Turkey: Failed coup means the status quo prevails in terms of macroeconomic policy - BBH

Research Team at BBH, notes that just before the weekend, it appeared Turkey was offering a new drama but the coup attempt was defeated, and the immediate market impact looks minimal, or at least likely to be localized to Turkish markets. 

Key Quotes 

“The more significant fallout will likely be political in nature.  President Erdogan, whose authoritarian style and move away from a secular state already was already the source of criticism, is likely to go even further down this path. 

There is speculation that Erdogan may have spurred the coup in a "false flag" operation, but we are skeptical.  However, we recognize Erdogan as a savvy political actor and anticipate his ability to turn the failed coup attempt into his advantage. 

Erdogan claims that his onetime ally Gulen, who left Turkey in 1999 and now resides in the US, was the mastermind of the coup, and demands his extradition.  The US (and Europe) quickly supported the democratic government in Turkey in the face of the coup, but has requested evidence of Gulen's guilt before sending him to home.  One need not be cynical to be skeptical of his chances of a fair trial.

Turkey's military is the self-appointed defender of secularism and has intervened at least four other times since 1960.  The popular narrative and the one that Erdogan is promoting of course is that the coup failed because the people, encouraged by the President himself on social media, took to the streets.  That may be part of the story, but the military itself appeared divided and this added to the drama.  On balance, turning the coup back means the status quo prevails in terms of macroeconomic policy within a probably more autocratic context.”