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UPDATE 3-Turkish PM says talks with Kurdish militants possible
* Previous talks with PKK broke down
* Militant violence at most intense in a decade
* Two soldiers, 13 PKK fighters killed in latest clashes
By Daren Butler
ISTANBUL, Sept 27 (Reuters) - Turkey's intelligence agency may hold talks with Kurdish militants if the time is right, Prime Minister Tayyip Erdogan said on Thursday, as his government grapples with an upsurge in separatist violence in the country's southeast.
The conflict has cost Turkey dearly since the militants took up arms in 1984, both in human and economic terms, and as the death toll climbs there is growing public pressure on Erdogan to bring an end to the bloodshed.
Turkish intelligence officials have had contact with senior figures from the Kurdistan Workers Party (PKK) in the past few years to try to end a conflict that has claimed more than 40,000 lives, but talks have broken down.
Those contacts included secret talks, thought to have been held in 2010 in Oslo between intelligence officials and PKK negotiators, as well as meetings on the small island of Imrali, where PKK leader Abdullah Ocalan is serving a life sentence.
"We have taken these steps in Oslo and Imrali before ... and we will take the same steps again when we deem them necessary," Erdogan said in a live interview on Turkey's NTV television station late on Thursday.
"The timing of such a move is very important, but we are not prejudiced against such an act," he said.
Erdogan's comments came after Turkey's main pro-Kurdish party called for the resumption of talks between the state and the PKK to prevent a further escalation of violence.
Clashes in the past few months between Turkey's armed forces and militants from the PKK - considered a terrorist organisation by Ankara, the United States and the European Union - have been among the heaviest since the conflict began.
Turkish soldiers backed by helicopters killed 13 PKK fighters on Thursday during clashes in Cukurca near the mountainous Iraqi border, security sources said. Two soldiers were killed and three wounded in the fighting.
Ankara has linked the upsurge in violence to the conflict in neighbouring Syria. Erdogan has accused President Bashar al-Assad of arming the PKK militants and raised the possibility of military intervention in Syria if the PKK were to launch attacks from Syrian soil.
Erdogan also blamed European and Scandinavian countries for allowing PKK sympathisers to raise finances for the group on their soil.
"Terrorist leaders walk free in these countries, and they allow them to collect financial aid in the streets, creating a resource worth millions of euros," Erdogan said. "Scandinavian countries literally act as accessories to the terrorist organisation."
The EU labelling of the PKK as a terrorist organisation has made it harder for Kurds in Western Europe's large Turkish diaspora to provide it with support.
Danish police said this month that an investigation of Turkish citizens of Kurdish origin had resulted in the arrest of eight people suspected of funnelling around $25 million to the PKK since 2009.
TEACH THEM A LESSON
After a decade in power, Erdogan's attempts to end the 28-year-old war with Kurdish militants in the mountainous border region with Iraq are coming under scrutiny.
His government has broken taboos with some reforms such as authorising Kurdish language teaching and broadcasting, but the death toll in fighting over the past 15 months has been the heaviest since Ocalan was captured in 1999, according to the International Crisis Group think-tank.
Erdogan defended his government's record.
"I have presented before the number of military operations carried out and soldiers killed during the terms of different governments in the last 30 years. Our term has been the one with the least number of military operations," he said.
"But on the number of martyrs (Turkish soldiers killed), the terrorist organisation has never been so powerful in terms of the arms they own ... Our security forces have taught them the necessary lessons, and will continue to do so."
The head of Turkey's armed forces said in a newspaper interview on Wednesday that the military also had the capability to launch a sustained operation against the PKK in northern Iraq, where it has its main base.
Erdogan gave his interview a few days before his AK Party's congress, where he is expected to set out the party's future as it goes through its biggest overhaul since coming to power a decade ago.
Turkish special forces captured Ocalan in Kenya in 1999 after Assad's father, then-President Hafez al-Assad, cast him out of Syria amid concern that Turkey would launch military action over the militant leader's presence in Damascus.
Since his conviction, Ocalan has been jailed on Imrali, located in the Marmara Sea south of Istanbul.
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