The country’s constitutional court said it would decide in 10 days whether to proceed with a case brought by Turkey’s senior prosecutor demanding the closure of the Justice and Development party (AKP) for “anti-secular activities”.
Analysts said the closure was possible but unlikely, and warned that a prolonged legal battle loomed in Turkey’s highly politicised judicial arena. The threat of -closure dramatically raises the stakes in the clash between the AKP, with its roots in political Islam, and the increasingly besieged secularist establishment. The legal fight, which could last for up to a year, could paralyze decision-making and freeze a faltering economic and structural reform process.
Foreign investors, who own about 70 per cent of the Istanbul stock market, were heavy sellers, sending the main market index down 7.5 per cent at the close. It was the steepest plunge for two years and was a more severe fall than in other emerging markets hit by the credit turmoil in the US.
At one point a euro was worth more than two liras, although the Turkish currency later recovered a little. The lira fell 3.5 per cent against the US dollar.
Wolfango Piccoli, a political risk analyst at London-based Eurasia Group, said Turkey was “locked into a major political crisis that puts political and macro-economic stability at risk”.
Ozgur Altug, chief economist at Raymond James Securities in Istanbul, said that if, as he expects, the constitutional court decided the case against the AKP had merit it would make further structural reforms “impossible” and jeopardize the financing this year of Turkey’s high current account deficit.
The AKP closure threat surfaced on Friday, when Turkey’s chief prosecutor sent a 162-page indictment to the constitutional court setting out what he alleged were systematic attempts by senior party and government officials to undermine the strict separation of religion and politics decreed in the Turkish constitution.
The prosecutor, Abdurrahman Yalcinkaya, is attached to the respected court of appeals. Analysts said his case, based among other things on reports of alcohol bans, segregation of women and men, and speeches by leading AKP figures, was stronger than it appeared on the surface and would almost certainly be looked at by the constitutional court.
What troubled observers more was the prosecutor’s additional request to the court to ban Recep Tayyip Erdogan, the prime minister, Abdullah Gul, the president, and 69 other named AKP -figures from politics for five years.