Gulf leaders welcome Erdogan re-election

Reuters/Murad Sezer

• Turkish lira slipped to near record lows on news of victory
• Stock market reacted more favourably

Gulf leaders have congratulated Recep Tayyip Erdoğan on his re-election as president of Turkey, as currency and stock markets had a more mixed reaction to the news.

Saudi Arabia’s King Salman bin Abdulaziz Al Saud sent a cable of congratulations, the Saudi Press Agency reported on Monday, and UAE President Sheikh Mohamed bin Zayed Al Nahyan extended his congratulations in a phone call on Sunday.

Dubai’s Sheikh Mohammed bin Rashid Al Maktoum and UAE vice president Sheikh Mansour bin Zayed Al Nahyan also sent congratulatory messages, according to the UAE state-owned Wam news agency.

• GCC sees Erdoğan as best bet for Turkish president
• Uncertainty as Turkey prepares for runoff election

The Turkish currency slipped to near record lows on the news of Erdogan’s victory. The lira was at 20.05 to the dollar early on Monday, close to its record low of 20.06 record on Friday.

The lira is down 6 percent so far this year.

“The current set-up is just not sustainable,” said Tim Ash at BlueBay Asset Management, told Reuters. “With limited FX reserves and massively negative real interest rates, the pressure on the lira is heavy.”

The Turkish stock market reacted more favourably, with the benchmark BIST-100 index up 2.54 percent in early trading.

Erdoğan, who has been in power since 2003 – first as prime minister and then as president from 2014 – is unlikely to change his unorthodox economic policies.

Gulf nations, especially Qatar, have invested heavily in Turkey in the past few years as part of wider efforts to de-escalate tensions in the Middle East despite the country’s economic malaise and poor returns from previous multibillion-dollar deals.

Gulf governments would have been wary of investing further in Turkey were Erdoğan to lose, Bodrum-based economist Arda Tunca told AGBI earlier this month.

“Should they find common ground with the new government, they might continue but they won’t get the special protections and privileges Erdoğan gave them,” he said.