Turkey's relations with Europe are plunging from bad to worse, raising the prospect of a sharp divorce if constitutional amendments to dramatically expand Turkish President Recep Tayyip Erdogan's powers pass a referendum next month.

The diplomatic spat with the Netherlands, triggered after the Turkish government ignored a Dutch refusal to allow its ministers to campaign for the referendum among the diaspora, is symptomatic of the larger crisis plaguing EU-Turkish relations driven by the steady deterioration in the rule of law under Erdogan over the past four years.

A number of European governments have limited or prohibited Turkish ministers from campaigning on their soil for an April 16 referendum on proposed constitutional amendments. A panel of legal experts at the Council of Europe said last week the proposed presidential system represents a "dangerous step backwards" for democracy.

In a calculated move, Erdogan has sought to fuel a crisis to rally nationalist voters ahead of the vote, which according to several polls is leaning towards a "No."

Condemning several European governments for blocking ministers from campaigning, he has likened the Dutch and German governments to "Nazis" and "fascists," sharp words that will be difficult to backpedal from.

Against this backdrop, the Netherlands, France and Germany hold critical elections this year amid a surge in anti-immigrant populist parties.

"While Turkey clearly finds it conducive to whip up nationalist sentiment, there are people also doing this on the European side," said Paul Levin, the Director of the Stockholm University Institute for Turkish Studies.

But the larger problem is not the narrow issue of blocking Turkish ministers from attending meetings, said Marc Pierini, a former EU ambassador to Ankara now at the Carnegie Europe think thank. 

"The point is whether European governments will allow a Turkish government that is suppressing freedoms to campaign for more suppression of freedoms on their soil," he said.

Adding to concern, the referendum will be held under a state of emergency granted in the wake of last July's failed coup attempt, which the government has used to carry out massive purges. 

Meanwhile, the opposition in Turkey faces harassment and restrictions on campaigning, Kurdish lawmakers have been thrown in prison, rule of law is deteriorating and freedom of speech and press are under assault.

Today's situation in Turkey is a far cry from heady expectations when Erdogan, who was prime minister up until 2014, and his AK Party came to power in 2002 on a pro-EU platform that promised greater rights, freedom and prosperity.

His Islamist party was able to assemble under its umbrella liberals and democrats who pushed through reforms, paving the way for formal EU accession negotiations to open in 2005.

"The AKP when it first came to power did in fact implement a number of significant and sometimes politically difficult reforms in order to pursue a strategy of moving closer to the European Union," said Levin.

The hope in European capitals at the time was that the EU process would anchor to Turkey to the West and cement democracy. But the reform process stuttered, before dramatically retreating due to a confluence of international and domestic factors. 

First, a divided Cyprus led by the internationally recognized Greek side joined the EU in 2004, giving it veto power over Turkey's accession process. Then the leaders of Austria, Germany, France and other European states began to question Turkey's full membership.

"These were all developments that undermined the credibility, this carrot of full membership after difficult reforms in Turkey. As a result the reform drive slowed down," Levin said.

Domestically, Erdogan began consolidating power by removing the Kemalist secular elite that traditionally dominated the police, judiciary and military. In this effort, he was aided by fellow Islamists from the shadowy Gulen movement, who Ankara later blamed for last July's failed coup attempt.

By 2011, as the Arab Spring reared its head, pundits began to present Turkey as a "model" for the Middle East, having successfully combined secularism, political Islam and democracy.

On the surface, everything seemed fine. By early 2013, the economy was booming, reforms were back on track and Erdogan had launched an ambitious peace process with Kurdish militants promising to end 30 years of conflict.

Everything changed with the Gezi Park protests in the summer of 2013, which were violently put down by the government and raised concern in European capitals.

Meanwhile, a simmering power struggle between Gulenists and Erdogan spilled out into the open in late 2013, when the Gulenists released damning evidence of corruption that almost took down Erdogan's government. Thousands of alleged Gulenists were purged.

The Gezi Park protests and corruption scandal shook Erdogan. The threat to his rule prompted him to take hardline stance to further consolidate power as he assumed the presidency in 2014. On other fronts, Erdogan pushed aside potential rivals within his party.

The net effect was the creation of a body of loyalists within the party and state, as Erdogan turned his attention to transforming Turkey from a parliamentary system to an executive presidency with sweeping powers. Erdogan has already used the presidency like no other previous president, violating the constitutional limits on what is traditionally a largely ceremonial post.

Another turning point came in the June 2015 national elections, when the AK Party came first but failed to gain a majority in parliament for the first time. It appeared that voters had sent Erdogan a message to slow down.

But Erdogan and the AK Party refused coalition building and in a calculated gamble to rally nationalist votes, he resumed war with Kurdish militants and called for snap elections that returned AK Party a majority in parliament in November.

The four year period of power consolidation and crackdowns starting with the Gezi Park protests witnessed a steady deterioration in the rule of law that deviates from EU standards, Pierini said.

In particular, the period since mid-2014 "has been a demonstration that Turkey or at least Erdogan is not contemplating a liberal democratic model as we have in Europe. That is the first fundamental rift between Turkey and the EU," he said.

The deterioration in the rule of law, accelerated after July's failed coup and subsequent purges, prompted the European Parliament in a non-binding vote in November to call for suspending Turkey's EU accession process.

The EU may now have to seriously consider temporarily suspending Turkey's accession negotiations if next month's referendum passes.

"At some point down the road the EU will have to review EU accession for Turkey. The challenge will be temporarily suspending EU talks without it impacting the refugee crisis and difficult negotiations over Cyprus," Levin said. 

For Pierini, if the draft constitutional changes are adopted it "will be the end of the road."

"You will have a clear divorce with Europe because there will be one-man rule with no checks and balances," he said.