Turkey Coalition No Cakewalk as HDP Rejects Economic Status Quo

The groundswell of voter support that pushed Turkey’s pro-Kurdish party into parliament was a landmark event for a nation fractured by ethnic politics and ravaged by a 30-year war with Kurdish insurgents.

Yet the economic program of the Peoples’ Democratic Party, or HDP, may prevent it from joining any governing coalition, according to Figen Yuksekdag, one of its two co-chairs. In a six-page response to questions from Bloomberg, Yuksekdag outlined her party’s platform for the economy, one that she says could put it at odds not just with political rivals, but with international investors as well.

“The HDP has a program that’s on the side of the poor, workers and retirees,” said Yuksekdag, 44, characterizing the other three parties as advocates of “neo-liberal” economic programs that have increased wealth inequality. “This is a fundamental problem for a coalition partnership: we will never support an economic program that harms the people.”

With none of Turkey’s four parties able to win an outright majority at June 7 elections, and coalition scenarios dominating the agenda in Ankara, her words suggest any optimism about finding shared ground may be premature. The lira rallied on June 11, when President Recep Tayyip Erdogan urged a rapid formation of a coalition government.

“The markets have priced in positives that have little possibility of materializing,” said Atilla Yesilada, an Istanbul-based economist for GlobalSource Partners Inc. That’s bound to fade, he said, when it becomes “crystal clear that forging a coalition is no cakewalk.”

Kurdish Conflict

The HDP grew out of the state’s bloody conflict with Kurds, and one of its core aims is to end the fighting and the poverty it has wrought. While it lagged its three competitors, with 13 percent of the vote, it’s also seeking economic leverage that goes beyond influence over peace negotiations.

“You can’t make a definite connection between an end to the war, economic growth and an increase in the people’s prosperity,” Yuksekdag said. “That can be determined only by which kind of economic policies are pursued.”

Yuksekdag says the HDP would spend 121 billion liras ($44 billion) on social aid programs including free electricity to 19 million housholds, rent assistance to 3 million more, cash advances to students, and pension increases. Funds would come from shaving security spending by 35 billion liras -- the combined budget for military, police and intelligence services is about 50 billion liras this year -- cutting waste and corruption, and a more progressive tax system that reduces reliance on indirect taxes, she said.

Economic Pledges

“We know that the economic pledges in HDP’s electoral platform won’t be liked by some in finance and investment circles,” she said. “This is natural, because we defend an economic policy that has poor people at its center.”

Yuksekdag, who dropped out of high school and became an activist, was elected to represent Van, a region near the Armenian and Iranian borders that’s played host to generations of struggles between Turks and minorities. On an index of economic development published by Turkey’s official statistics agency, the region ranked last, producing about $3,500 per person compared with almost $14,000 in Istanbul.

While ending fighting will have economic benefits, such inequality means it needs to be backed by policies that benefit those most affected, Yuksekdag said. Conflict with the Kurdistan Workers’ Party, or PKK, claimed some 40,000 lives and is estimated to have cost the Turkish economy between $65 billion and $350 billion.

“Exact numbers can’t be provided because you can’t calculate secret budgets used by the prime ministry and the intelligence agency,” Yuksekdag said. “What we know to be true is this: war has swallowed hundreds of billions of dollars, and the burden for this has been placed on the backs of the poor.”