* Around 350 police officers removed in Ankara
* More arrests in corruption probe in Izmir
* Scandal weakening ruling party ahead of elections
By Daren Butler
ISTANBUL, Jan 7 Turkish Prime Minister Tayyip
Erdogan's government purged hundreds of police officers
overnight, media said, as part of a crackdown on a rival he
accuses of trying to usurp state power by tarring him with a
specious corruption investigation.
Some of the officers, who included members of the financial
and organised crime, smuggling and anti-terrorism units, were
moved to traffic duties, according to the reports. Ankara
police, chief focus of the action, declined to comment.
Despite the dismissals, among them senior commanders, police
and prosecutors continued arrests, which on Tuesday targeted the
state railway company and a western port.
Erdogan, facing the biggest challenge of an 11-year rule
that has seen the army banished from politics, the economy
booming and Ankara pressing its role in the Middle East,
portrays the raids and arrests as a "dirty plot" by an Islamic
cleric. The cleric backs no political party but exercises broad,
if covert, influence in the police and judiciary.
The corruption scandal is shaking investor confidence in
Turkey at a time when the lira currency is languishing at record
lows, inflation is rising and growth slowing. As much as its
Islamist-rooted ideology, AK Party's support has relied on its
avowed commitment to fight corruption and its economic record.
Uncertainty caused by the scandal could hit economic growth
in the short term, Finance Minister Mehmet Simsek said, while
ratings agency Fitch warned on Tuesday that a prolonged crisis
could weaken Turkey's creditworthiness.
Details of the corruption allegations have not been made
public, but are believed to relate to construction and real
estate projects and Turkey's gold trade with Iran, according to
Turkish newspaper reports citing prosecutors' documents.
Prominent business people, the sons of three cabinet
ministers and state officials are among those to have been
detained for questioning.
Among the dozens questioned, most have been released. A
remaining 24, including two of the ministers' sons, have been
remanded in custody, according to local media.
NO BACKING DOWN
The government has hit back by sacking or reassigning
hundreds of police across the country since the crisis broke
with a day of raids and arrests on Dec. 17.
Around 350 officers in Ankara, including members of the
financial and organised crime, smuggling and anti-terrorism
units, were dismissed or reassigned overnight to new roles
including traffic or district duties, the media reports said.
According to the Hurriyet daily, some 1,700 police have been
dismissed or reassigned in Istanbul and Ankara alone since the
corruption investigations became public.
Some would have been directly linked to the inquiries, while
others may have been removed because of links to the Hizmet
(Service) movement of U.S.-based cleric Fethullah Gulen, which
Erdogan now describes as an intolerable "state within a state".
The two were close allies when Erdogan's AK Party was first
elected in 2002. But they have fallen out in the last couple of
years over policy towards the United States and Israel and a
recent attempt by Erdogan to close down the private schools that
are the centre of a global Hizmet network.
Prosecutors meanwhile deepened their investigations, with at
least 25 more people including public officials detained as part
of an investigation into the activities of a port in the Aegean
province of Izmir, broadcaster CNN Turk said.
It later said three divisional police chiefs behind those
detentions had been removed from their posts.
Eight officials from the state railway company TCDD were
among those detained in the raids, the company said in a
statement, denying reports its headquarters had been searched.
Erdogan and the Hizmet movement which exercises influence
through a network of contacts built on sponsorship of schools
and other social and media organisations, accuse each other of
manipulating the police and compromising the independence of the
judiciary. Hizmet denies unleashing the investigation.
"Purges, or more accurately massacres, are being carried out
of civil servants who are fulfilling their duties defined by the
law," Gulen said in a letter to President Abdullah Gul, written
as the row intensified in late December but published by the
pro-government Yeni Safak newspaper on Monday.
Erdogan, who has won three general elections and remains
widely popular, casts the scandal as an attempted "judicial
coup", a foreign-backed plot by those jealous of his success.
"Neither side appears willing to give up at this stage in
this high stakes battle for control of the state," said Timothy
Ash, head of emerging markets research at Standard Bank.
Reflecting the impact of the scandal on financial markets,
the Turkish government bond yield curve has inverted for the
first time in six months, suggesting a growing number of traders
are betting that the central bank will be forced into a large
interest rate hike to support the lira.
The central bank has so far been reluctant to raise its main
interest rates for fear of slowing growth ahead of local
elections in March and presidential polls due in August.