On 16 April, Turkey will hold a referendum to approve a series of amendments to its constitution. These would transfer some powers from parliament and the judiciary to the presidency. A simple majority is required for the amendments to pass.
- The referendum is a vote on President Recep Tayyip Erdoğan’s governing style.
Although Turkey’s constitution vests executive power in the prime minister and their cabinet, since 2014 Erdoğan has governed the country as president, and since July 2016 has ruled by decree under emergency laws. A yes vote would resolve legal and political uncertainties over this arrangement, and allow Erdoğan to stay in power until 2029.
- We believe the referendum is likely to pass, despite polling data indicating a small majority opposed to the measures. Erdoğan and his cabinet exercise control over the press, security services and public budgets. The president is experienced in using the powers of incumbency to his advantage, suggesting the polls will ultimately break in his favor.
- Turkish policymaking is increasingly unpredictable and mismatched to the problems facing the country. The government lacks solutions for its slowing economy, rising militancy at home and its tarnished image abroad. Instead, Erdoğan’s focus is to maintain support by whipping up nationalist fervor against a shifting array of perceived adversaries.
- Turkey’s politically-charged atmosphere underlines the need for conducting robust due diligence when investing in the country. The pro-Erdoğan media’s mere criticism of a company can presage a regulatory investigation. Behind closed doors, some companies facing such pressures are cutting deals with Erdoğan’s associates for protection, increasing compliance risks. On 16 April, Turkey may vote to change its constitution. But it will remain a complex place to do business.
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