Unofficial results of Turkey’s April 16 referendum have shown that Turks narrowly voted in favour of President Recep Erdogan’s plans to change the country’s constitution to establish an executive-style presidency with sweeping powers.

Protests broke out in Turkey’s three largest city late on April 17, as the opposition accused the Supreme Election Board of changing the rules in the middle of the game. However, Turkish markets are expected to rally now the uncertainty surrounding the referendum has been removed. 

The vote will give Turkey’s already dominant president to a more powerful position than enjoyed even by Mustafa Kemal Ataturk, the founder of the modern Turkish Republic. Erdogan, who has been in power as premier or president since 2002, could stay in charge until 2029 if the constitutional changes are passed, with few checks on his power.

According to state-run news agency Anadolu, with 99.97% of the ballots counted, the Yes camp that included Erdogan’s ruling Justice and Development Party (AKP) and the opposition Nationalist Movement Party (MHP), won 25.16mn votes or 51.41%, while the No camp garnered 23.78mn or 48.59% of the votes. Official results are expected within 11-12 days.

The main opposition Republican People's Party (CHP) said it would challenge the results and demand a recount of up to 60% of votes due to alleged irregularities.

While voting was underway, the country’s Supreme Election Board declared that it would count ballots that had not been stamped by its officials as valid unless they could be proved fraudulent, according to state-run broadcaster TRT World.

The board’s decision made the referendum results questionable, claimed Kemal Kilicdaroglu, the leader of the CHP.

“You cannot change the rules of the game in the middle of the game,” Kilicdaroglu said.

Cumhuriyet newspaper, seen as close to the CHP, reported that protesters took to the streets in Turkey’s three largest cities Istanbul, Ankara and Izmir on Sunday night. However, protests did not spread to other cities and died away overnight.

Preliminary results have shown that the Yes camp lost in AKP strongholds Istanbul (51.35% to 48.65%), and Ankara (51.15% to 48.85%). In Izmir, the country’s third largest city and a bastion of the main opposition party, the No votes also prevailed (68.8% to 31.2%).

The ruling AKP has dismissed the CHP’s claims of irregularities.

Striking a conciliatory tone, Prime Minister Binali Yildirim said “Yes voters and No voters were just as valuable as each other.”

“I hereby express my appreciation to all my citizens who have voted ‘yes’ and ‘no’. I am greeting all of them with love and sympathy. There is no loser in this referendum. Turkey is the winner, the dear nation is the winner,” Yildirim said, according to Hurriyet Daily News.

The government will start to work on making necessary regulations to harmonise the existing system with the new system, he added.

The referendum results should be respected, said Erdogan, addressing a jubilant crowd of supporters in Istanbul.

“More than 25mn people voted in favour of the constitutional changes. This is significant. This is not an ordinary change and the referendum result has marked the beginning of a new era,” said a defiant Erdogan.

He also signalled that there won’t be elections until 2019, when term the presidential and parliamentary elections will be held.

However, he added that another referendum on reinstating the death penalty could be held.

Brussels has already warned that such a move would jeopardise Ankara’s EU bid.  

“We take note of the reported results of the referendum in Turkey on the amendments to the Constitution. We are awaiting the assessment of the OSCE/ODIHR International Observation Mission, also with regard to alleged irregularities,” the European Commission said in a statement on April 16.

“The constitutional amendments, and especially their practical implementation, will be assessed in light of Turkey's obligations as a European Union candidate country. In view of the close referendum result and the far-reaching implications of the constitutional amendments,” it added.

The Commission called on the Turkish authorities to seek the broadest possible national consensus in their implementation.  

“We'd be well advised to keep calm and to proceed in a level-headed way," commented Germany's Foreign Minister Sigmar Gabriel, according to Reuters.

Lira rallies on referendum results

Turkey’s markets are likely to rally on April 17 as the referendum result has now removed major political uncertainties. Investors feared that if the No camp prevailed in the popular vote, the ruling AKP might call snap elections.

The government has said it would carry out much needed but long delayed structural reforms after the popular vote.

“We have prepared the reforms, but we have not had the chance to implement them systematically, we will accelerate the reforms starting May 2017. These will include an improvement of the investment environment, and tax and judicial reforms,” Reuters quoted Deputy Prime Minister Mehmet Simsek as saying on April 10.

The lira has already rallied after the results showed a victory for Erdogan and the AKP. The currency strengthened more than 3.5% in Asian trade Sunday, from 3.74 to 3.63 against the greenback, Anadolu reported.

The currency was trading at 3.6376 per dollar as of 7.00am Istanbul time on April 17.

“We might see a bump in Turkish asset prices when markets open tomorrow, with the lira strengthening and bonds and equities rallying. However, stepping back, our sense is that the referendum result raises at least as many questions for investors as it provides answers,” Neill Shearing at Capital Economics wrote in an emailed commentary on April 16.

“Three things in particular are worth watching for. The first is whether or not the result is challenged by opposition parties. The picture should become clearer over the next 24-48 hours. The second question is whether the narrow margin of victory pushes President Erdogan towards more conciliatory policy positions,” he said.

“The third issue to watch is whether fiscal (and perhaps even monetary) policy is loosened in an effort to shore up growth ahead of 2019 elections. Our sense is that the slender margin of victory increases the chances of policy stimulus. There is some room to loosen fiscal policy, but a substantial monetary stimulus would risk a fresh lira sell-off,” Shearing added.