* Davutoglu expected to be next prime minister
* Economic team likely to remain in place
* Erdogan allies touted to take on cabinet roles
(Adds analyst comment, investor reaction)
By Orhan Coskun and Jonny Hogg
ANKARA, Aug 20 Turkish president-elect Tayyip
Erdogan looks set to maintain his influence on daily politics
after being sworn in next week, with close allies likely to take
on cabinet posts in a new government and his economic team
expected to remain largely intact.
Outgoing president Abdullah Gul said on Tuesday that Foreign
Minister Ahmet Davutoglu was likely to take over as chairman of
the party and become the next prime minister, rekindling
speculation about the shape of the new cabinet.
Davutoglu, an academic who has served as Erdogan's foreign
minister for the past five years, is expected to be confirmed as
the ruling AK Party's nominee for chairman on Thursday before
being formally voted in at an AK general assembly on Aug. 27.
Senior AK officials told Reuters that ministers responsible
for the economy would remain in place under Davutoglu, and that
close Erdogan allies including his top aide Yalcin Akdogan and
intelligence chief Hakan Fidan might be given cabinet positions.
Investors have been particularly concerned about the fate of
Deputy Prime Minister Ali Babacan and Finance Minister Mehmet
Simsek, who have guided the economy towards unprecedented
stability in recent years.
"The decision will be up to Erdogan and Davutoglu, but in
the new cabinet which is expected to be formed at the beginning
of September, no changes are expected with Babacan and Simsek or
other economic portfolios," one senior AK official said.
Erdogan, who co-founded the AK Party and has dominated
Turkish politics for more than a decade as prime minister, won
the country's first national presidential election on Aug. 10
with 52 percent of the vote. Previous presidents were elected by
Senior officials had told Reuters before the vote that
economic ministers would be retained at least until a
parliamentary election next June if Erdogan won.
Erdogan will step down as leader of the AK Party when he is
inaugurated on Aug. 28, as required by the constitution, but has
made clear that he wants the party he co-founded with Gul more
than 10 years ago to remain loyal and unified.
"Davutoglu is certainly someone that Erdogan can control,
because he doesn't have his own constituency. Erdogan made him.
He's about the most amenable prime minister that could be
chosen," one European diplomat said.
But investors are likely to see Davutoglu, a well-known
figure internationally and respected within the AK Party, as a
choice representing stability given his foreign policy
experience, particularly if he retains the economic team.
"Davutoglu is the highest-profile person within the AKP with
whom Erdogan could work comfortably as prime minister, under a
de facto presidential system," said Ozgur Unluhisarcikli,
director at the German Marshall Fund think-tank in Ankara.
"He's becoming prime minister at a very difficult period,
facing severe foreign policy choices but also serious economic
choices and domestic tensions."
Erdogan wants a strong and loyal party leader to boost the
AK's majority in next June's election, a result which would help
him to change the constitution and strengthen the powers of the
While Davutoglu is likely to back him in this, he would lack
his predecessor's high profile among the AK's core voters,
meaning Erdogan may try to continue to assert his influence over
the party even after breaking formal ties.
"Davutoglu lacks Erdogan's caustic rhetorical skills and
ability to inspire almost fanatical personal devotion amongst
the AKP's grassroots. He is likely to struggle to impose himself
and be dependent on Erdogan to maintain party unity," risk
research firm Teneo Intelligence's Wolfango Piccoli said.
Davutoglu has overseen Turkish foreign policy at a turbulent
time for the Middle East, with wars in neighbouring Iraq and
Syria and the Arab Spring uprisings, but his "zero problems with
the neighbours" policy has crumbled, with relations degraded
with Egypt, Syria, Israel, Iraq and Iran.
"In the Middle East he is basically persona non grata ...
they're isolated. Countries like Egypt are hardly going to be
happy if he is prime minister and Erdogan is president," the
European diplomat said.
Gul, who commands respect among core AK voters and is seen
as a more conciliatory figure than Erdogan, had long been touted
as a future prime minister. But he has been sidelined in recent
months and, with the AK general assembly a day before he leaves
office, could not in any case immediately become party leader.
Senior AK officials said intelligence chief Hakan Fidan, one
of Erdogan's closest confidantes, and EU minister Mevlut
Cavusoglu were being considered as possible replacements for
Davutoglu in the role of foreign minister.
Top aide Yalcin Akdogan was also expected to take up a
position in cabinet, possibly as a deputy prime minister, while
AK deputy chairman Mustafa Sentop is seen as a candidate for
justice minister, the officials said.
(Writing by Nick Tattersall; Editing by Louise Ireland)