ANKARA: Turkey’s battered financial markets bounced back Monday as the Cabinet met for the first time since a major reshuffle by Prime Minister Recep Tayyip Erdogan, battling a damaging political crisis over a high-profile graft probe.
The lira rallied to 2.1336 against the U.S. dollar after it hit a record low of 2.17 last week as Erdogan, who has dominated Turkish politics for 11 years, faced mass protests and growing calls to resign.
The Istanbul stock exchange surged 4.30 percent to 66,633.88 points.
Erdogan has vowed he would survive the scandal sparked by the corruption probe which has pierced the very heart of his Islamic-rooted government.
A string of close Erdogan allies have been rounded up and charged over allegations of bribery for construction projects as well as illicit money transfers to sanctions-hit Iran.
Local media reports have suggested his son Bilal may also face investigation. “It is a campaign against the Turkish nation,” a defiant Erdogan said at a rally Sunday.
“They said Gezi and smashed the windows. Now they say corruption and smashed the windows. This game will fail,” he said, referring to mass street protests that rocked his government in June.
The political turmoil in Turkey, which had been seen as a model of democracy in the Muslim world, is threatening Erdogan’s future ahead of a crucial batch of elections next year kicking off with local polls in March.
Erdogan has blamed a political plot by international conspirators and their domestic collaborators to undermine his government and sap the country’s growth, as the scandal also threatens his undeclared ambitions to run for president in 2014.
He named 10 new ministers – almost half the Cabinet – after his interior, economy and environment ministers stepped down last week following the detention of their sons in the probe.
The crisis has shaken Erdogan’s image as the country’s almost unassailable strongman, exposing rifts within his own Justice and Development Party (AKP) and a power struggle with an influential U.S.-based Muslim preacher, Fethullah Gulen.
The government has suggested that Gulen loyalists – who wield considerable influence on the police and judiciary – were forcing the fast-moving corruption inquiry to undermine Erdogan in the run-up to the March elections.
“This operation is an assassination attempt ahead of elections,” new Interior Minister Efkan Ala was quoted as saying by pro-government Sabah daily Monday.
“This is almost a coup to topple the government,” Ala said.
Gulen, who has been living in self-imposed exile in Pennsylvania since 1999 after being accused by the then-government of plotting to form an Islamic state, has denied involvement in the corruption probe.
Erdogan’s government has nevertheless ordered the sacking of dozens of police chiefs linked to Gulen or who oversaw sweeping raids on Dec. 17 that saw the detention of dozens of people including the ministers’ sons and high-profile businessmen.
Among those charged with bribery is Suleyman Aslan, the chief executive of Turkey’s state-owned Halkbank, which is accused of being involved in illegal gold sales to Iran.
Anti-government demonstrators have taken to brandishing shoe boxes at protests after $4.5 million in cash was found stashed in shoe boxes in Aslan’s home.
“It is the first time in the history of the Turkish republic that a prime minister is defending thieves. How can someone who defends thieves be prime minister,” said Kemal Kilicdaroglu, leader of the opposition Republican People’s Party.
Turkey’s once powerful military, the self-declared guardians of the secular state, has said it would not get involved in the latest political crisis, which comes just months after the mass anti-government demonstrations in June.
Since taking power in 2002, Erdogan’s government, led by his Islamic-rooted Justice and Development Party, has reined in the military with a series of court cases against top army brass.
But Sunday the government signaled that it could change the law to pave the way for retrials of hundreds of convicted officers.