(Bloomberg) — Turkish opposition candidate Ekrem Imamoglu won the redo of the Istanbul mayor’s race by a landslide on Sunday, in a stinging indictment of President Recep Tayyip Erdogan’s economic policies and his refusal to accept an earlier defeat.Imamoglu, backed by opposition parties including CHP, won 54% of the vote, and the ruling AK Party’s candidate, former Prime Minister Binali Yildirim captured 45%, according to state media. The political upstart broadened his margin of victory to nearly 800,000 votes from 14,000 in the March 31 balloting, in a clear sign voters are concerned about the crumbling of Turkey’s democratic foundations and an economy reeling from a spike in consumer prices and unemployment.Read why Turkey’s president cares so much about the Istanbul raceErdogan, who had challenged Imamoglu’s win in the original vote, accepted the outcome of the rerun he championed, but has hinted the new mayor could run into legal problems. He suggested Imamoglu might be tried for allegedly insulting a provincial governor, and a prison sentence could lead to his ouster — much as Erdogan lost his own seat as Istanbul mayor in 1998 for reciting an Islamic poem deemed a threat to Turkey’s secular order.Losing Istanbul is much more than ceding control of Turkey’s largest city and commercial powerhouse. The mayor’s job was the springboard for Erdogan’s own political career, and if Imamoglu, 49, performs well in the position, then the president may find himself with a future challenger.“With the elections out of the way, the key question is how the Erdogan administration reacts to Imamoglu’s victory,” said Piotr Matys, a London-based analyst at Rabobank. “It would be rational to focus on economic reforms, but instead the administration could concentrate on preventing Imamoglu from building a much stronger position ahead of parliamentary and presidential elections in four years.”There has been speculation that Erdogan or the opposition might push for early elections in the case of an Imamoglu victory, but the president’s nationalist ally, Devlet Bahceli of the MHP party, dismissed the prospect.Money PotDefeat in Istanbul, home to about a fifth of Turkey’s 82 million people, also strips Erdogan’s party of a major source of patronage and handouts. By some estimates, the city absorbs a quarter of all public investment and accounts for a third of the country’s $ 748 billion economy.Istanbul erupted in celebration over the first opposition victory since Erdogan came to power 16 years ago. Major thoroughfares were packed with cars honking their horns, passengers hanging out of windows and waving Turkish flags through sunroofs. Imamoglu, in his victory speech, said he was willing to work with Erdogan and would like to meet with him.The decisive nature of the victory — outstripping any margin won by Erdogan or his allies — might put investors at ease. A narrow victory would have brought the legitimacy of the vote into question, Anastasia Levashova, a fund manager at Blackfriars Asset Management in London, said before the election.The lira rallied in early Asian trading where liquidity is usually thin, rising as much as 1% to 5.7561 per dollar.Read why a nailbiter would be market’s worst nightmare, no matter who winsAfter the election board deposed Imamoglu in May after 18 days in office, the lira weakened the most in emerging markets and stocks sank as investors fretted over what they saw as the erosion of the rule of law. The economy remains in distress with a double-dip recession threatening and unemployment stuck around 14%. The market craves a break from the never-ending electoral cycle that could finally shift the focus to economic reforms.Erdogan’s Big Political Drama in Istanbul Gets a Surprise ActorOne thing that may have tipped the scale so heavily in Imamoglu’s favor is the Kurdish vote. Some Kurdish voters had sat out the March election, but over the past week, the jailed former leader of the pro-Kurdish HDP party, Selahattin Demirtas, called on his followers to support Imamoglu.“This guy may be the only one to unite opposition parties under one roof in so many years,” said Gizem Konak, 26, who had supported HDP in the past. “I think Imamoglu has the potential to change the destiny of this country.”Authorities parried Demirtas’s call by having Abdullah Ocalan, the jailed leader of the Kurdish separatist militant group PKK, urge Turkey’s largest ethnic minority to stay neutral. That backfired by alienating Turkish nationalist voters, according to Mert Yildiz, founder of political advisory Foresight.The PKK is considered a terrorist organization by Turkey, the U.S. and European Union.Read why the election was so controversialNot OverAn Imamoglu win doesn’t necessarily mean an end to Turkey’s political turmoil. AKP members dissatisfied with Erdogan’s policies may be emboldened to split off. The ruling party has been losing support since Erdogan was sworn in with sweeping new powers after last year’s election.Erdogan also has other levers of power to assert his will over the city. The party commands a majority on the municipal council, and together with an ally, leads 25 of Istanbul’s 39 districts.To contact the reporters on this story: Cagan Koc in Istanbul at ckoc2@bloomberg.net;Selcan Hacaoglu in Ankara at shacaoglu@bloomberg.netTo contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net, ;Onur Ant at oant@bloomberg.net, Amy TeibelFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

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