Turkey’s prime minister Ahmet Davutoglu on Tuesday informed president Recep Tayyip Erdogan he had failed to form a coalition government, paving the way for new general elections just months after June polls.

In a major setback for Erdogan, the ruling Justice and Development Party (AKP) lost its overall majority in the June 7 legislative polls for the first time since it came to power in 2002, raising the prospect of the first coalition government in over a decade.

But in a meeting at the presidential palace in Ankara, Davutoglu returned to Erdogan the mandate he received from the president on July 9 to begin coalition talks with opposition parties, the presidency said in a statement.

“The prime minister told President Erdogan that despite all efforts he was unable to form a government that could win a vote of confidence,” the statement said after the 90-minute meeting.

“President Erdogan thanked the prime minister for his efforts,” it added.

With all possibilities exhausted before a August 23 deadline to form the new government, Turkey is now facing snap new polls and entering uncharted political territory.

Davutoglu had held coalition talks with the second-placed Republican People’s Party (CHP) and third-placed Nationalist Movement Party (MHP) but failed to broker a deal with either.

According to the constitution, the AKP will be able to continue as a minority government until elections if a majority in parliament votes in favour of holding the early polls.

If however Erdogan uses his right to call the election himself, a so-called “election government” will be formed until the polls, consisting of members from all four parties represented in parliament.

“Now all paths lead to the ballot box,” pro-AKP columnist Abdulkadir Selvi wrote in the Yeni Safak daily.

It is the first time in Turkey’s history that the largest party has failed to form a coalition and repeat elections need to be held.

The AKP prides itself on providing Turkey with almost 13 years of stable one-party rule that have been a marked contrast to the chaotic coalitions and coups that came before.

The political drama comes as the government wages an unprecedented “anti-terror” offensive against jihadists and Kurdish militants, although it vehemently denies the strikes were launched in the hope of providing a boost at the ballot box.

‘Ignoring the outcome’

The elections should be held 90 days after they are called, meaning that Sunday, November 22 would be a possibility were Erdogan to call the polls shortly after the expiration of the August 23 deadline.

This would mean that the election could be held in the wake of Turkey hosting the G20 leaders’ summit in Antalya from November 15-16.

Confusing matters further, the election commission ruled Tuesday that this period should be shortened if necessary, meaning polls could be held as early as October.

AKP deputy chairman and chief spokesman Besir Atalay announced after a meeting of its executive committee it would hold a general congress on September 12, in possible preparation for the early polls.

Some analysts have suggested Erdogan all along wanted to see a re-run of the election so the AKP could regain an overall majority and realise his dream of creating a presidential system in Turkey.

Pro-government newspapers have buzzed with speculation that the party would improve on its June 7 vote share of just under 41 percent in new polls, although this is far from certain.

Murat Yetkin, editor-in-chief of Hurriyet Daily News, said Erdogan had used every possible means in order to extend the AKP’s time in power in defiance of the election result.

“Nobody expected the seizure of an entire election by simply ignoring the outcome,” he wrote.

The political uncertainty, coupled with a decision by the central bank to freeze interest rates put further pressure on the Turkish lira which has lost 24.3 percent in value against the dollar since the start of the year.

The lira lost 1.31 percent in value to hit a historic low in value of 2.906 to the dollar, the first time it has broken through the psychologically important 2.9 barrier.