Istanbul (CNN)Turkish Prime Minister Ahmet Davutoglu will step down from his post later this month, he announced Thursday, following an increasingly public rift with President Recep Tayyip Erdogan.
Turkish Prime Minister Ahmet Davutoglu to step down this month
Speaking in Ankara, Davutoglu said he would not seek the leadership of the ruling AKP (Justice and Development Party) at an extraordinary congress of the party on May 22, effectively ending his tenure as prime minister.
"Our party is entering a new era," said Davutoglu, who has held the post since August 2014.
The 57-year-old said stepping aside would be better "for the continuity of the unity and integrity of the party... because the fate of the AKP is not just the fate of the AKP any more, but the fate of Turkey."
Davutoglu will continue in his role as an AKP parliamentarian.
The announcement, which followed a meeting between Davutoglu and Erdogan on Wednesday night, brings an amicable resolution to the distancing between the country's most powerful men, avoiding the spectacle of an all-out resignation.
The former academic and diplomat was hand-picked by Erdogan to succeed him as prime minister in 2014, when the latter was elected to the largely symbolic presidency.
But the reality has been that Erdogan never really left the helm of the administration or the party.
Erdogan, who served as prime minister from 2003 to 2014, has been vocal about his ambitions to change the country's constitutional arrangements to move to a presidential system.
Erdogan's supporters have criticized Davutoglu for not doing enough to push for the presidential system, although Davutoglu is on record as saying he supports such a change.
Other issues on which the close allies were seen to differ included Kurdish militants -- whom Davutoglu had said that he may be willing to sit down with again -- and the jailing of journalists and academics.
Speaking to reporters Thursday, Davutoglu said he reached his decision after the AKP removed his powers to appoint local party leadership, explaining that he did not like the way the party went about the action.
Regarding his relationship with Erdogan, Davutoglu said: ''I will never allow any untoward comments, or anyone to use this to damage our President."
"His honor is my honor; his family is my family. No one should lead into any wrongdoing with my relationship with my President."
Davutoglu went to lengths to reassure the public in his comments Thursday that the AKP would continue to be a source of stability.
"I emphasize to all the investors and economic circles not to doubt that this stable and secure environment will continue," he said.
Istanbul's benchmark stock index dropped 1% on Thursday.
William Jackson, senior emerging markets economist at Capital Economics, said the development would "reinforce concerns about the shift towards increasingly authoritarian policy-making in the country."
Critics argue that Erdogan has become increasingly authoritarian to the point of harming Turkey's unity in pushing for a presidential system, and Turkey has been criticized for jailing journalists and dissidents.
Turkey holds one of the world's lowest rankings for press freedom, and those who have merely insulted Erdogan have been placed on trial.
Erdogan has even lodged a criminal complaint in Germany against a comedian who read a crude poem that referred to him on German television.
Once the darling of emerging markets investors, Turkey's proximity to the war in Syria and complicated domestic politics has made investors turn away.
The country is facing growing instability, amid escalating conflicts with ISIS and Kurdish militants and an influx of refugees from neighboring Syria.
The government says the refugee crisis has cost it more than $10 billion so far.
Turkey struck a deal with the European Union in March under which people who cross into Europe illegally are being sent back to Turkey. For every Syrian sent back to Turkey under the plan, a vetted Syrian refugee will go from Turkey to Europe to be resettled.