One wouldn’t typically expect the landslide reelection of a party known for its Islamist roots to make foreign investors feel that their capital is secure. Yet in Turkey, in 2007, financial markets cheered the triumph of the Justice and Development Party (AKP) in the July 22 general election. A day after the election, the Istanbul stock market benchmark IMKB-100 rose 5% while the Turkish lira gained 2.3% against the dollar.

To win the election in 2007, the AKP ran on its economic achievements. The Turkish and international media, missing the point, focused their attention on the party’s social policy, branding the balloting a “battle for Turkey’s soul”. Voters, much more concerned with pocketbook issues over secularism, provided the AKP with nearly 47% of the vote –  a massive figure by Turkish standards. The AKP became the first government to win reelection in 20 years and the first since 1954 to increase its vote (up from 34% in 2002).

- Ian Bremmer, President of the Eurasia Group and author of “The J-Curve” and the above excerpt from “The Fat Tail: The Power of Political Knowledge for Strategic Investing“