Turkey appeared to be hurtling towards an election and political uncertainty after the country’s two biggest parties failed to conclude a coalition agreement on Thursday.

“We reached an understanding that there were no grounds for a joint government,” Prime Minister Ahmet Davutoglu said, after a last-ditch attempt to clinch a deal between his ruling Justice and Development party (AKP) and the main opposition group, the Republican People’s party (CHP).

Mr Davutoglu cited “deep differences” in policy, including education and foreign policy. A snap election, he said, appeared very likely. “We might say it’s now become the only possibility,” he said.

The CHP’s leader, Kemal Kilicdaroglu, pinned the blame for the talks’ failure on the ruling party, claiming the AKP had never been committed to a lasting agreement. “Until now, we’ve received an offer of an election government, not a coalition,” he said. Mr Davutoglu, he added, had only proposed a limited agreement, paving the way for elections after three months. “Turkey has missed a historic opportunity,” Mr Kilicdaroglu said. Elections are now expected in November.

Mr Davutoglu, for his part, referred to the talks as “open, principled and transparent”. The lira fell to a record low of 2.83 against the dollar on the news, before recovering slightly.

On paper, Turkey’s political parties have until 23 August to try to forge a coalition agreement, but the window for a deal appears to have shut, said analysts. The Nationalist Movement party (MHP) and the pro-Kurdish Peoples’ Democratic party, which finished third and fourth, respectively, in the June 7 elections, had signalled they would not join an AKP-led coalition.

Coalition talks began last month after the AKP failed to secure enough votes in the poll to retain the parliamentary majority it had held since the autumn of 2002.

Mr Davutoglu left the door ajar for a deal with the MHP, but acknowledged that an agreement was unlikely. He said that Devlet Bahceli, the MHP leader, “has himself brought up elections”. MHP officials reached by phone declined to comment on coalition prospects.

“It’s difficult to see how any coalition can be formed,” said Wolfango Piccoli, an analyst at Teneo Intelligence in London. A temporary minority AKP government with outside support from the MHP was still possible, he said, “but regardless, we’re heading for an election in the autumn”.

“The choice of an early election is a huge gamble,” he added, citing recent polls that put the AKP’s support only slightly higher than the 41 per cent it received in the elections. “It remains very unclear whether the outcome can be much different from the one we got last time.”

Coming after weeks of clashes between the outlawed Kurdistan Workers’ party (PKK) and security forces, political uncertainty was what Turks needed least, said Ozgur Unluhisarcikli, Ankara director of the German Marshall Fund of the United States.

“I think the PKK threat will [remain] until there’s a permanent government in Turkey,” he said. “To contain the violence you need a deal, and in an election cycle a deal is not possible.”

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