The incumbent AKP won a decisive victory at a snap election held on November 1, a vote necessitated by the failure of the party to form a government after winning just 40.9% of the vote and losing its majority status in the 550-member Parliament at an election held in June. Pre-election polling suggested that the outcome of the snap election would be another hung Parliament, but the AKP boosted its vote share to nearly 50%, and won a clear majority of 317 seats. To the extent that the unexpected gains are attributable to a campaign strategy that relied on stoking internal divisions, demonizing foreigners, and stifling criticism of the AKP, the implications of the outcome for political stability and the climate for investment are ambiguous, at best.

With the AKP’s majority restored, President Recep Tayyip Erdoğan will undoubtedly resume his campaign to overhaul the political system, which focuses on replacing the current parliamentary model with one in which executive power resides primarily with the president. He has in any case claimed a right to exert greater influence than his predecessors as president ever presumed to possess, and Prime Minister Ahmet Davutoğlu thus far appears to be a willing accomplice, albeit sometimes grudgingly, in the constitutionally dubious power grab.

The most immediate casualty of the AKP’s campaign strategy is the government’s long-running effort to conclude a peace agreement with the militant Kurdish PKK, which was abandoned as part of a broader effort to stigmatize the pro-Kurdish HDP, whose strong showing at the June elections played a key role in the AKP’s loss of its majority status. A stepped-up military campaign against the PKK creates a heightened risk of terrorist attacks by Kurdish militants and by ISIL, which has been blamed for a string of deadly attacks carried out between May and July. The inability of Turkish authorities to conclusively determine who was responsible for twin suicide bombings that killed more than 100 people in Ankara in mid-October highlights the increase in potential sources of deadly turmoil in recent months.

Increased security risks in Ankara and the southeast region of the country will dampen investor enthusiasm, at a time when the IMF has identified a decrease in capital inflows as the main risk to the economy. Signals that the US will initiate monetary tightening before the end of the year point to a continued slide of the lira that will put pressure on the central bank to hike interest rates, with negative implications for the growth outlook in 2015–2016.