POLITICAL DEVELOPMENTS 
2007 was an eventful year in Turkey. The year saw both parliamentary and presidential elections, and growing political tension that reached its peak toward the end of the year, spilling over into 2008.  During this process of change, the controversy over the place of Islamic symbols in secular society intensified, focusing on the Islamic headscarf, while a gradual shift occurred in the traditional Turkish political infrastructure. 
Prime Minsiter Recep Tayyip Erdogan and his government, elected in 2002, had not faced any serious opposition since being elected. As had been prediced, this changed as the presidential elections issue loomed and came to dominate the country’s agenda. When it became obvious that an AKP candidate – with a background in political Islamic movements – could become the next president of the Turkish Republic, a wide range of opposing blocs emerged within the secular parts of Turkish society, both within and outside the parliament, to try to prevent this from happening. The most ardently secular opponents of the AKP held large-scale “Republican” meetings of a magnitude unprecedented in the history of modern Turkey.

During these meetings, hundreds of thousands of people, the majority of which were women, expressed their discontent with the AKP government and the prospect of a person  they viewed as Islamist in the post of president. The objective of the demonstrations, failing to prevent the election of an Islamist president, was to warn the prospective candidate that his secular stance was untrustworthy. The opposition then assumed the strategy of seeking to exclude all non-secular elements from the strongholds of secularism, or from acceding to the post of the presidency. All subsequent arguments against the AKP derived from this principle. Hence, as the question of secularism, a defining element of the Turkish Republic, entered the political arena once more as it had done numerous times in the preceding 84 years of the Republic, political tension increased dramatically. 

The AKP made a token attempt to appease the opposition and the rising tensions in the country. This can be assumed to be the main reason underlying Erdogan’s decision not to stand as a candidate for the presidency. Givign that role instead to his long-time ally, foreign minister Abdullah Gül, seemed an astute move: Gül was widely liked in EU countries.  Nevertheless, this also proved insufficient to satisfy the opposition. Therefore, opposition parties represented in parliament such as the CHP, ANAP and DYP collectively boycotted the election, and did not participate in the voting procedure. The election of Gül was therefore handed to the Constitutional Court, on the grounds that its statuary position was subject to question, as the allegedly required minimum number of 367 voting members of parliament was not reached. The Constitutional Court, of which the majority of members had been appointed by staunch secularist President Ahmet Necdet Sezer, deemed the election invalid. The parliament then decided to reschedule the parliamentary elections, earlier scheduled for November 3, and decided to hold them on July 22, to seek to unlock the deadlock over the presidential election. Meanwhile, an AKP move to amend the constitution to have the president elected by the president rather than by the parliament was ratified by the parliament, but rejected by President Sezer. Thus, a situation emerged where the proposal would be subjected to a plebiscite.

The decision to hold elections ahead of schedule calmed tensions somewhat. Because of their decision not to participate in the voting process during the balloting for president, the DYP and ANAP, largely dependent on conservative votes, met a strong negative reaction from their grass roots. Indeed, the AKP successfully campaigned for right-wing voters, who were distrubed by the slogans vocied by the republican demonstrations not to allow a religious person to be the countryäs president. This victimization of the AKP served the party well and was a contributing factor to its election. 

Although its target group was close to the AKP voters, the nationalist MHP did not represent a great hope for the masses, due to its shifting political stance. The party was increasingly touting an anti-American, anti-EU and anti-globalization line. The attempts by the DYP and ANAP to unite and form a new center-right Democratic Party in an effort to pass the election threshold, failed for reasons that will be discussed below.
The AKP won the parliamentary elections of July 20 with close to a majority of the popular vote, recigin 47.7 percent. This provided it with 341 out of 550 seats in the parliament. The AKP victory depended on a series of factors. Primary amogn these were the weakness of its rivals, the controversies in the presidential elections including the “e-memorandum” posted by the military leadership. This combined with some true achievements of the AKP government, such as the inclusion of the poor masses into the social security system, economic and social development programs in the countryside, and progress in the EU accession process. 
Election night was nightmarish for both the right and left wing opposition. Aware of public concerns, Erdogan, akin to a leader confronted with the prospect of a revolution, held a speech reassuring and embracing the people. However, the pre-prepared speech did not appease the masses’ concerns regarding the AKP’s commitment to secularism.

Following the elections, Abdullah Gül once again declared his candidacy for the presidency – according to some sources, against Mr. Erdogan’s wishes. When the MHP, which had not been represented in parliament in the previous term, declared its intention to participate in the voting procedure, the AKP overcame the 367-seat problem and Mr. Gül was elected as president in the third round. This left no uncertainty that the control mechanism of the secular and Kemalist elite, which constituted the core of the state, had collapsed.

The resolution previously rejected by Sezer suggesting that the president should be elected by popular vote for four years rather than seven was not withdrawn; due to Mr. Erdogan’s persistence, a referendum was held and the proposal was accepted by 70 percent of the vote. This was, in effect, a successful move intended to suppress the already weak opposition. From a different approach, the referendum was understood as an assessment of how people would react to the planned large-scale changes to the political system that the AKP elite was planning. Indeed, the decision to place the revision of the constitution on the agenda instantly after the plebiscite reinforces this understanding. The subsequent discussions among the secular elite and media, on whether Turkey was becoming Malaysia, can be regarded as an indicator of such concerns.

From that point onward, the question whether the Islamic headscarf should be permitted in universities became fundamental in the Turkish political system. The headscarf issue should therefore not be seen in isolation; it needs to be considered in the context of the larger sensitivities over secularism, which explains the anxiety of the opposition.

Considering that the wives of the prominent leaders in the government party wear the Islamic headscarf, it can be assumed that the government appoints and promotes like-minded individuals to the high levels of the bureaucracy. Indeed, a rising number of young Turkish intellectuals whose wives do not cover their heads with the Islamic headscarf (or in the case of women, who themselves do not wear it) are either fired from government positions of unable to find jobs in government. Furthermore, it is very likely that during the AKP’s second term, this implementation will spread to lower levels of the bureaucracy. This is the reason why the issue of the Islamic headscarf has become the focus of the secular elite’s concerns. While the army and the secular elite ardently oppose the wearing of the Islamic headscarf in public areas, the AKP maintain that they consider this issue from the perspective of individual liberties and the freedom of education. 

However, the latest polls demonstrate that from 2002, coinciding with the start of the AKP’s first term, to the present, women wearing the traditional headscarf increased by 5 percent (from 64 to 69 percent), while those wearing the Islamic headscarf (known as Türban) increased by 400 percent (from 4 to 16 percent). These statistics must be interpreted as a sign of social change. The results undoubtedly please Turkey’s Islamists, who aim to transform society gradually rather than by triggering a radical Islamic revolution.

Political parties tend to express a worldview and represent a social group. The more moderate wings of the Islamist Refah (Welfare) and Fazilet (Virtue) Parties formed the AKP. The AKP earned the respect and admiration of the public opinion in the West due to the realization of reforms, and the steps taken in the EU membership process. Within Turkey, societal elements that dis approve of the army’s role in politics, mainly the liberal and leftist intellectuals, also supported the AKP. 

That said, a growing number of experts on Turkey grew concerned that the AKPs policies were undermining the secular system. 

After the end of Erdogan Tezic's term Chairman of the Council of Higher Education (YÖK), President Gül appointed Yusuf Ziya Özcanas the new Chair in December 2007. In his first press conference, Mr. Özcan affirmed that he was against all prohibitions, implicitly denoting that he was against the prohibition of wearing the Islamic headscarf in universities. This can be understood as a reflection of the desire on the part of Messrs. Erdogan and Gül to implement a de facto relaxation without amending anything on paper – something likely due to hesitation caused by the widespread debates on possible changes to the constitution. As is the case with the Prime Minister’s advisor Ahmet Davutoglu, subsequently regarded as the architect of the AKP first-term foreign policy approach, Yusuf Ziya Özcan is an academician with a background as a lecturer at the International Islamic University in Malaysia. Judging by Özcan’s appointment and his early statements, secular circles emphasize that the incumbent administration in Turkey is shaped around a specific view of the world, dividing society into ‘us’ and ‘them’, and argue that the secular core infrastructure is under severe threat.

FOREIGN POLICY & SECURITY
The most significant success of the AKP government’s first term was undoubtedly the start of the EU accession negotiations in 2004. After these began, the process gradually slowed down and failed to develop at the anticipated pace. The reason for this may have been opposition to the AKP government or reluctance within the European Union concerning enlargement. Although no significant problems have arisen during the negotiations, resistance of by France and the Greek Cypriot government has prevented important chapters from being opened in 2007. By refusing to open Turkey’s ports and airports to trade with Greek Cyprus, the AKP provides ammunition to the parties that want to freeze the negotiations. However, the government stated that the issue was considered in accordance with the general stance of the EU, and due to the disorder within the EU the AKP appeared unwilling to give all its cards away.

The AKP was successful in initiating negotiations with the EU. However, the process seems increasingly ill-administered. Although many external and internal reasons underlie this, the AKP may be bitter for failing to receive anticipated support from the EU on its chief ambition to abolish the prohibition on the Islamic headscarf. The fact that Ali Babacan was appointed head negotiator in the 59th government holding a position of State Minister, and in the 60th government simulataneously with the post if Minister of Foreign Affairs, has been interpreted as a sign of the AKP not taking the process seriously, given that the task of leading EU negotiations is demanding and can hardly be undertaken in parallel with another ministerial position. This has frequently been a topic of discussion in diplomatic circles in Ankara. 

Even though the AKP government considers itself a close ally of the United States, it is difficult to claim that Turkish-American relations were cordial until Turkey initiated cross-border operations into Northern Iraq. There is no doubt that the damage from Turkey’s refusal to cooperate with American requests during the 2003 invasion of Iraq has lingered. After the Iraq invasion, Turkey lost a significant degree of influence in Northern Iraq, as it was not a part of the winning coalition on the ground. Instead, the Kurdish regional government in Northern Iraq improved its relations with the U.S. to the extent that it gradually isolated Turkey from the region, perhaps not economically but definitely politically. It was in this environment that the PKK terror re-ignited and the already prevailing anti-Americanism in Turkey reached its peak. 

This situation combined with the AKP’s increasingly Islamist tendencies, to lead the Turkish government to a rapprochement with states such as Iran and Syria, who are anathema to the U.S.. Even Iran’s nuclear weapons program appears to have been ignored by the AKP even though a potential Iranian nuclear bomb would also pose a threat to Turkey and alter its entire strategic logic.

The deterioration of Turkish-American relations caused Kurdish groups in Iraq to become the strategic ally and main benefactor of the U.S. in the post-Iraq war environment. In this power vacuum, starting from 2006, the PKK emerged once again as a threat to Turkey. Thus, Turkey stationed over 100,000 soldiers at the Iraqi frontier, for a combination of concerns over the Kurdish administration in Northern Iraq and the PKK threat. Despite the army's public declaration regarding the necessity of a cross-border operation, the AKP government did not find such an operation appropriate on the eve of the general elections. This may have been the first time in recent Turkish history that civilians took the initiative, despite immense pressure. However, after the elections and the PKK’s growing number of attacks on Turkish military posts, the government agreed to put a motion to the parliament to send armed forces into Northern Iraq. The motion passed with over five hundred votes, with the support of the opposition.  

Having passed this vote, however, the government did not hasten to begin an operation and instead used every possible diplomatic and political mechanism to delay the operation. The matter was discussed between Messrs. Bush and Erdogan on November 5, in order to avoid a confrontation between Turkey and the U.S.. Both leaders confirmed the PKK as their common enemy and the meeting was followed by an increase in intelligence exchanges. On December 16, the U.S. opened its airspace and 50 Turkish F-16 fighter planes bombed targets in Northern Iraq. It is difficult to judge the success and military outcome of the operation, however, it is certain that Turkish-U.S. relations have improved and that anti-Americanism in Turkey has decreased, largely as a result of growing consensus over Northern Iraq.Following the operation, political circles have speculated as to whether the government is preparing an extended amnesty for PKK fighters. However, even with an extended amnesty, the PKK threat does not seem likely to go away in the short term. Under pressure from the U.S. and the Northern Iraq regional government, the PKK might consider abandoning its camps in Iraq and transforming its structure, yet the threat to Turkey will undoubtedly continue in other forms.

THE ECONOMY
Turkish people have become accustomed to high levels of inflation, in the double and occasionally triple digits. The IMF program that began in 2001 and continued during the AKPs tenure has managed to reduce inflation to single-digit levels. Macroeconomic indicators are positive. For the first time, public debt rated below 60 percent of GNP, and economic growth has been sustained for 23 quarters despite a slight decrease in the last quarter. The expected 5 percent growth rate for 2007 seems in fact to have finished at ca. 4 percent. The growth in the export sector has continued, and this year, for the first time, the aim of US$100 billion dollars in exports was exceeded. Parallel to that, the growth of imports also continued. Together with these positive factors, the inflation rate exceeded projections and remained at around 9 percent. In line with increasing imports, the current account deficit of around US$40 billion accounted for 8 percent of GNP. Interest rates of around 17-18 percent imply that Turkey is one of the countries giving the highest real interest rates, which may constitute a risk for the economy.

PROSPECTS FOR 2008
The AKP may have shelved its plans to launch a wholesome revision of the country’s constitution, in spite of having appointed a committee of scholars to that effect. While this is likely due to the growing opposition in many circles to the AKP’s policies, there is no sign of the AKP giving up its project of gradually transforming society. The newly elected president of YÖK signaled that he would try to solve both the issues of the religious (imam-hatip) schools and the Islamic headscarf by creating “de factosituations”. The AKP seeks to ensure that graduates of religious schools, centering on Islamic learning, can be accepted to universities. However, if no solution is found, it can be presumed that the issue of the Islamic headscarf will be concealed in the ongoing constitutional amendment. It should be noted that the AKP possesses the required number of seats in the parliament (333) to send a proposed amendment to a referendum. These tensions are expected to grow in 2008.

In spite of the army’s e-memorandum, the opposition did not take the opportunity to step outside democratic mechanisms during 2007. A significant challenge would arise if the political opposition and the bureaucratic bodies resort to non-democratic means should they realize that they are unable to compete with the AKP over votes. Mr. Sezer functioned as a control mechanism over the AKP until the election of a new president, acting as a firewall checking and balancing the AKP. However, with the handover of the presidency, no checks and balances to the AKP’s power remain. That said, it is likely that the political opposition, the armed forces, the high judicial instances and the high-level bureaucracy – the traditional keepers of the secular state – could move to alter this situation if they feel that the AKP’s ambitions to gradually but irrevocably transform society become sufficiently evident. Since there is no strong and well-organized opposition, only the AKPs imprudence can at this time cause any harm on the party. If Mr. Erdogan embraces all citizens, as he promised to do after his re-election, he and Turkey will breathe a sigh of relief. If not, it does not seem likely that Turkey will follow a stable line in 2008.

As concerns the reforms necessary for EU accession, it is unrealistic to assume that the AKP will be keen to fulfill the required reform programs. To begin with, it has not showed such an inclination during the past six months; moreover, the political realities in either the EU or Turkey provide the appriopriate conditions for constructive engagement and reform. The most important step that the government could take for the advancement of the negotiations would be the appointment of  an individual solely responsible for EU negotiations. This would mean that Mr. Babacan would have to resign either from the post of Foreign Minister or the post as head negotiator. Additionally, strengthening the institutional structure for implementing the reforms required by the EU would smoothen the path to EU membership.

As regard relations with the United States, it would not be realistic to expect U.S.-Turkish relations to improve significantly, in spite of the temporary appeasement and exchange of intelligence in connection with the recent Iraq operations. The AKP’s foreign policy toward the East has been shaped by its ideologicall origins in political Islam, and appear incompatible with U.S. interests in the Middle East. As a consequence, Turkish-American relations are likely to fluctuate in 2008, depending on developments in Iraq, the Iran question and the PKK and Kirkuk issues.

Anti-American and anti-EU circles in Turkey are trying to change the direction of the country’s policies as regards Russia and China. However, it will not be easy for the AKP to depart from Turkey’s traditional foreign policy line and strategic relations. It is likely that the AKP will leave its Central Asian policy to its fate. In the Turkic Republics summit held in Azerbaijan recently, it was resolved to form a secretariat of Turkic states, but it remains to be seen if this will be implemented. The AKP’s main interests appear to lie in the Middle East, where the government is following a policy of its own, departing from traditional Turkish caution in its relations with the region. This policy is compatible neither with the traditional Turkish stance of disinterest, nor with the policies of its traditional allies. It seems that Turkey’s Middle East policy will be formed in accordance with the AKP’s Islamist and idealist tendencies.

Some analysts maintain that the PKK has played out its role as a terrorist organization. Henceforth it can be expected that the PKK, which set alight the fire of separatism and nationalism, will transform its organizational structure and method of struggle. The absence of a substantial reaction to the air operations against the organization indicates that the PKK is likely to return to non-military forms of struggle and could "come down" from the mountains. 

As regards the economy, had there not been a global economic crisis or political events that could profoundly disturb the country’s stability, 2008 would have been the year that Turkey could have repaired the structural weaknesses of the economy. Undoubtedly, the current account deficit of ca. 8 percent of GDP can only be maintained by foreign direct investment. The need for foreign direct investment will force Turkey to make large-scale privatizations in the energy or banking sectors in 2008. Moreover, the burden of the social security reform that brought the AKP vast amounts of votes will become heavy on the economy. The pressure of social security on the economy will be profoundly felt in 2008.

Turkey’s political environment in 2008 is unlikely to be determined solely by economic or foregin policy concerns. Rather, an intensıve debate concerning the secular nature Turkey’s political system will continue to dominate the agenda. This could make 2008 a lost year for Turkey.