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Erdogan Faces Fallout After His Party’s Loss in Istanbul Mayor’s Race

ISTANBUL — It was bad enough for President Recep Tayyip Erdogan of Turkey that his chosen candidate lost again in a do-over election for mayor of Istanbul. But as the scale of the defeat became clear on Monday, Mr. Erdogan and his strongman methods faced recriminations not just from critics, but from his party and wider circle of supporters.

Not only did more people vote in the repeat election on Sunday, but they gave the opposition candidate the kind of endorsement that indicated a desertion from the governing Justice and Development Party, the A.K.P., and even from Mr. Erdogan himself.

The result fractured the invincibility of a strong-willed leader with little tolerance for dissent, who has made Turkey an increasingly prominent force in the Middle East and raised tensions with the United States as he moves his country, a member of NATO, closer to Russia.

“Earthquake at the ballot box,” ran the front-page headline of Karar, a newspaper founded three years ago by journalists who had once been close to the A.K.P. government.

“The margin is a reaction against the unfairness and the recklessness of doing politics with the disproportional state power, as much as it is the electorate’s loyalty to democracy and law,” Mustafa Karaalioglu, a columnist, wrote in Karar. “The electorate rose against those who did not understand what it had told them. The ballot box this time did not talk, but shouted.”

Preliminary results announced Monday by Sadi Guven, head of the High Election Council, showed that the opposition candidate, Ekrem Imamoglu, won 54 percent in the repeat vote for mayor of Istanbul; Mr. Erdogan’s candidate, Binali Yildirim, received 45 percent of the vote.

Mr. Imamoglu won by more than 800,000 votes, compared with a 13,000-vote victory in the first ballot. Turnout rose one percentage point, to 84 percent.

Mr. Erdogan will now have his hands full in containing the fallout from the electoral defeat, the biggest of his political career, which came after what in hindsight was his disastrous decision to push for a rerun of the mayoral election after Mr. Imamoglu’s initial victory three months ago.

It was hard to overstate the sting for Mr. Erdogan. Istanbul is his hometown, and the A.K.P. has dominated the city for 25 years, since he became mayor in 1994.

But anger over his decision to pursue a new vote and frustration over a weakening economy took their toll, coming as they did after three years of a harsh political crackdown following a failed coup.

[For President Erdogan, the bill for Turkey’s debt-fueled growth is coming due.]

“Slap of the people,” Evrensel, a leftist newspaper that is frequently critical of Mr. Erdogan, announced on its front page. “Istanbul made its choice,” ran the headlines in three main pro-government newspapers.

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CreditKemal Aslan/Reuters

Complaints had already been building within Mr. Erdogan’s party after its loss in the March election and the subsequent cancellation of that vote.

Several analysts, including some who have worked with Mr. Erdogan and others who ran the campaign against him, said that the defeat showed deep problems within his camp, which could cost him the presidency when he faces re-election in four years.

Ozgur Unluhisarcikli, the Ankara director for the German Marshall Fund of the United States, a research organization, said “the scale of the result represents a sociological shift” away from the A.K.P. and toward the opposition.

Some said Mr. Erdogan was likely to take a lower profile domestically in the immediate aftermath of the defeat, as he planned his way forward.

The largest challenge for Mr. Erdogan is a movement led by a former A.K.P. president, Abdullah Gul, and a former finance minister, Ali Babacan, to form a breakaway party. Both men support many of the ideals of the A.K.P., notably conservative pro-market policies with social support for the party’s lower-income political base.

Mr. Erdogan is likely to seek some changes, partly to weaken any challenge from the breakaway group, but that could destabilize his alliance with the Nationalist Movement Party, which he has relied on to secure the presidency and a majority in Parliament.

“The big question is: Will he ultimately stick to the ultranationalist alliance and continue the paranoid security state or reverse course and attempt at reform?” said Asli Aydintasbas, a senior fellow with the European Council on Foreign Relations.

While the Istanbul mayor’s race may seem relatively unimportant, the consequences for Mr. Erdogan are far-reaching, because his party has relied on financing from supporters in the business world and companies that have benefited from government contracts.

Now, not only has Mr. Erdogan lost access to that source, but Mr. Imamoglu will have access to records that seem likely to detail potentially embarrassing cronyism and wasteful spending that have benefited the president’s supporters.

Mr. Imamoglu got a foretaste during the 17 days he spent in office before he was forced to step aside during the election rerun. In that time, he discovered that Istanbul, Turkey’s economic capital, had dozens of cars at the mayor’s disposal and millions budgeted for officials’ homes, even as the city was sinking into debt.

In addition, the Istanbul municipality paid millions of dollars to charitable foundations run by Mr. Erdogan’s family last year, Turkish newspapers have reported.

Pro-government newspaper columnists are already moving to divert the mood, writing that Mr. Erdogan would turn to foreign policy to enhance his image. That suggested that far from tempering his stance, the president may project a more combative attitude in discussions abroad.

The pro-government newspaper, Aksam, made Turkey’s dispute with the United States over its purchase of the Russian S400 missile system the lead story, with a headline that read “S400s a matter of sovereignty.”

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CreditChris Mcgrath/Getty Images

“Today the most common feeling among the people is the betrayal by their historical allies, the U.S., France, the U.K. and Germany,” Hakki Ocal wrote in the pro-government Daily Sabah.

Mr. Erdogan is likely to proceed with his purchase of the Russian S400 missile system despite American objections, said Ms. Aydintasbas, in the hopes that President Trump will soften the blow by waiving sanctions or choosing the least harsh sanctions.

“Trump is the wild card in this equation, and he may end up giving the Turkish leader the compromise he seeks,” she said.

To improve relations with Europe, Mr. Erdogan — who has fired, purged and arrested tens of thousands of people since the failed coup in 2016 — would have to release some of the political prisoners held in Turkey, Ms. Aydintasbas said.

Business leaders have also advised Mr. Erdogan that the release of detained journalists and civil society activists would smooth ties with the European Union, Bahadir Kaleagasi, the secretary general of Tusiad, an association of Turkish industry and businesses, said in a recent interview.

The mayoral election results coincided with the trial of one of the most prominent political prisoners, Osman Kavala, a philanthropist often described as the George Soros of Turkey. He has been jailed for the past 20 months, accused of trying to overthrow the government for supporting the popular protests in Istanbul’s Taksim Square in 2013.

Mr. Kavala told the judge the indictment was a “fantastical fiction” with no proof, asserting: “I have never believed in changing a government in any way other than free elections.”

One of the most strident voices in the presidential circle, the columnist Hilal Kaplan, signaled that the political fight for Turkey was by no means over.

The A.K.P. alliance may have lost Istanbul and other big cities to the opposition People’s Republican Party, or C.H.P., she reminded readers, but it won presidential and parliamentary elections last year and general municipal elections in March with 52 to 54 percent of the vote.

“Moving forward, we will watch the C.H.P. leadership trying to overcome the challenges of being in charge and governing with a multitude of partners,” she wrote.

Anger among A.K.P. members and former supporters of the party at the electoral disaster was evident on social media.

Kemal Ozturk, a former columnist for the pro-government newspaper Yeni Safak who is well-connected in government circles, said the self-interest of people close to Mr. Erdogan had boomeranged on them.

“They did such vile things as they considered everything permissible for their small interests that they stained, they damaged a huge community’s religion, cause and faith,” he posted on Twitter. “This is the real thing we should be enraged about. Losing Istanbul is small in comparison to that.”

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Austerity Has Ravaged U.K. Communities. It Has Also Spurred Reinvention.

PRESTON, England — In communities across Britain, funding from London was shrinking to nothing — the central equation of national austerity. But here in the fading industrial belt of northwestern England, the city of Preston took the crisis of budget-cutting as impetus for a basic refashioning.

In what has come to be known as the Preston model, the local government and other institutions began directing government spending toward local businesses. The city raised salaries for municipal employees, ensuring that they earned a living wage.

Local leaders replaced an aborted shopping mall construction project with a retro-chic market that has become a magnet for new businesses. They have aided cooperative businesses, including a farm-to-table-cafe that aims to boost the market for local produce while training people for jobs in the hospitality industry.

In short, Preston has exploited austerity as a catalyst for self-sufficiency.

Preston is not the only local council to adapt to austerity through radical experiments in governance. Other communities have doubled down on capitalism, venturing into real estate speculation in pursuit of revenues — a story not guaranteed to end in joy.

“It doesn’t look very wise at the scale that some councils have done it,” says Tony Travers, an expert on local government at the London School of Economics. “I am slightly amazed that the government has been content to sit and watch this.”

The architects of austerity, the Conservative-led coalition government that took power in 2010, championed it as the unavoidable reckoning with debts left by a global financial crisis. They described their budget-cutting as courageous and even transformative: Decreased public largess would force innovation in government, while spurring entrepreneurialism in place of an unhealthy reliance on the public sphere.

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CreditFinbarr O’Reilly for The New York Times
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CreditFinbarr O’Reilly for The New York Times
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CreditFinbarr O’Reilly for The New York Times

People disagree about the justice of that idea and the merits of the consequences, but the fact of change is now beyond argument. Austerity has, for better or worse, altered the basic workings of modern Britain.

Spending on local services in England has plunged by more than one-fifth on average over the past decade, the Institute for Fiscal Studies calculated in a recent study, while especially troubled areas like the north of England have seen much deeper cuts.

Given statutory imperatives to maintain programs like care for older people and children, local councils have made sharper cuts where they have discretion. Spending has dropped by more than 60 percent on youth centers, by more than half on housing programs and by more than 40 percent on highways, transportation and cultural programs.

Some councils are running perilously close to exhausting their reserves, and a few have veered toward bankruptcy. Evidence of change is palpable and pervasive: Older people wait for volunteer-driven buses that have replaced discontinued public routes; patients sit for hours in hospitals before they can see an overwhelmed doctor; school administrators struggle to furnish basic items like winter coats and tampons to students.

Most of Britain now finds itself at an uncomfortable crossroads: Either taxes go up, or local services will almost certainly continue to decline.

In Preston, a city of 140,000 people, leaders have sought a route around that unpalatable choice. They have refocused public spending on area businesses, aiming to keep more money in the community rather than sending it away to global banks and international retail giants.

This refashioning began with the demise of the previous approach to economic development, a failed effort more than a decade ago to reinvigorate the forlorn downtown with a new shopping center.

The end came in 2009, just as austerity was beginning to force cuts to mental health and youth services, and just as the city was overwhelmed with joblessness, homelessness and despair.

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CreditFinbarr O’Reilly for The New York Times
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CreditFinbarr O’Reilly for The New York Times
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CreditFinbarr O’Reilly for The New York Times

“It was horrific,” recalls Matthew Brown, the leader of the Preston City Council, and an unabashedly left-wing member of the Labour Party. “We were totally constrained in our capacity to help people.”

One night in March 2012, Mr. Brown went to a local pub to meet an expert from a research institution focused on reviving the fortunes of local communities. Their conversation yielded the blueprint for the Preston model.

The model operates not with force of law, but as a social pact. In return for a reliable stream of public money, local institutions pledge to consider more than the bottom line in building new facilities, hiring and paying workers, and contracting for services.

At first, some of Mr. Brown’s council peers resisted his ideas as idiosyncratic flights of fancy. But as austerity tore at the fabric of life, basic ideological assumptions came up for reconsideration.

“It’s about systemic change,” says Neil McInroy, chief executive officer of the research institution, the Center for Local Economic Strategies, and the man Mr. Brown met in the pub. “There was a general aura of people searching for austerity answers.”

When the Preston model began, participating local institutions were directing only 5 percent of their spending within Preston and 39 percent within Lancashire County, according to an analysis by the center. By 2017, those shares had swelled to 18 percent and 78 percent respectively.

“There’s a correlation between deprivation and crime,” says Clive Grunshaw, the Lancashire police and crime commissioner. “If you can invest in these communities, then clearly they will benefit.”

On a chilly afternoon in January, a representative from the Preston Council left town hall and walked across the street to a boarded-up coffee shop owned by the local government. There, he handed the keys to Kay Johnson, founder of a local cooperative called the Larder.

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CreditFinbarr O’Reilly for The New York Times
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CreditFinbarr O’Reilly for The New York Times
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CreditFinbarr O’Reilly for The New York Times

Ms. Johnson’s company is devoted to boosting reliance on locally grown produce. It runs a culinary school and a catering operation. It offers free cooking classes at public housing complexes, giving low-income people strategies to eat healthier while staying within their budgets.

The coffee shop represents the Larder’s next phase. It will outfit the space as a farm-to-table cafe, serving as a place for graduates of its culinary classes to gain work experience. The council is supporting the effort with a discounted lease.

If austerity was the catalyst for moving toward self-sufficiency, the renovated 19th-century market is physical proof of the transformation.

“It forced us to start to looking inward,” says John Bridge, a Preston-born architect who helped design the new market as a partner at a local firm, and has since begun his own practice. “Because of austerity, we have had to think differently.”

Here is an irony of austerity’s consequences. Championed as a spur to rugged individualism, it has prompted communities like Preston to intensify government’s role in economic life.

“There was a culture shift,” Mr. Brown said, occupying a stool in a pub as a man with a banjo crooned Bob Dylan’s countercultural anthem “Maggie’s Farm.” “We’re trying to find alternatives to the capitalist model.”

Yet, in other communities contending with shortfalls, austerity has reinforced support for capitalism. Local leaders have adopted the mien of real estate magnates, using borrowed money.

Over the past two years, councils in England have raised purchases of land and buildings from 2.8 billion pounds annually (about $3.5 billion) to £4 billion (about $5 billion), according to government data. At the same time, total borrowing by English councils has risen to £10 billion, around $10.3 billion, from £4.4 billion.



Scotland

100 MILES

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Ireland

North Sea

Preston

Irish Sea

Britain

England

Wales

London

Ashford

English Channel


By The New York Times

The body that sets standards for the management of government funds, the Chartered Institute of Public Finance and Accountancy, warned recently that tethering council finances to the swings of real estate investment portfolios was perhaps a less-than-fantastic idea.

“Council services are then linked directly to the success or otherwise of the property market, which can be volatile,” says Don Peebles, the institute’s head of policy. “The more services are funded through these returns on investment, the more that increases the risk.”

Tell that to Gerry Clarkson, who leads the Ashford borough council in the southeast of England. Austerity has lopped 40 percent from his council’s budget, yielding increased fees for trash and recycling, cuts to public sports centers and a surplus of lamentation.

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CreditFinbarr O’Reilly for The New York Times
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CreditFinbarr O’Reilly for The New York Times
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CreditFinbarr O’Reilly for The New York Times

“I said, ‘Stop moaning, and stop crying in your beer,’ ” Mr. Clarkson recalls. “‘We don’t need government funding. We are going to behave like a business.’ ”

A retired London fire chief and an unrepentant pounder of tables, Mr. Clarkson revels in telling stories that end with his dressing down some functionary whose doubts, arithmetic or ardor for regulation has impeded his grand visions.

He is intent on turning Ashford — home to 127,000 people, its downtown pockmarked with empty shops, tattoo parlors and liquor stores — into a thriving hub of commerce.

Thanks to high-speed rail links, the borough is but 38 minutes from London and two hours from Paris. “This is a sleeping giant right here,” he says.

Mr. Clarkson fancies himself a maestro of wealth-generating expansion. In 2013, his council bought a block of 30 apartments and some shops on the edges of town, paying a mere £1 million, or $1.3 million. The following year, the council purchased a 12-story office tower next to the train station, paying £7.8 million, or about $10 million, all of it borrowed.

Then the council bought a forsaken shopping center, the Park Mall, to inject life into the town center. Finally, it developed Elwick Place, a six-screen cinema plus restaurants, a hotel and a parking lot. That cost the council £42 million, or $53 million, 95 percent of it borrowed, though at an interest rate of about 1 percent.

All told, Ashford has sunk more than £50 million, around $65 million, into real estate ventures over the past six years. As Mr. Clarkson happily recounts, these investments have produced revenues expected to exceed £3 million, or about $4 million, this year. The office tower alone is yielding a 13 percent profit margin. The Park Mall is increasingly full of shoppers.

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CreditFinbarr O’Reilly for The New York Times
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CreditFinbarr O’Reilly for The New York Times
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CreditFinbarr O’Reilly for The New York Times

All this has cushioned the blow as Ashford’s grant from the central government has shrunk to £125,000 ($160,000) last year from £8 million ($10 million) in 2010, on its way to zero for 2019. Ashford has managed to largely maintain its public services along with some of the lowest property tax rates in the county.

But what happens if the economy turns down, or if property prices fall? To run a government as a business is to run it in a way that makes failure a possibility.

“You wouldn’t want to stop local governments from being entrepreneurial,” says Laurence Ferry, a public finance expert at Durham University. “At the same time, councils have to be careful. There has to be concern if they are stepping into areas outside their expertise.”

Governments may fail to properly assess the risks of industries like retail, now being swiftly refashioned by e-commerce.

Mr. Clarkson hears this and grins the grin of a man unwilling to be defeated by small-minded concerns. “You can’t get your nails done online,” he says. “You can’t get a cup of coffee online.”

Ashford will be fine, he insists, because its economy is built on housing — a commodity that, as he tells it, is somehow impervious to risk. “There’s nothing safer than houses,” he says.

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