What Turkey’s election surprise says about the troubled country by Steven A. Cook @FortuneMagazine November 2, 2015, 3:12 PM EDT E-mail Tweet Facebook Linkedin Share icons Just five months after failing to secure a parliamentary majority for the first time since 2002, Turkey’s Justice and Development Party (AKP) came roaring back on Sunday with 49.4% of the popular vote and a renewed mandate to govern without any coalition partners. Going into the elections, all the polling indicated that the AKP would garner about 40% of the vote, which would force it to seek coalition partners to form a government. This was precisely the outcome of the June elections, after which the inability of the AKP and Turkey’s other main parties to agree on a government produced a “hung parliament” and Sunday’s re-run elections. There are already questions about the AKP’s turnaround, improving almost ten percentage points in an environment where the country is once again at war with the terrorists of the Kurdistan Workers’ Party (PKK), where the self-declared Islamic State has perpetrated horrific bombings taking the lives of 134 Turks since July, and where the economy has been on the slide. Opponents of the AKP and critics of President Recep Tayyip Erdogan, who sabotaged coalition talks in June because he did not like the election results, suspect the outcome was manipulated. Erdogan and AKP party officials insist that voters opted for stability during increasingly uncertain times. Regardless, neither Erdogan nor the AKP have answers for the multiple crises buffeting the country. The most obvious and pressing problem for the new Turkish government is security. For the better part of the last 18 months, Turkey avoided direct confrontation with the Islamic State, fearing retaliation on the streets of Turkish cities. Ankara was also wary of the American strategy to fight the group in Iraq first without addressing what Turkish officials have long believed to be the root cause of the Islamic State problem—the regime of Syria’s Bashar al-Assad, which has created the kind of chaos in which the Islamic State has thrived. The Turks also determined that Kurdish nationalism and the consonant political gains that Syrian, Iraqi, and Turkish Kurds have made was a greater threat to their sovereignty than the Islamic State’s nihilism. Despite this caution, Turkey now confronts simultaneous conflicts with the PKK and the Islamic State. After a year of intensive American diplomacy, Ankara’s decision last July to provide the United States and coalition forces access to air bases close to the Islamic State’s territory has made Turkey a target. The threat is considerable given the fact that almost five years after the conflict in neighboring Syria began, the Islamic State (and other extremist groups) has built networks and infrastructure along the Turkish-Syrian border. Consequently, there are likely to be more Islamic State-related attacks in Turkish cities. As for the PKK, since 1984 Turkish security forces have been unable to bring the conflict with that group to an end. There is no reason to believe they will be successful now. Barring a return to the on-again, off-again negotiations that the Turkish government and the PKK launched in 2013, the violence is likely to continue. Despite continuing questions about security, Turkey’s markets soared and the lira reversed its slide against the dollar the morning after AKP’s resounding victory. Investors had grown accustomed to the political stability that Erdogan and successive AKP governments have provided over the last 13 years. The optimism of the markets may be short lived, however. Other than the continuity and stability that investors seem to be betting on in the short run, Turkey’s economic challenges remain exactly what they were the day before Turks cast their ballots. Turkey’s economy is expected to grow 2.8% in 2015 and barely improve in the following five years. Unemployment has consistently hovered around 10%, though it has been as high as 14% in 2009 and as low as 7.8% in 2012. Youth unemployment is double the national average. Yet the biggest question coming out of the election relates to economic policymaking and management. Will the former deputy prime minister, Ali Babacan, who was unable to run in the June elections due to an AKP by-law (since relaxed) that prevents him from sitting in parliament for three consecutive terms, return to his former position to anchor the economy? Babacan in particular has a sterling reputation and his reappointment would certainly boost investor confidence. The other major economic issue is the independence of Turkey’s Central Bank. Erdogan has lashed out whenever the Bank’s officials have broached the idea of raising interest rates. From his perspective, low interest rates are an important component of the AKP’s electoral success because cheap money drives growth, which makes people wealthier, and, to the extent that Turks vote with their wallets, Erdogan and the AKP benefit. This in turn advances the president’s effort to transform Turkish society. Central Bank officials have resisted Erdogan’s pressure when they were forced to raise interbank rates in January 2014, though they seemed to heed his demands that those rates come down quickly. It seems entirely possible that the AKP and Erdogan will use the mandate Turks gave them on Sunday to chip away at the Central Bank’s independence. Of broader concern are Turkey’s deep divisions. Erdogan and the AKP originally came to power on a broad coalition of Turks from different sectors of society. After the 2007 elections in which the party won 47% of the vote when pious Turks, Kurds, liberals, big businesses, and average Turks voted for the AKP in what was then unprecedented numbers, Erdogan sought electoral success through confrontation and polarization. His success has produced an environment in which there are two mutually incomprehensible societies living side by side. Erdogan and the AKP have governed those who support them and sought to intimidate the others. Turks have not experienced this kind of tension and mistrust since the violence that broke out between leftist and rightist political groups in 1976 and that lasted for four years, taking the lives of anywhere between 4,500 and 5,000 Turks. There is little reason to believe that Sunday’s elections have put an end to Turkey’s troubles. The AKP seems intent on pressing its political advantage and imposing its worldview on the country despite the fact that approximately half the population disagrees with that vision. Security remains a significant and ongoing problem, which will continue to weigh on international investors. In 2002, the AKP was elected to resolve a similar set of problems. The irony of Turkey’s present situation is that Erdogan and the AKP exacerbated these very problems in order to reestablish their dominant position in the political arena. Despite outward signs of a robust and healthy political system, Sunday’s election disguises a troubled country. Steven A. Cook is the Eni Enrico Mattei Senior Fellow for Middle East and Africa Studies at the Council on Foreign Relations. Oxford University Press will publish his upcoming book, Thwarted Dreams: Violence and Authoritarianism in the New Middle East, in 2016.