The world's largest political risk consultancy, Eurasia Group predicts that following the June 7 elections, a coalition comprising of the Justice and Development Party (AK Party) and right-wing Nationalist Movement Party (MHP), remains the most likely scenario, rather than early elections. The Eurasia Group report penned by analyst Mehmet Müderrisoğlu said that if Prime Minister Ahmet Davutoğlu does not provide assurances sought by the MHP, the coalition is only likely to be formed in the second half of July. According to the report, the possibility of early elections in November is about 25 percent.
The report predicts that under any coalition scenario, the AK Party's coalition partner will use the anticorruption issue to discredit the party and thereby destabilize the government. The Eurasia Group also predicts that Kurdish reforms will remain minimal. It was stated in the report that the AK Party's potential coalition partners - the right-wing MHP and the left-of-center Republican People's Party (CHP - have opposing priorities in terms of Kurdish policy. A total halt to the Kurdish reform process - as the MHP would have - would cost the AK Party Kurdish support, whereas an acceleration of the process - in line with the CHP's preferences - would alienate the AK Party's nationalist voters.
According to the report, none of the AK Party's potential coalition partners will insist on underwriting structural economic reforms in a coalition protocol. "Yet an ongoing disagreement within the AK Party over the reasons for the party's poor electoral performance will continue to inhibit unity regarding economic policy," they claimed.
The report also claims that if Davutoğlu fails to form a coalition and early elections ensue, he will still not be replaced during the AK Party's Fifth Ordinary Congress, which will likely take place in late August or early September. However, the Eurasia Group also predicts that this situation may further harm the reputation of Davutoğlu saying, "This would be a blow to the reformist camp and add to an overall sense of unpreparedness for an impending shift in global liquidity conditions. It would likewise lay the foundation for intra-party tension that ensures economic policy remains politicized and sub-optimal."