DIYARBAKIR, Turkey (Reuters) - When Prime Minister Tayyip Erdogan acknowledged the existence of a "Kurdish problem" to a rally in the southeastern city of Diyarbakir, Mayor Osman Baydemir was among thousands who stood to applaud a momentous declaration. For decades, Turkey had refused even to recognize Kurds as a separate ethnic group.
Seven years later, Baydemir, shaking with anger, blames Erdogan's government for the worst fighting between the army and Kurdish rebels in years. Raising the stakes in his confrontation with Ankara, he has joined a hunger strike by Kurdish prisoners.
"When the prime minister said, 'The Kurdish problem is my problem too,' I was among those who stood up and applauded him. But we were fooled, our hopes were falsely raised," he says.
"We are living through the Kurdish cause's most critical period ... Ours is perhaps the last generation willing to extend a hand and negotiate."
Baydemir says the prosecution of thousands of Kurdish politicians and activists since 2009 and more recently the government's slow response to the hunger strike have sapped hopes for a solution to a three-decade conflict with the Kurdistan Workers Party (PKK) - deemed a terrorist group by the EU and Washington as well as Turkey.
The Kurdish conflict has taken some 40,000 lives, mainly Kurds, and burns at the heart of Turkey. It brakes the southeastern economy, draws criticism from abroad on rights policies and stirs anger in the Turkish heartland with images of soldiers' coffins returning, draped in the red Turkish flag.
Baydemir, 41, among the most prominent of Kurdish politicians, says his goal is to stop the violence. He is nothing if he is not dogged.
The mayor faces hundreds of criminal cases - too many to count, he says - for things he has said or done, including attending the funerals of PKK militants that has brought him charges of "spreading propaganda for a terrorist organization".
ERDOGAN'S BOLD STEPS
"All of my life I have stayed away from violence and the instruments of violence, and have seen a legal, democratic struggle as the only means to achieve change," Baydemir says, his hands shaking as he gesticulates with anger.
"But I have had it up to here with the prosecutions, the government's attitude, the judiciary, the media's stance and the majority of Turks who view the Kurdish people's justified cause through a nationalist lens."
Where 37 fellow mayors languish in jail, Baydemir, outspoken as he is, has been spared arrest; perhaps because of his popularity or perhaps because of the symbolic importance of Diyarbakir, a city of 1.5 million people and the regional centre of Turkey's heavily Kurdish southeast.
"The government has shut all legal, democratic channels. This sends Kurds the message: 'Head to the mountains,'" Baydemir says, referring to PKK camps in northern Iraq and the highlands of southeastern Turkey where it fights Turkish soldiers.
Erdogan would see things quite differently.
He has taken steps leaders before him would never have dared in a country that had outlawed even the use of the Kurdish language until 1991.
As part of efforts to meet EU membership criteria, Erdogan allowed Kurdish television broadcasts and, most recently, elective Kurdish language courses at state schools.
In 2010, he risked the wrath of a conservative establishment by endorsing secret talks with PKK representatives. The talks failed, and the PKK has abandoned a ceasefire.
The last 18 months has seen the heaviest fighting in more than a decade between the PKK and the Turkish army. Since June 2011, when Erdogan was re-elected to a third term, more than 800 people have been killed, the deadliest fighting since PKK leader Abdullah Ocalan was captured and jailed in 1999, according to estimates by the International Crisis Group.
Does Baydemir, then, hold the hope of a mediated political solution, as his supporters argue? Or are he and his party tools of the PKK, as Erdogan has suggested?
Critics say Baydemir and other officials of his Peace and Democracy Party (BDP) have failed to hold the PKK accountable for violence. The EU has urged the BDP to distance itself explicitly from the insurgents. The BDP, for its part, says it shares no overt links, just a common grassroots.
"The BDP is failing those who voted for them to contribute to a political solution of the Kurdish problem," said Hilal Kaplan, a columnist for the pro-government Yeni Safak newspaper.
"Baydemir is different. He has always questioned the PKK's effectiveness. But he and others on hunger strike are thumbing their noses at the state just when it was ready to negotiate."
Many Turks fear the PKK campaign, combined now with Kurdish rebel activity in Syria and the emergence of a strong autonomous Kurdish entity in northern Iraq, could threaten the unity of Turkey and lead to broader ethnic conflict in the country.
Serafettin Elci, an elder statesman in the Kurdish movement, described Baydemir as a tempering influence, an alternative to the lure of the PKK's promise of forcing change with the gun.
"His genuine aim is to stop the clashes, end the armed struggle and establish a lasting peace between Kurds and the state," said Elci, who served as a cabinet minister in the 1970s and returned to parliament in 2011 in a bloc with the BDP.
Baydemir announced last Saturday he was joining a hunger strike launched 64 days ago by prisoners and now involving some 1,800 people. The protesters, taking sugar water and vitamins, demand expansion of Kurdish language rights and access to lawyers for Ocalan, now held in an island prison off Istanbul.
A death now, says Baydemir, could only further complicate efforts towards a solution.
The government said last week it would send a bill to parliament to allow defendants to testify in Kurdish in court, a key demand, but cabinet has yet to approve it.
Most of the inmates on hunger strike are either convicted PKK members or accused of links to the Union of Kurdistan Communities (KCK), which the state says is a PKK offshoot.
Many of the KCK defendants, including politicians, lawyers, journalists and others in prison for as long as 3-1/2 years without conviction, belong to the BDP, which Erdogan calls the PKK's "political extension."
Baydemir, who studied English in the United States before becoming mayor in 2004, accuses the government of prosecuting those who seek a political alternative to the PKK. That, he says, is the fundamental reason for the escalation in violence.
"We have a powerful prime minister. If he wants to solve the Kurdish issue, he will," the mayor said.
HOUSE UP FOR SALE
In 2010, a court barred Baydemir from traveling outside Turkey, but he has thus far escaped the lengthy pre-trial detention of his peers. Some 190 elected officials are in jail, including 37 mayors. Six BDP lawmakers are also behind bars.
"Authorities have probably decided against detaining Osman because he is so well-liked by the Kurdish public. There is a sensitivity towards Diyarbakir," said Raci Bilici, a successor of Baydemir as secretary of a human rights organization.
Baydemir publicly lashed out at Erdogan following the arrest of Kurdish politicians in December 2009, and, referring to the BDP's oak tree emblem, asked: "Which branch of the oak tree poked what part of your body?"
Erdogan sued for defamation. Under a court ruling, a quarter of Baydemir's monthly salary is now sequestered to pay Erdogan compensation totaling some 50,000 lira, with fees and interest.
Facing another 50,000 lira suit from Erdogan - this time for calling the prime minister a "facist" following the arrest of another Kurdish mayor earlier this year - Baydemir has put his house up for sale in anticipation of the verdict.
"Osman may be prone to the occasional, very harsh outburst," Elci, the veteran Kurdish activist, observed.
"But at heart he is a dove."
(Editing by Ralph Boulton)
($1 = 1.79 Turkish liras)