Snap Analysis: Turkish voters strongly back charter reform

ANKARA Sun Sep 12, 2010 2:34pm EDT

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ANKARA (Reuters) - Turkish voters strongly backed constitutional reforms in a referendum on Sunday, unofficial results showed, in a major boost to Prime Minister Tayyip Erdogan's government ahead of a general election in mid-2011.

Erdogan has said the package is needed to strengthen democracy and bring Turkey closer to European norms. But secularist opponents say changes to overhaul the top levels of the judiciary would give the Islamist-rooted AK control over courts.

* The outcome boosts Erdogan's hopes of a third successive poll victory in a parliamentary election set for July 2011.

Investors will interpret the outcome as a sign Erdogan is comfortably positioned to form another single-party government, removing the prospect of a coalition. Coalition governments have a history of in-fighting in Turkey, and investors like the AK party's pro-business policies.

Although the strong endorsement of the government eliminates political instability in the short term, the margin of victory may tempt Erdogan to call early elections although he has repeatedly rejected the idea.

* Investors will greet the outcome as a fresh vote of confidence in the government, credited with bringing in record foreign investment and managing economic growth that has almost tripled Turkey's GDP in the last eight years. Turkish stocks

and the lira are set to rally and benchmark bond yield will likely fall on Monday.

Turkey's rising current account deficit, and doubts about the government's commitment to fiscal discipline since it decided last month to suspend plans for limiting the budget deficit, may keep in check any further rally by the markets.

* While the European Union has criticized the government for rushing the reform proposals and of stifling public debate over the issues, the victory is a boost to Turkey's ambitions of EU membership.

The European Union has repeatedly called on Ankara to overhaul a constitution drafted after a military coup in 1980 and blamed for holding back Turkey's political and economic development.

Turkey's EU accession bid has dimmed recently because of a dispute over the divided island of Cyprus and opposition by some EU member states, but the result could prod the bloc into speeding up accession process, analysts said.

* Despite the clear win for the AK Party, the vote is unlikely to bridge the religious/secularist fault-line in Turkish politics.

The military, self-appointed guardians of Turkey's secular values, have seen their power clipped by EU-driven reforms and the high courts have become the last redoubt of a conservative secularist establishment.

Analysts are not expecting any untoward reaction from the military, which has removed four governments in the past.

Secularist opponents are deeply suspicious of the AK Party, which they accuse of harboring a secret plan to roll back Turkey's secular principles, a charged denied by the AK Party.

Polls show the bulk of the 'yes' vote came from the religiously conservative Anatolian heartland, home to a rising middle class that is the AK Party's backbone. The 'no' vote was stronger in the secular-minded west coast. The outcome will fan fears among large swathes of Turkish voters of a creeping Islamist agenda.

Boosted by the strong showing, the AK Party might be tempted to try again to remove a ban on the Muslim headscarf at universities. A previous attempt was annulled by the Constitutional Court.

* Under the AK Party, the NATO member has retooled its traditionally Western-aligned foreign policy, deepening ties with Iran, Syria and Iraq while harshly criticizing Israel's treatment of the Palestinians. Erdogan might see the outcome as a vindication of his foreign policy, which has raised concerns in some Western circles of a change of axis.

* With the referendum out of the way, the AK Party can focus more attention on other pressing domestic problems, such as a Kurdish guerrilla insurgency and strains with the military over alleged plots by army officers to overthrow the government.

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