The victory by Ekrem Imamoglu, 49, is a stunning victory for the opposition party in Turkey, which had initially won the mayoral election in March before the vote was challenged by Erdogan's governing party.
Why? There was a general sentiment among conservatives that an injustice had been done against Imamoglu in the first election where he emerged as the victor, albeit with a small margin. The decision was seen as a political favour to Erdogan. The decision to re-run the vote was criticized by Western allies and caused uproar among domestic opponents who said Turkey's democracy was under threat.
Ekrem Imamoğlu of the Republican People's Party (CHP) had secured more than 54% of votes, with almost all ballots opened, Turkish broadcasters said - a far wider victory margin than his narrow win three months ago. "I congratulate Ekrem Imamoglu, who has won the election, according to unofficial results", Erdogan said in a Twitter post.
While this is a ray of hope for the beleaguered opposition, it is too early to write an epitaph for Erdogan, who has positioned himself as the most powerful leader since Mustafa Kemal Atatürk, the founder of the modern Turkish republic.
Istanbul is not the capital city of Turkey but is still its main political and economic powerhouse.
Imamoglu's victory has punctured the aura of invincibility surrounding Erdogan."Mayor again!" Others hung out of cars, blaring horns and waving red-and-white Turkish flags.
The handover of power in the mayor's office could shed further light on what Imamoglu said was the misspending of billions of lira at the Istanbul municipality, which has a budget of around US$4 billion (RM16.55 billion).
A group of election monitors from the Council of Europe, a Strasbourg-France based organization aimed at holding member states accountable for human rights commitments, said Sunday's election was held "competently and in compliance with the applicable rules".
The lira rallied in early Asian trading when liquidity is usually thin, before paring to trade at 5.7750 per dollar at 4:21 a.m. local time.
Turkey's electoral board annulled the results after weeks of partial recounts. The economy remains in distress with a double-dip recession threatening and unemployment stuck around 14 per cent.
In contrast, the AK Party levelled the usual slurs against its opponents, from questioning Mr. Imamoglu's patriotism because of his Greek origins to suggesting he sympathizes with terrorists for getting support from the mainly Kurdish Peoples' Democratic Party (HDP).
"You have protected our tradition of democracy, dating back a hundred years". "I think Imamoglu has the potential to change the destiny of this country". Turkey is a North Atlantic Treaty Organisation member that is still formally a candidate to join the European Union.
Ozgur Unluhisarcikli, Ankara office director of the German Marshall Fund, argued that the loss of Istanbul is likely to fuel speculation of divisions within the ruling party and among its supporters.
An Imamoglu win doesn't necessarily mean an end to Turkey's political turmoil.
In power first as prime minister and then as president since 2004, Erdogan has gradually shifted Turkey away from its secularist roots toward authoritarian and Islamist politics.
"It's a colossal defeat for Yildirim but also Erdogan".
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