Market Data 
- Turkey’s President’s AK Party lost major local elections in Istanbul and Ankara.
- The election results might impact Turkey’s relationship with Russia.
- Economic woes, including high inflation, were a decisive factor in the election results.
The Turkish party led by President Recep Tayyip Erdoğan suffered big losses in local elections held on Sunday.
Ekrem Imamoğlu, the incumbent from main opposition party CHP, led the mayoral race in Istanbul by nearly 10 percentage points after more than half the votes had been counted, Reuters reported early on Monday. CHP also retained its mayoral seat in Ankara and gained another 15 seats in cities across the country.
Erdoğan conceded defeat for the AK Party, the AFP reported.
The opposition’s win is a blow to Erdoğan, who has been in power as Turkey’s prime minister or president since 2003. Since he is also a close partner of Russian President Vladimir Putin — even though Turkey is a NATO member — the defeat of Erdoğan’s party could change the two countries’ relationship.
What Erdoğan’s party’s defeat means for Putin and Russia
If Erdoğan’s AK Party had won resoundingly, the victory would be used in Ankara to “justify a close relationship with Russia in the eyes of the Turkish public,” Marc Pierieni and Francesco Siccardi, researchers at think tank Carnegie Europe, wrote last week.
“For Turkey’s Western partners, this affinity is a cause for concern,” they added.
But an opposition victory in the majority of the largest Turkish cities would have “a dampening effect on President Erdoğan’s prestige at home,” they wrote.
The Carnegie analysts did not specify how this could change Turkey’s international relationships, but said Ankara’s position after the local election could change its relationship with the West and Russia.
“The extent to which President Erdoğan can exercise his personal power at home will be a crucial factor that determines Turkey’s international behavior,” they added.
Since Russia invaded Ukraine, Turkey has been positioning itself as an intermediary between the West and Moscow — brokering grain export deals between Russia and Ukraine and offering to host peace talks between the two sides.
At the same time, Erdoğan’s administration has been talking to Moscow about setting up a gas hub in Turkey as Europe weans itself off natural-gas imports from Russia.
To be sure, the elections on Sunday were local — Erdoğan already won the presidential election in May, securing another term for five years. While the AK Party’s losses in local elections on Sunday point to changes in the country, the political shift doesn’t mean Turkey will give up its ties with Russia — especially since the Turkish economy has been in a years-long crisis.
Turkey’s ongoing economic crisis
Erdoğan’s administration has been battling runaway inflation for years, prompting the central bank to hike interest rates relentlessly. The Turkish lira has also lost 40% of its value against the US dollar in the past 12 months.
Inflation has gotten so bad — it was 67% in February — that the central bank hiked interest rates to 50% on March 21, stunning the markets.
“The economy was the decisive factor,” Hakan Akbas, a senior adviser at the advisory firm Albright Stonebridge Group, told Reuters on Sunday. “Turkish people demanded change and Imamoğlu is now the default nemesis to President Erdogan.”
In a speech at AK Party’s headquarters on Sunday, Erdogan pledged to “respect the decision of the nation,” according to AFP. “We will avoid being stubborn, acting against the national will and questioning the power of the nation,” he added.
