Erdoğan’s Political Rival and 100 Others Arrested; Increased Political Risk in the Rule of Law and Investor Confidence

26/03/2025 - Written by Ozan A. Koyas

Arrests of the Opposition

The Mayor of Istanbul, Ekrem Imamoğlu, with around 100 other key opposition politicians and businessmen to President Erdoğan and his Justice and Development Party (AKP) were arrested in Istanbul on 19 March. The charges against them involve alleged corruption in the Istanbul Metropolitan Municipality (IBB) and terror charges in regards to aiding the PKK and other Kurdish groups. Focusing on Imamoğlu and his arrested associates, they have been jailed mainly on corruption crimes, with terror crimes being dropped on Imamoğlu by the court in Istanbul.

The Turkish Justice Minister denies any involvement of Erdoğan in the arrests (Poyrazlar, 2025), although the Turkish judiciary and security forces have been under Erdoğan's grip for years. Additionally, Erdoğan’s government has a track record by European democratic standards of fabricating evidence for arresting journalists and government officials, if they oppose or criticise Erdoğan’s rulings.

As a result of this track record, the arrests are a political move by Erdoğan. Afterall, Imamoğlu’s arrest came just before the Republican People’s Party (CHP) presidential nomination for the upcoming 2028 presidential election. His Istanbul University diploma was also annulled a day before his arrest, without which he could never run for President in the first place - as any Turkish president under the constitution needs to hold a university diploma. The current geopolitical environment may have nudged Erdoğan as well to decide to take a move now. Increased global authoritarianism alongside the erosion of a rules-based international order do establish the grounds that facilitate domestic crackdowns, while reducing international backlash. 

Furthermore, a four day protest ban has been implemented, with crackdowns on both physical demonstrations and posts on social media. Yet many in Türkiye’s major cities took to the streets. Many supporters of the CHP participated to respond to what they see as a preemptive coup against the next President of the Turkish Republic. If the protests continue, they could be one of the biggest demonstrations against Erdoğan since his party’s power grab in the late 2010s, and the Gezi Park protests the years before.

Rule of Law

Such a volley of arrests is unprecedented in Türkiye since Erdoğan’s consolidation of power following the 2016 coup. The elimination of Imamoğlu and key oppositional figures indicate a worsening of the rule of law in Türkiye, resembling more autocratic countries. It can be comparable to tactics of intimidation of the opposition, and transgression of democratic rights in Tunisia, Hungary, and Russia. Although Erdoğan’s AKP had been slowly eroding Turkish democracy for decades, he had never stooped down to such a level in halting the progress of the Turkish political opposition. There has been electoral manipulation, and overall changing the rules of the game to win elections, but never directly removing members of the opposition.

Yet such a progression is not surprising. The already non-independent Turkish judiciary, and the Turkish security forces are employed as a tool to aide Erdoğan’s political interests. The process for a fair trial and due process are selectively transgressed when certain political forces or even business leaders do not comply with Erdoğan’s AKP. In terms of democratic rights, the freedom of expression and assembly are highly affected, most notably around universities and places of public assembly around Türkiye, not just Istanbul. Erdoğan has been implementing this strategy since the Gezi Park protests in 2013, and even the separate attacks on Imamoğlu in 2019, 2022, and 2024. Since the start of the protests, close to 1,400 people have been arrested.

What could this mean for Türkiye? Probably an increased risk for the right of the opposition to participate in elections. The already high levels of political polarisation in the country can indicate a possible move by Erdoğan and his supporters to go further against the CHP. The pro-Islamist Yeni Akit newspaper has even called for Erdoğan to move against Mansur Yavaş, who is the current CHP mayor of Ankara, and a very close second in the CHP polls behind Imamoğlu. Türkiye is already heavily divided between the secularists and the Islamists; such unprecedented calls to further suppress Erdoğan’s oppositional forces can prove to incite more social unrest.

While for the CHP, hundreds of thousands of their members and sympathisers have taken to the streets in Istanbul and other major cities despite protest bans. The CHP party elections also saw around 15 million votes in their elections, nominating the jailed Ekrem Imamoğlu as the party’s presidential candidate. It is arguably the biggest political demonstration in the 21st century, surpassing the Gezi Park protests in 2013 if the protests continue for the weeks to come.

On a more international security perspective, the instrumentalisation of law for more autocratic means could also put the development of Kurdish rights in Türkiye in jeopardy. Kurds hoping for more democratic representation and protection of their identity are weary as their calls are now more likely to be stifled. Internationally by Western nations, Türkiye will be further perceived as a cumbersome ally, only really valuable for Europe to combat Russia, and other of its key partners in Eastern Europe, and the Middle East - that could complicate the security relationship being developed between the EU and Türkiye.

Investor Confidence

Erdoğan’s autocratic move also severely damaged confidence in the Borsa Istanbul 100 index, the Turkish Stock market. It saw a downfall of near 20%, the worst drop since the 2008 global financial crisis. The lira also fell around 15% against the US dollar, further continuing the trend of the currency freefall for more than a decade. Increased political uncertainties and transgressions over the rule of law are bad signs for investors since such developments could potentially put their existing and future investment plans at an increased risk. 

If investor confidence and the markets do not recover in the short run, such an economic downturn could lead to damaging effects on banking. The Turkish Central Bank convened a few days ago to sell more than $10 billion of foreign currency reserves to support the falling lira. More measures can be expected in the coming weeks as the Central Bank has held an emergency meeting to discuss the next steps for recovery.

On a broader note however, the recent arrests and current ongoing protests could potentially damage the Turkish tourism sector. Previous events of political instability had produced such effects previously such as in 2016 in the aftermath of the attempted July coup against Erdoğan. The international reputation of Türkiye does matter not only for investors but also for the foreign public interested in visiting. As for the depreciation of the lira, it can lead to an increase in import prices for Türkiye which is already highly dependent on such imports, and facing high levels of inflation. For an economy which was deemed set to recover from years of economic struggle, such authoritarian developments and instability can halt this progress.

Historically, Erdoğan’s policies have majorly impacted Turkish economy trajectory since he gained more power and influence over state economic policy. Over the past five years, Türkiye's economic policies have been characterised by unconventional approaches, particularly concerning interest rates and currency interventions. The administration's reluctance to raise interest rates, despite rising inflation, led to significant sales of foreign exchange reserves—estimated at $128 billion between 2019 and 2020—to support the lira. These interventions have strained the CBRT's reserves and raised concerns about the sustainability of such measures. It was only recently in the past few years that Türkiye has returned to a more orthodox economic approach. 

Yet now Erdoğan’s political moves come back to hurt the Turkish economy. While it is still too early to tell what will happen to the economy since the arrests, Turkish country risk ratings could go back down to pre-2025 levels. If Erdoğan continues to clash with the CHP, and investor confidence is not restored, these could hinder attempts of the Central Bank to combat inflation, and for the Turkish economy to effectively recover.

Recommendations

The use of hard autocratic measures may be a short-term strategic move for Erdoğan. Afterall, he directly impedes on the ability of the growing opposition from threatening his power. Yet the arrest of Imamoğlu could provide him the needed momentum of support to gain more power, just like Erdoğan’s arrest in 1998 did for him. 

There is also potential international resentment which could build up to pressure Erdoğan if the opportunity rises. Erdoğan autocratic moves can field Türkiye’s industry heads, and pro-democratic states to apply domestic pressure. There could also be an immediate response to Erdoğan from Kurdish militant movements, as the recent PKK step-down was conditional on advancing Kurdish rights in Türkiye; proving difficult at a time when Türkiye’s democracy is further weakened. 

Alternatively, a domestic move could also signal to Türkiye’s autocratic allies that it aligns further with their style of governance, and increase its diplomatic and economic ties with China and potentially BRICS countries.