ISTANBUL (Reuters) – Millions of Istanbul residents voted on Sunday in a re-run of a mayoral election that has become a referendum on President Tayyip Erdogan’s policies and a test of Turkey’s ailing democracy.

In the initial March 31 vote, the opposition Republican People’s Party (CHP) candidate secured a narrow victory over Erdogan’s AK Party (AKP) in Turkey’s largest city, a rare electoral defeat for the president.

But after weeks of AKP appeals, Turkey’s High Election Board in May annulled the vote citing irregularities. The opposition called the decision a “coup” against democracy, which has raised the stakes for round two.

“It is really ridiculous that the election is being re-run. It was an election won fair and square,” said Asim Solak, 50, who said he was voting for the opposition candidate in the CHP stronghold of Tesvikiye.

“It is clear who cancelled the election. We hope this election re-run will be a big lesson for them,” he said.

Polling stations across Istanbul opened at 8 a.m. (0500 GMT), with 10.56 million people registered to vote in a city which makes up nearly a fifth of Turkey’s 82 million population. Voting ends at 5 p.m. Results will be announced in the evening.

Real estate agent Bayram, 60, said he voted for the AKP’s candidate, former prime minister Binali Yildirim, as he believed foreign powers the United States, Europe and Israel supported the opposition.

“All of these will want a piece from Istanbul and then there will be chaos. The enemy of my enemy is my friend. All these foreign powers don’t like Erdogan, so he is my friend,” he said after voting in Kagithane district, an AKP stronghold.

HIGH STAKES

Erdogan has repeated his line that “whoever wins Istanbul wins Turkey.” A second loss in the city, where in the 1990s he served as mayor, would be embarrassing for Erdogan and could weaken what until recently seemed to be his iron grip on power.

Turkey’s economy is in recession and the United States, its NATO ally, has threatened sanctions if Erdogan goes ahead with plans to install Russian missile defences.

A second AKP loss could also shed further light into what CHP mayoral candidate Ekrem Imamoglu said was the misspending of billions of lira at the Istanbul municipality, which has a budget of around $4 billion.

“If Imamoglu wins again, there’s going to be a chain of serious changes in Turkish politics,” journalist and writer Murat Yetkin said.

“It will be interpreted as the beginning of a decline for AKP and for Erdogan as well,” he said, noting that the president himself had called the local elections “a matter of survival”.

Another Imamoglu win could eventually trigger a national election earlier than 2023 as scheduled, a cabinet reshuffle, and even a potential adjustment in foreign policy, Yetkin added.

To narrow the roughly 13,000-vote gap in March, the AKP re-calibrated its message recently to court Kurdish voters, who make up about 15% of voters in the city of 15 million.

The campaign received a twist when jailed Kurdish militant leader Abdullah Ocalan urged the pro-Kurdish Peoples’ Democratic Party (HDP) to stay neutral in the vote. The HDP, which backs Imamoglu, accused Erdogan of trying to divide Kurds.

LOCAL PROTESTS

Having campaigned hard ahead of the March vote, a strategy that many within AKP believe has backfired, Erdogan initially kept a low-profile this month. But last week he returned to his combative campaigning and targeted Imamoglu directly, including threatening him with legal action, raising questions over whether the AKP would accept a second defeat.

Polls have shown Imamoglu, a former district mayor, retaining a lead over his AKP rival. Some polls put him up to 9 percentage points ahead, with his more inclusive message resonating with some voters.

The decision to re-run the vote drew international criticism and accusations from Turkey’s opposition of an erosion in the rule of law. Residents in several districts took to the streets banging pots and pans in protest.

Some voters told Reuters that an AKP victory on Sunday could lead to bigger protests.

The uncertainty over the fate of Istanbul, Turkey’s business hub, and potential delays in broader economic reforms, have kept financial markets on edge. Turkey’s lira currency tumbled after the decision to annul the March vote and is down nearly 10% this year in part on election jitters.