Under Recep Tayyip Erdogan and his AK party, Turkey has become richer and more confident. But the party’s iron grip is becoming counterproductive, says Max Rodenbeck

SEEN IN SILHOUETTE from a commuter ferry bustling across the Bosporus, parts of Istanbul seem to have changed little from centuries past. Looking to the west, towards Europe, the old walled city is still capped by multiple domes and spiky minarets. But turn to the east, towards Asia, and a different picture unfolds. Standing as sentries to the narrow strait, giant gantry cranes heave containers onto waiting ships. Beyond them, along the low-slung Marmara shore, march soaring ranks of high-rise buildings. To the north, the hills on the Asian side of the Bosporus prickle with a metallic forest of communications towers. And on the highest of those hills rises a startling mirror to the old Istanbul: the giant bulbous dome and six rocket-like minarets of a colossal new mosque (pictured). When finished later this year, this will be Turkey’s biggest-ever house of prayer.

The scale and symbolism of the mosque, like so much of the frenzied construction that is reshaping this city, reflect the will and vision of one man: Recep Tayyip Erdogan. After over two decades in power, from 1994 as mayor of Istanbul, from 2003 as Turkey’s prime minister and since August 2014 as president, Mr Erdogan towers over his country’s political landscape. To detractors he is a would-be sultan, implacable, cunning and reckless in his ambition. To admirers he is the embodiment of a revived national spirit, a man of the people elevated to worldly glory, a pugnacious righter of wrongs and a bold defender of the faith.

Mr Erdogan has presided over some startling transformations. In two short decades his country, and most dramatically its long-neglected Anatolian hinterland, has moved from relative poverty and provincialism to relative wealth and sophistication. An inward-looking nation that exported little except labour has become a regional economic powerhouse, a tourist magnet as well as a haven for refugees, and an increasingly important global hub for energy, trade and transport.

In many ways Turkey’s 78m people have never had it so good. Since the 1990s the proportion of those living below the official poverty line has declined from the teens to low single digits, and the share of the middle class has doubled to over 40%. By every measure of living standards, the gap between Turkey and fellow members of the OECD, a club of mostly rich countries, has shrunk markedly.

Under the subtle but relentless Islamising influence of the Justice and Development (AK) party, co-founded and led by Mr Erdogan until he became the nation’s (theoretically non-partisan) president, the Sunni Muslim component of Turkey’s complex national identity has strengthened. The long shadow of Kemal Ataturk, the ruthless moderniser who 90 years ago built a secular republic on the ashes of the Ottoman Empire, has faded. The AK party has marched the army, long given to ejecting elected governments from power, back to its barracks. Turkey has resumed its role as turntable between east and west.

When the AK party stumbled badly in parliamentary elections in June 2015, pundits were quick to herald an end to Mr Erdogan’s long winning streak. Whiffs of corruption and abuse of power had tainted his party, and terrorist acts by Islamic State (IS) and the influx of more than 2m Syrian refugees into the country had made Turks question his judgment.

Who dares, wins

Shorn of a parliamentary majority for the first time since 2002, the AK party should have sought a coalition partner, but instead Mr Erdogan boldly gambled on a new election on November 1st. To everyone’s astonishment his party surged back, trouncing a trio of rival parties. With 317 seats in the Grand National Assembly, Turkey’s unicameral 550-seat parliament, the party can now again legislate at will.

However, its majority is insufficient to allow it to revise Turkey’s 1982 constitution on its own. That was what Mr Erdogan had been trying to achieve in the June election, in the hope of creating a presidential system that would greatly widen his ostensibly limited (but in fact extensive) powers as president. In the absence of a two-thirds majority, he must work in tandem with his hand-picked prime minister, Ahmet Davutoglu, who is a less divisive figure.

Ahead of the November election Mr Erdogan wisely toned down rhetoric about expanding his own powers but quietly strengthened his control over the party. At a party meeting last September he engineered the replacement of 31 members (out of 50) of the party’s politburo with people personally loyal to him. One of these, his son-in law, is now also a cabinet minister; and one of the party’s new members of parliament is Mr Erdogan’s former chauffeur.

Today there is no doubt about who is boss. Bureaucrats in Ankara, the capital, respond to the merest whisper from the saray (palace), the grandiose 1,000-room presidential complex, built atop a hill on the city’s outskirts at a reported cost of $615m and opened in 2014. The famously short-fused Mr Erdogan will almost certainly continue to dominate Turkish politics until the end of his term in 2019, and very possibly beyond: some say he has set his sights on 2023, the 100th anniversary of the Turkish republic. By then he would have served at the helm of the Turkish state for far longer than Ataturk himself.

To his party’s pious core constituency, that is something to rejoice in. Much of the country’s urban working class, as well as those living in the stretch of central Anatolia sometimes known as Turkey’s Koran belt, share this cult-like devotion to the former food vendor and semi-professional footballer turned statesman. Other AK voters, such as small businessmen and property developers, may be warier of Mr Erdogan. They support the party mainly because of its record of economic growth and relative stability after decades of turbulence. The AK’s swift comeback between the June and November polls reflected fear of a return to political volatility as much as enthusiasm for its policies.

The collapse last summer of peace talks between the government and the Kurdistan Workers’ party (PKK), an armed rebel group, raises the spectre of more bloodshed. The talks had made little progress but did much to calm the restless south-east, a region dominated by ethnic Kurds, who make up 15-20% of Turkey’s population nationwide. Fighting in the region in the 1980s and 1990s had left some 40,000 soldiers, rebels and civilians dead and displaced perhaps 1m Kurds from their homes. Soon after the June election, clashes between security forces and Kurdish activists, which had been suspended for two years, resumed. In the months since, heavily armed police have clamped curfews on Kurdish towns. The clashes have left well over a hundred civilians dead, in addition to scores of Turkish security men and, says the Turkish army, more than 400 alleged PKK guerrillas.

At the same time Mr Erdogan faces rising economic headwinds. Between 2002 and 2007 Turkey’s GDP grew at an annual average of 6.8% and its exports tripled, but since then GDP growth has settled at around 3.5% a year and exports have remained virtually flat. Income per person, which the AK party four years ago rashly promised would rise to $25,000 a year within a decade, is stuck at around $10,000.

None of this is disastrous, and Turkey’s economy is far more robust than it used to be. The trouble is that Mr Erdogan’s government has continued to behave as if the good times had kept rolling. Although the country’s chronic current-account deficit has narrowed lately, thanks to falling energy prices, Turkey relies heavily on foreign capital and is finding it increasingly difficult to attract money from abroad. Yet in recent years its government has shied away from reforms to boost the meagre domestic savings rate or promote industry, even as a consumer credit binge and heavy infrastructure spending have crowded out private investment. Rigid labour and tax rules remain a burden. Mr Erdogan himself has shaken confidence further by bullying his central bank to keep money cheap and by hitting the business interests of political rivals. Without a serious policy shift, including an effort to deal with concerns about institutional independence and the rule of law, Turkey’s economy will continue to underperform.

Darker scenarios have less to do with the country’s domestic market than with geopolitics. Because of the way it straddles cultures and continents, Turkey has always held a complicated hand. In recent years the mayhem on its southern borders, coupled with renewed tension pitting its NATO and European allies against an expansionist Russia, have made its position all the more delicate. Yet Mr Erdogan’s government has failed to show much diplomatic finesse.

Everyone agrees that Turkey has been immensely generous in accommodating well over 2m refugees from Syria’s civil war. It has also worked hard to resolve long-standing squabbles with neighbours such as Greece, Bulgaria, Cyprus and Armenia. But it has often appeared aloof and suspicious, failing to communicate effectively or to work with allies.

The most important of these, and Turkey’s dominant trading partner, is the European Union. Fear of a continuing tidal wave of migrants has lately prompted Europe to proffer aid and a resumption of stalled talks on Turkish membership in exchange for tighter border controls. But there is little warmth in the relationship. Most European governments still see Turkey as a buffer more than a partner. And Mr Erdogan’s government has appeared more concerned to extract concessions than to adopt European norms as a good thing in their own right.

The danger of isolation was sharply underlined in November when Turkish jets shot down a Russian fighter over Syria that had briefly entered its air space. The Russian president, Vladimir Putin, swiftly responded with a broadside of sanctions. The Russian measures could trim up to 0.7% from Turkish GDP growth this year, according to the European Bank for Reconstruction and Development.

With lukewarm support from its allies, Turkey has tried to calm the excitement. But given its support for militias fighting against Syria’s president, Bashar al-Assad, and Russia’s growing military commitment to his survival, there could well be more clashes. Turkey seems in danger of stumbling into an unplanned but potentially costly fight. It imports most of its gas from Russia, and Turkish construction firms have well over $10 billion-worth of Russian contracts on their books.

Worried voters in November rallied behind Mr Erdogan, backing a strong, tested government

Now Turkey faces a new threat. A double suicide-bombing in Ankara on October 10th last year aimed at a march by leftist trade unions and Kurdish activists killed more than 100 people. In January suicide-bombers struck again, this time in the heart of Istanbul, killing ten tourists. Both attacks were attributed to Islamic State. In a country that has long seen itself as insulated from Middle Eastern turmoil, the intrusion of violent radical Islam came as a particular shock. Worse, it partly reflected Mr Erdogan’s slowness to recognise the danger of blow-back from his own policies in Syria, where Turkey for too long indulged radical Islamists so long as they opposed the Assad regime.

Rather than blame the party in power for such setbacks, worried voters in November rallied behind Mr Erdogan, backing a strong, tested government rather than risk rule by a possibly weaker coalition. It helped that the ruling party, in effect, controls Turkey’s mainstream media, which pumped up nationalism in the face of danger. Mr Erdogan had carried the 2014 presidential election with a slim majority of 52%, and his AK party, for all its success, enjoys the support of just half the Turkish public. Many of the rest remain sceptical or even bitterly opposed to him.

This special report will argue that Turkey’s leaders, with their ambitions still set on mastery, are not doing nearly enough to heal such internal rifts. The Kurdish issue looms as one big danger, and so does the Turkish economy’s growing vulnerability to external shocks. Mr Erdogan’s blustering, bulldozing style, together with his party’s growing intolerance for dissent, portends trouble.