Erdogan’s abusive misrule is largely based on economic results. The Moody’s downgrade however is one of a number of emerging events that threaten that hegemony and the Ottomanism that comes with it.
Prime Minister Tayyip Erdoğan suffered a double blow to his authority when Turkey’s top court annulled part of a law tightening government control of the judiciary on Friday hours after Moody’s cut its rating outlook.
Cutting its sovereign outlook to negative, the credit agency said political uncertainty in Turkey would weigh on weak points in its economy, notably its high external financing needs, damaging its growth prospects.
“Moody’s expects these tensions in the political arena to persist until at least the second quarter of 2015, when parliamentary elections are due,” the agency said.
The lira weakened to 2.1172 against the dollar by 1438 GMT from 2.0975 late on Thursday, while bond yields rose and equities fell.
“While the timing of the cut in the outlook on Turkey’s rating is at odds with the recent improvement in sentiment, it’s a reminder, if one were needed, that Turkey remains one of the most vulnerable emerging markets,” said Nicholas Spiro, head of Spiro Sovereign Strategy.
“Although last week’s local elections were preceded and followed by a market rally, the victory of the AKP is merely storing up trouble for the future.”
Tyranny implodes sooner or later. Erdogan’s increasing abuses have resulted in a rising backlash which he has suppressed with violence and highhanded tactics. The AKP remains powerful, mainly because of the lack of a viable opposition, but Turkey is becoming more unstable as the backlashes increase.