Ankara - In a terse exchange of words, German Chancellor Angela Merkel on Thursday urged Turkey to uphold democracy as the country heads toward a critical referendum on boosting the powers of the presidency, while Turkish President Recep Tayyip Erdogan took offence at her reference to "Islamist terror," saying the words cannot be placed together.Merkel was in Ankara for talks with Erdogan and other Turkish officials aimed at soothing relations that have been strained, among other things, by Turkish accusations that Germany does not support Turkey in its fight against terror groups. Turkey also wants Germany to extradite some 40 soldiers allegedly involved in the failed coup in July and to reject asylum requests from people linked to a movement Turkey blames for the coup.Merkel's visit is her first to Turkey since the coup and comes as Turkey prepares to hold a referendum on whether to switch to an executive presidential system, which critics say would concentrate too many powers in Erdogan's hands and further erode the separation of powers in the country."I pointed out that in such a phase of deep political change, everything must be done to preserve the separation of powers, and above all freedom of opinion and the plurality of society," Merkel told reporters during a joint press statement with Erdogan."Opposition belongs to a democracy. We see that with one another every day in democratic states," she said.She called for elections observers to be allowed to monitor the vote.Erdogan rejected the notion that the presidential system he has long called for would end the separation of powers.Reproached the German leader"First of all, there's not an ounce of truth to this," he said. "There's a legislative organ; an executive one as well; and a judicial."He reproached the German leader for using the phrase "Islamist terror" during their joint statement, saying the expression saddens Muslims because Islam and terror cannot coexist."Personally, as a Muslim, as a Muslim president, I can never accept this," Erdogan said.Merkel responded by saying Germany makes a linguistic distinction between 'Islam' and 'Islamist.'"I would like people in Turkey to know, in any case, that we do not just respect and value Muslims, but we want to work well together and fight this terrible terrorism together," she added.Merkel later toured parts of Turkey's parliament, which were damaged by bombings during the coup attempt.