyum means state trustee).
The case comes as western countries increasingly court Turkey, which has Nato’s second-biggest army after the US, as a defence partner and bulwark against Middle Eastern instability and Russian revanchism.
During a visit to Ankara on Monday, British foreign secretary David Lammy described the UK and Turkey as “the closest of friends and partners”, working “together to find peaceful solutions to conflict in the Middle East and Russia’s illegal invasion of Ukraine”.
Tom Barrack, the US ambassador and Donald Trump’s special envoy on Syria, also described Turkey as a “great Nato ally” over the weekend, and praised the “deep relationship of trust” established between Erdoğan and the US president.
“For the first time, we are seeing a shared commitment between the US and Turkey to act not only as defence partners but as regional leaders,” Barrack told the Anadolu state news agency.
Barrack also said he believed that Turkey would soon be able to rejoin the F35 fighter jet manufacturing programme, which was suspended in 2019 after Turkey bought Russia’s S-300 air defence system. The US sanctioned Turkey the following year.
