(Bloomberg) -- An Islamist ally-turned-rival has become a new headache for Turkish President Recep Tayyip Erdogan as he battles to cement his authority in the wake of an historic defeat in local elections. 

The Islamist New Welfare Party, which got more than 6% of the vote in Sunday’s polls, backed Erdogan’s reelection as president 10 months ago but campaigned aggressively against his AK Party on this occasion. The switch contributed to crushing wins for the pro-secular opposition Republican People’s Party, or CHP, in Istanbul and other major cities, alongside unprecedented inroads into former AK Party strongholds. 

The result leaves Erdogan, 70, facing extensive damage control while contending with Turkey’s deepest cost-of-living crisis in decades. His challenge is not only to focus on the resurgent CHP, his traditional chief political adversary, but on those among his own conservative base that switched support to New Welfare. 

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The Islamist move away from the president came against the backdrop of Israel’s ongoing war against Hamas in Gaza, and New Welfare protested against the government at rallies for continuing to trade with Israel. Led by Fatih Erbakan, the 44-year-old son of Turkey’s first Islamist prime minister, the late Erdogan mentor Necmettin Erbakan, the party became the voice of pious Muslims opposing the deaths of thousands of Palestinians as well as Turkish economic hardship and corruption. 

Erdogan’s government has refused to greatly reduce trade with the Jewish state and is unlikely to do so in response to New Welfare’s criticism. Meanwhile, a switch in monetary policy to raise borrowing costs has yet to tame rampant inflation, expected to peak at 70% next month as the price of basic foods continues to soar.

“The disillusionment with the economy prompted a notable shift among AKP voters toward the New Welfare, which embodies the Erbakan Islamist legacy,” said Temmuz Yigit Bezmez, a consultant at Istanbul Economics. “The New Welfare established itself as a trustworthy alternative to AKP.”

Bid to Extend

While Erdogan has a mandate to stay on as president until 2028 — officially his final term — the shift in the political landscape means he could struggle to execute the maneuvers needed to extend his rule. The president needs at least 360 votes in the 600-seat parliament to call for a snap election or trigger a referendum on a new constitution, and he and nationalist ally MHP are currently 46 lawmakers short.   

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Erdogan could be forced to give up some of his executive powers to make concessions to try and win new political allies within the parliament, according to people familiar with the matter. He may seek alliances with three other parties, including Iyi Party, Saadet and Deva, which did very poorly in local elections but retain control of 73 seats, they said, asking not to be identified because of the sensitivity of the issue. 

New Welfare’s deputy chairman, Suat Kilic, said his party’s criticism of the government’s mismanagement of the economy as well as allegations of bribery, corruption and extravagant spending was key to success. 

“We criticized negativities regarding the economy and tender processes,” Kilic said in an interview. “We promised to prevent ostentation and corruption.”

Self-Assessment

In defeat, Erdogan pledged an examination of his party’s policies and is expected to reshuffle leading members of government to strengthen ties with the electorate, said the people. He’s also likely to look at ways to reconnect the government and his party with regular voters by improving local ties.

“Even the closure of the election book, which has been tiring our country, our nation and our economy for the last year, is a great gain,” Erdogan said as he conceded Sunday’s contest. “It is important that we all make good use of this time together.”

The president has vowed to maintain current economic policy under Finance Minister Mehmet Simsek to try and address inflation, saying he expects to see positive results in the second half of the year. That’s a must if he wants to restore his flagging popularity. 

“Erdogan is likely to continue backing Simsek’s policies in the near term, while demanding a swift recovery,”said Emre Peker, Europe director for Eurasia Group.

--With assistance from Patrick Sykes and Gina Turner.

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