(CNN) —  

There’s an old saying in Turkish politics: “Who wins Istanbul, wins Turkey.” The country’s biggest city and commercial heart is undoubtedly its biggest political prize and President Recep Tayyip Erdogan isn’t about to give it up without a fight.

When Erdogan’s governing Justice and Development Party (AKP) lost the Istanbul mayoral elections by a razor-thin margin against the opposition Republican People’s Party (CHP) in March, the defeat was crushing.

His party also lost capital Ankara during the elections, but Istanbul was different. This was the President’s hometown, where his party had ruled since the 1990s, and where he launched his political career as mayor in 1994.

Erdogan wasn’t going to give up this financial powerhouse – which has a bigger budget then some European countries – easily.

True, he wasn’t even a candidate in the March 31 mayoral election. But Erdogan still served as the face of his party’s local campaign in what was widely seen as a referendum on his government.

In the wake of AKP’s loss, it claimed the election was blighted by voter fraud and called for a rerun. On Monday it got its wish, with the Supreme Election Council voting in favor of a rerun to be held on June 23.

The President said a new vote is necessary in light of “organized corruption, utter lawlessness and irregularity” during the vote and that a new poll was an important step towards “strengthening democracy.”

CHP’s Deputy Chairman, Onursal Adiguzel, meanwhile, called the decision “plain dictatorship.”

“This system that overrules the will of the people and disregards the law is neither democratic, nor legitimate,” Adiguzel said on Twitter.

Experts say the electoral council’s decision to accept claims of voter fraud made by Erdogan’s AKP party – and the subsequent wiping of results – show a worryingly new level of government influence over a supposedly independent body.

The council is made up of judges, elected by the country’s Court of Appeals and Council of State, who have no direct links to the government.

However, the election committee is “highly dominated by AKP sympathizers,” said Lina Khatib, head of the Middle East and North Africa program at British think tank Chatham House.

“But so far, despite this, elections have always been accepted as free and fair,” she told CNN. “This is the first time we see the influence of the AKP in the election committee, being used to influence the results of the election.”

’Everything is going to be great’

On Monday Ekrem Imamoglu, Istanbul’s new CHP mayor, had his mayoral certificate canceled.

Addressing a crowd of supporters following the decision, Imamoglu ended a speech by saying, “Everything is going to be great.” In response, the hashtag “everything is going to be great” or “HerŞeyÇokGüzelOlacak” quickly emerged online.

The opposition now faces a difficult decision. “They (the CHP) regard the decision to rerun is itself unfair, but at the same time if they chose not to rerun this makes the ground wide open for Erdogan’s party to gain the seat,” said Khatib.

On the day of the announcement, there were small gatherings of protesters throughout the city, with some banging pots and pans from their windows in a show of solidarity. By Tuesday the mood was calm and quiet, according to CNN reporters in Istanbul.

Since large anti-government Gezi Park protests in 2013, Erdogan’s popularity has waned, even as his grip on power has tightened, said Khatib, pointing to the recent appointment of his son-in-law Berat Albayrak as economy minister and large numbers of journalists that have been imprisoned.

The decision to reverse the mayoral race is “the bookend of a historic era,” tweeted Sonar Cagaptay, Director of the Turkish Program at The Washington Institute, on Tuesday.

“Until now, it was one man, one vote, from now on it is: vote until the governing party wins,” he said.

Financial lifeline

Throughout his premiership and presidency, Erdogan has had the final say on several mega projects in Istanbul – from the city’s new airport to urban development plans at Gezi Park that sparked the huge protests in 2013.

“Istanbul is not just about prestige, it’s about money,” said Khatib. “There is a lot of real estate investment in Istanbul by members of the AKP,” she added.

Khatib said that “having mayoral influence in Istanbul plays a huge role in facilitating some of the real estate deals that are keeping supporters of AKP loyal to the AKP.

“So losing Istanbul means the AKP risks losing this financial lifeline.”

Turkey now faces one of its most significant elections in years, all against the backdrop of heightened social unrest and a fragile national economy.

CNN’s Hande Atay Alam in Atlanta contributed to this report.