After two decades in power, Recep Tayyip Erdoğan consolidated his dominance over Turkish politics with victory in Sunday’s presidential election. The question now facing Turkey — and the wider world — is what the strongman leader will do next.

As the head of a strategically vital NATO power, joining Europe to the Middle East, Erdoğan’s international influence is critical. At home, with an economy struggling to cope with rampant inflation, his domestic challenges are daunting.

Sunday’s election represented one of the biggest threats to Erdoğan’s rule so far. He is Turkey’s most commanding leader since Mustafa Kemal Atatürk, who founded the country 100 years ago — and he won, by 52 percent to 48 percent, with a campaign that reinforced his authoritarian creed.

“The results show that the president can deploy identity politics to squeeze out a win despite the worst economic conditions since the 2001 financial crisis,” Emre Peker, director for Europe at the Eurasia Group consultancy, told POLITICO, referring to the financial crash that helped bring in Erdoğan’s rule over two decades ago.  

The president’s critics say that his victory reflects his command over state resources. They say he is making the country into a more authoritarian state, through his influence over most of the media and the imprisonment of leading opposition and civil society figures. The fear voiced by many opposition groups is that five more years of Erdoğan in power could deal a devastating blow to Turkish democracy.

Erdoğan’s supporters counter that the vote reflects Turks’ appreciation of his 20 years in office, first as prime minister then as president. 

They say the country is much stronger than it was 20 years ago, because of economic growth, improved infrastructure and a more active role in world affairs — and that the president is unafraid to take an independent line from the west, despite Turkey’s status as a member of NATO.

Noting the extreme polarization between pro- and anti-Erdoğan camps, Peker said that the president’s reelection victory “goes to show how consolidated his base is and that it is [barely] more than half the electorate who have been calling the shots for more than two decades.” 

He added that in each successive election, Erdoğan has taken a harder line on nationalist and conservative issues. 

In his victory speech in Ankara, Erdoğan himself signalled he is unlikely to compromise on his strongman style in the five years ahead. He vowed that jailed Kurdish politician Selahattin Demirtaş — a former party leader and presidential candidate — should stay in prison. The European Court of Human Rights has said he should be set free.

But there’s one challenge that’s not entirely in his control: Turkey’s economy.

Turkey has been suffering from sky-high inflation — which at one point last year hit 85 percent — and a weak currency, which on Friday hit an all-time low against the dollar. The country’s central bank has also been running low on reserves ahead of the vote.

One big issue is whether Turkey will let the lira weaken further now that the election is over or will be forced to do so by the markets. 

A still more important question is whether Erdoğan will return to more orthodox economic policies or instead continue with his current mix of big spending and resisting interest rate rises. Many economists say this combination is unsustainable and risks a crisis in the aftermath of the election, with the lira vulnerable to attack.

Murat Üçer, a former adviser to the Turkish central bank now at GlobalSource Partners, told POLITICO that he does not see a quick return to orthodoxy and the stickiest issue is the Turkish lira.

“Truly liquid reserves excluding gold, official swaps etc. are now down to a meager $20 billion-$25 billion, Turkish Lira liquidity had to be tightened drastically and controls on foreign currency demand have reached unsustainable proportions,” he said.

But Erdoğan is refusing to move. In his Ankara victory speech, he promised to keep interest rates low, which he said would reduce inflation — an argument many mainstream economists reject as absurd.

A defiant ally

Perhaps the biggest focus for other countries is what Erdoğan’s reelection means for Turkey’s stance in world affairs. Under his rule, Turkey has become a crucial actor and a defiant ally on many vital issues, not least Russia’s war in Ukraine. 

Ankara refused to join sanctions on Russia following Vladimir Putin’s invasion of Ukraine but played a vital part in negotiating a deal to allow the export of Ukrainian grain through the Black Sea. As a NATO member, Turkey has approved Finland’s entry into the alliance but is still blocking the membership of Sweden. 

Peker of the Eurasia Group predicted that “Ankara will maintain robust diplomatic and economic ties with Moscow, while remaining a critical but difficult NATO ally.” As a result Erdoğan will ultimately ratify Sweden’s NATO membership if it is permitted to buy more F-16 jets from the U.S., he said. 

Turkey has an uneasy relationship with the EU, not just because of European perceptions that Erdoğan has undermined the rule of law in his own country but also because of his threats to send millions of Syrian refugees currently housed in Turkey into the bloc.

“Turkey will give a message to the West with this election,” Erdoğan said in combative comments last month. “This country does not look at what the West says, neither when fighting terrorism nor in determining its economic policies.”

Now that the election is over, Erdoğan is more powerful than ever. Turkey’s NATO allies will be watching anxiously to see whether he delivers on his promises or on his threats.