Turkey Facing Turbulence As President Erdogan's Party Loses Parliamentary Majority

Turkish President Recep Tayyip Erdogan was to meet with his premier today, with the country plunged into political turbulence after his ruling party lost its parliamentary majority for the first time since coming to power in 2002.

The uncertainty swiftly rattled financial markets, with stocks tumbling in morning trade and the Turkish lira plummeting in value against the dollar.

Mr Erdogan's Justice and Development Party (AKP) has dominated Turkish politics for the last 13 years, but came up well short of a majority of seats in Sunday's legislative elections due to a breakthrough showing by the pro-Kurdish People's Democratic Party (HDP).

A coalition government and early elections are both now possibilities, in a situation unprecedented since the Islamic-rooted AKP swept to power.

The results wrecked the ambition of Mr Erdogan - prime minister from 2003 to 2014 and now president - of agreeing a new constitution to switch Turkey from a parliamentary to a presidential system.

Such a change would have required a two-thirds majority in parliament. Just months before the election, Mr Erdogan had been targeting 400 seats for the AKP.

However, his first reaction to the result was strictly statesman-like, in contrast to his hugely partisan support for the AKP in the campaign.

He acknowledged that the AKP would not be able to govern alone and urged Turkey's political forces to show responsibility in "a new process".

"According to the available results, no party will be able to govern alone," he said in a statement released by the presidency that hailed the conduct of the elections.

Government options

Mr Erdogan was to meet Prime Minister Ahmet Davutoglu today to discuss the options for forming a government, Turkish media said, in a meeting that had been expected Monday but was postponed.

The AKP won 41 per cent of the vote, followed by the Republican People's Party (CHP) on 25 per cent, the Nationalist Movement Party (MHP) on 16.5 per cent and the HDP in fourth place with 13 per cent.

Turnout was 86.5 per cent.

The result marked a drop in support for the AKP of some nine per cent from last polls in 2011, against the background of a weakening economy and controversy over Mr Erdogan's perceived authoritarianism.

The AKP will have 258 seats in the 550-seat parliament, the CHP 132, and the MHP and HDP 80 apiece.

The outcome capped a tough two years for Mr Erdogan since 2013 when his dominant rule was challenged by unprecedented anti-government protests and then stunning corruption allegations against his inner circle.

"A new era," said the headline in the Milliyet daily. "The collapse," added the strongly anti-Mr Erdogan Sozcu.

"Mr Erdogan was a major problem in this election. A lot of Turks are very happy he got his comeuppance," said Steven Cook, senior fellow for Middle Eastern studies at the Council on Foreign Relations.

"It's going to be very much harder for him to get what he wants."

While some media said early elections were "on the horizon", Deputy Prime Minister Numan Kurtulmus played down those chances, saying it was the "most distant possibility".

Analysts have seen the nationalist MHP as the most likely coalition partner for the AKP in the new parliament.

Another Deputy Prime Minister, Bulent Arinc, even suggested that the MHP, CHP and HDP should try and form a coalition between themselves.

'One loser'

The result was a triumph for the HDP, which in the campaign sought to appeal beyond its mainly Kurdish support base to secular Turks, women and gays.

"There is just one loser in the election - Recep Tayyip Mr Erdogan," pro-opposition commentator Hasan Cemal wrote in an editorial for the T24 website. "And the winner is the HDP."

The parties now have 45 days to form a coalition, after which new elections would have to be called.

With investors nervous, the BIST 100 index on the Istanbul stock exchange fell 5.0 per cent while the Turkish lira lost 3.8 per cent in value against the dollar to trade at 2.76 lira to the dollar.

"The associated political uncertainty only adds to an ugly mix of existing problems for Turkey," said William Jackson at Capital Economics in London, citing high inflation, the current account deficit, and a rapid increase in private sector debt.

"Turkey is perhaps the most vulnerable of any major emerging market at this time," he said in a research note.

Turkey's central bank acted swiftly in an intervention to give some support to the lira, saying it was pruning its short term foreign exchange deposit rates, effective from today.

Meanwhile, the toll from an attack on a pre-election HDP rally rose to three dead. Friday's bombing was one of several against the party during the campaign.