Güldem Atabay: If Democracy Suffocates, the Economy Suffers

In Turkey, politics is no longer confined to the ballot box. Although the court case against the CHP party congress has been postponed to September 8, the matter is far from closed. As the century-old main opposition party, the Republican People’s Party (CHP) is a cornerstone of Turkey’s multi-party democracy and a key pillar of democratic checks and balances. For this reason, the issue has moved beyond a simple question of judicial impartiality and now represents a wider intervention into the political system.

The “absolute nullity” case filed against CHP is not just a legal move—it is a politically charged intervention that disrupts the nation’s political equilibrium, undermines the rule of law, and, ultimately, threatens the most vulnerable segments of the economy. When the aim is to reshape Turkey’s political balance through a direct attack on the CHP, the repercussions inevitably spill over into the economic realm.

At a time when Turkey is relying on fragile stability strategies—such as attracting hot money through high interest rates—analyses of political crises remain narrowly focused on financial markets. Yet the narrowing of democratic space by the government not only undermines the opposition but also stifles the economy, especially in an emerging market like Turkey. Investment decisions depend not just on cheap labor and infrastructure but also on political risk assessments, protection of property rights, and the presence of an independent judiciary.

If Risk Spikes on September 8, the Market Will React Swiftly

Should domestic political risk escalate on September 8 in an unprecedented way, the first shock will come from the foreign exchange markets. Currency investors react fast. In an economy like Turkey’s, which is heavily reliant on external financing, political stability and legal predictability are key to determining a wide array of variables—from exchange rates to interest rate policy. The trust of investors who have been willing to give Turkey “one more chance” would be quickly shattered.

Interest rate hikes, disinflation efforts, and already diluted rationalization steps would instantly be overtaken by scenarios of deepening uncertainty and political turbulence. This would come at a cost—not just for economic management, but for society as a whole: more volatility, more inequality, and more chaos.

Weakening the CHP through legal maneuvering—or more accurately, through political interference in the judicial system—would cause Turkey to plummet into a different league of nations altogether.

The Economic Toll Will Hit the Poor First

The economic impact of such a drastic “absolute nullity” ruling may not be immediately visible in income distribution or poverty levels, but the long-term consequences would be severe. Undermining political stability and the rule of law directly contributes to economic volatility that hits working-class and low-income groups the hardest.

Political uncertainty creates a domino effect in financial markets: the lira depreciates, inflation spikes, and investors retreat. The results? A decline in purchasing power for retirees, minimum-wage workers, and small business owners—and an even harsher cost of living. In an economy like Turkey’s, where inflation functions like a regressive tax, fixed-income citizens would suffer a sharp decline in real income.

When foreign capital perceives rising political risk, it withdraws. Domestic investors then shift their focus from production to safe havens or interest-bearing assets. This leads to a slowdown in job creation and threatens existing employment. Vulnerable groups—especially the young, women, and those with lower levels of education—get caught in a tightening unemployment trap.

Tax Burdens and Inequality Would Deepen

During such crises, governments tend to compensate by raising indirect taxes. Consumption taxes like VAT and special consumption taxes affect the rich and poor equally in percentage terms—but unequally in real life. A rise in food prices may merely dent a wealthy person’s budget for luxury goods, but for a poor family, it means eliminating yet another essential item from their daily lives. The tax burden becomes more unjust, and the income gap widens.

Weakening a major opposition party like the CHP through judicial means is not just a legal debate. When political representation is weakened, public demands—such as minimum wage increases, better pensions, or fairer social aid—can no longer find a voice in the political arena.

Every political crisis sets off a cycle of economic loss for the poor. The economy contracts, government spending becomes election-driven, income inequality worsens, and citizen demands are suppressed. In a country where the law is trampled in order to impose an “absolute nullity” ruling against the CHP, those who suffer the most from the economic fallout will not be judges or political elites.

As with every period where politics and law become inseparably intertwined, the ones who pay the highest price are always the poor.

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