If NEC-SE readers want to know what happened in the Turkish elections, just look at the power of the Lire and Turkish stocks over the past week.

The Turkish election means the entire conflict region will now change.

Three other groups, which have Kurdish ties, have now won.  The Turkish society was at odds with the Turkish President (and former Prime Minister) Erdogan’s Islamic philosophy on so many levels that they flocked in record numbers to the voting booth. Turkish society elected not only the largest number of females to Turkey’s Grand National Assembly – with 96 women being elected, bringing the total number of female deputies to a historical high of 17 percent, but also electing the Kurdish Workers Party (PKK) into Turkish politics and more importantly, power structure.

This is stunning given the fact that the PKK name could not even be uttered in Turkey a year ago and now it shares part of the 59% of the opposition coalition in the new Turkish government. The same opposition coalition that may seat the next cabinet in Turkey and possibly elect the next Prime Minister, along with the departmental leaders for all key governmental structures in Turkey.

This has lead to the possibility of Turkish President Erdogan calling for new elections and or being forced to establish a coalition with the current victors. He has to choose which one of the three winning groups he needs to unite with to create a cabinet.

This is made more difficult given you can already hear the rhetoric from the future leadership in Turkey that the old regime’s 12 years of corruption must be exposed. That corruption is tied to contracts, with a majority of them tied to the Kurdish Regional Government, and its footprint.

Currently there are approximately 4,000 registered Turkish companies in Erbil, the capital of KRG. These companies span the fields of construction, business contracting, and distribution. The majority of these companies owe their footprint to the previous Turkish leadership, which over the past twelve years fronted them the face-to-face meetings to win large construction projects in northern Iraq.

Many of these initial projects were funded largely by USAID, United States Corps of Engineers (USACE), and other U.S. Civil Military Project efforts in Northern Iraq designed to win the hearths and minds of Iraqis and to rebuild Iraq’s northern provinces after combat operations had ended in OIF. The problem for Iraq and the United States tax payers is that most of the money for those Humanitarian projects which fall under title 10 monies of U.S. Code and Civil Military Operations were spent in Southern Turkey, (mainly PKK populated areas), the home station for these businessmen, helping to develop southern Turkey’s infrastructure and to create and support front groups to Barazani’s larger coalition within the region. It should be noted that the PKK was on the blacklist for the State Department.

The current leadership of the KRG is in such a panic given they lost their ally, (Turkish President), in the region that Mr. Nerchavan Barazani, Prime Minister of Kurdistan made a two day long emergency trip to Sulaymaniyah right after the elections. His meeting was targeted at persuading the Patriotic Union of Kurdistan (PUK) interim leader Kosrat Rasul, to see if an alliance can be struck in order to save the Barazani KRG fractured coalition. The said coalition has been under fire given they declared independence while Mosul was being overrun by ISIS last year, sold Iraqi oil to Turkey given a 50 year contract they signed with Turkey without Iraq’s permission, promised oil to Israel that they cannot deliver given they have almost lost their footprint in Nineveh Plains and Kirkuk, and after they were told by the State Department that they need to learn how to administer a region before a region is given to them carte blanche. This does not include the 41% corruption index score and the fact that the KRG has not paid or shorted its civil servants pay over the past 5 months. All of the aforementioned lead to the possible ouster of some notable members of the KRG within a year.

The notable members of the KRG leadership that may be out or will be affected given their key leadership position are Mr. Masoud Barazani who probably will not run for reelection as the President of Kurdistan, set for 20 August 2015, given he has lost his allies in President Erdogon and his party, that were an opposition group to the PKK, the latter which won in the recent Turkish election. The other two other positions, which remain uncertain if Mr. Barzani is out, are the, Chancellor of the KRG Security Council position, and the Commander of the Peshmerga. This is key for the United States given the KRG has asked for direct weapon shipments to the Peshmirga under the current KRG leadership. The only individual that may remain untouched until after the election might be Mr. Nechervan Barzani. He is liked by the west and has been more effective with his administrative programs in the Kurdish region. NEC-Se does not know if the United States will delay the decision on any weapon shipments to the KRG until the elections have been concluded.

Sulamaniyah is closely tied to Iran both economically and politically, and for lack of better terms, not an outright enemy but a competitor to the KRG and Erbil. Given Mr. Nechervan Barzani just met with the interim leadership of PUK, the internal turf battles within the KRG have now begun showing their hand in the public record.

This election also means that Iran’s expectation to become a regional hegemony has just been solidified at the economic and political levels. With Iran having forces in Iraq, proxies in Yemen and Lebanon, and now introducing 15,000 troops to solidify the Syrian regime, the reality is that the Sunni states and allies of the United States have lost politically and economically in the region. Furthermore, the reality is that the PKK’s historical relationship with Russia may now bring Turkey closer to Russia economically and politically. As a note Russia finished conducting naval maneuvers in the Mediterranean along with China’s navy in May of this year.

So let’s recap: Russia, China, and Iran have a large footprint in the Middle East; Current KRG leadership is possibly on the way out; and Turkey is changing from within and possibly turning away from the U.S. while Saudi Arabia is in a free fall and possibly losing its footprint in the region over the next few months.

Given that Israeli businesses have been closely working with the companies who may be exposed over the next few months to complete the PKK political victory against the current KRG leadership, NEC-SE would highly encourage the Israeli businessmen to relook their existing contracts and enduring partners within the region.

This election also affects ISIS in Turkey, which had been on the receiving end of weapon shipments from Turkey given the fact that they were selling oil cheaply to the latter. ISIS will now be limited to receiving weapons from other interested parties within the region. ISIS has already started losing a footprint in Syria to YPG (Kurdish group). This loss will affect turkey as now YPG is displacing Syrian Arabs who are flocking into Turkey in record numbers destabilizing and already difficult Turkish political operational environment.

The new Turkish government will be challenged given the Syrian coalition which is now dead in Turkey was recruiting persons from the two million refugees in Turkey. These refugees will become a political and financial liability for Turkey given the Syrian opposition groups will now have to relocate from Turkey. ISIS will now lose its footprint in Syria given the U.S. will now have to rethink its tactical operations against Syrian forces ensuring that Bashar Assad’ remain in place. Syrian opposition is now virtually dead at the political level. On 10 Jun 15 The Washington Post stated that “ key lawmakers have moved to slash funding of a secret CIA operation to train and arm rebles in Syria.” It should be noted that Turkish forces are currently being used along Turkeys Southern boarders to stop Arab refugees from entering Turkey.

The Syrian anti-government coalition will have to be moved to Jordan. This is shifting the alliances in the region. The only Coalition option for the U.S.’s current policy is now in Jordan, which means Jordan will become unstable and possibly change internally.

The two positives for the Assyrians are that in early Jun and prior to the Turkish elections, the Assyrian Church of the East decided not to conduct the election of the next Patriarch of the Church of the East until September given they understood the strategic and regional issues the new Church Patriarch would be dealing with in this climate. There unanimous decision to delay should be applauded once again.

The second positive for the Assyrians is that Mr. Erol Dora, who is an Assyrian attorney, won a seat in the recent Turkish election. In fact, he is the first Assyrian Christian in 50 years to be re-elected to a seat in Turkey’s Parliament. Mr. Dora, who is 47-years-old, was born in the village of Hassana and became a refugee like the rest of the Assyrians when his village was evacuated by the military during fighting between rebels and soldiers in the 90’s. He is an independent but is liked by the PKK.

The lesson learned for U.S. policy in the region is that we need to stop allying ourselves with bad actors within the region. The Middle East is bleeding and as these bad actors fall our footprint diminishes in the region to the Russians and the Chinese. The United States is now in a position that not only is it funding, training, and equipping opposition groups in Syria who are politically dead but now must consider ensuring that Basar Al Assad remains in power given their is no opposition groups remaining viable at the political level. At the same time Iran who is keeping his regime alive rather see him replaced and may do so further solidifying their hold on Syria.

http://www.forbes.com/sites/rogeraitken/2015/06/10/turkish-stocks-look-cheap-post-shock-election-but-currency-vulnerability-weighs-heavy/