* Davutoglu lists priorities in new govt programme
* Economic growth potential a key focus
* Few major policy changes expected
(Adds details on foreign policy, quotes, background)
By Gulsen Solaker
ANKARA, Sept 1 Turkey's new prime minister said
on Monday he would pursue strong economic growth and EU
ambitions, while in the Middle East he saw no hope of
"normalising" ties with Israel unless it ended a blockade of the
Ahmet Davutoglu offered no suggestion of any change of
emphasise in policies pursued with greater or lesser vigor over
the last 11 years by Tayyip Erdogan, who was elected to a new,
more powerful presidency last month.
"The new Turkey will be a major and pioneering country,"
Davutoglu told parliamentary deputies, reading from the 189-page
document and pledging a nation that would be "freer and more
prosperous, more just and prestigious".
Erdogan, the first president in Turkey to be directly
elected, is expected to maintain strong influence over the
running of government from the Cankaya presidential palace. He
portrays himself as fulfiling a historic mission to transform
Davutoglu named a new cabinet on Friday, keeping key members
of the existing economic management team in place and naming
Ankara's point man on Europe as foreign minister, a line-up
broadly welcomed by investors and diplomats.
Davutoglu said Ankara would maintain efforts to achieve
European Union membership - a process that has stumbled somewhat
partly as a result of Erdogan's crackdown on anti-government
protests last year and his launching of a purge of judiciary and
police he accuses of engineering a graft case to undermine him.
He said Ankara would continue to support refugees from the
war in Syria, while pressing ahead with contacts with with
Kurdish militants to settle a decades-old conflict that has cost
over 40,000 lives.
But he said progress in the normalisation of relations with
Israel would only be possible if the Jewish state stopped
attacks on Gaza and ended its restrictions on the Strip.
Turkey was once Israel's closest regional ally in the
region. But Erdogan has been a strident critic of its treatment
of the Palestinians during the recent conflict that Israel says
was triggered by Palestinian rocket attacks on its territory and
the use of tunnels to infiltrate attackers.
The programme put emphasis on a strong economy, envisaging a
monetary policy which stepped up the struggle against inflation
but also supported growth and employment, as long as this did
not contradict the goal of achieving price stability.
Erdogan was a frequent critic of the central bank's interest
rate policy as prime minister, wedded to the notion that high
borrowing costs were the primary cause of Turkey's stubborn
inflation and calling for sharp rate cuts.
"We will follow a line which will increase growth potential,
creating solutions to problems in the economy with a long-term
view," the programme said, emphasising a focus on boosting
domestic savings and promoting value-added manufacturing.
It also said the central bank would continue to set monetary
policy independently and that structural measures would be taken
to narrow the current account deficit.
Deputy Prime Minister Ali Babacan has retained overall
responsibility for the economy in the new cabinet, government
spokesman Bulent Arinc said on Monday, a move likely to ease
concerns of a turf war.
The appointment of Numan Kurtulmus, deputy chairman in
charge of economic affairs in the ruling AK Party, as a deputy
premier alongside Babacan had unnerved some analysts who feared
their portfolios might conflict.
Babacan, and more recently Finance Minister Mehmet Simsek,
have been part of a well-respected economics team that has
helped steer Turkey through a decade of growth and stability.
Simsek also retained his post.
(Writing by Daren Butler; Editing by Nick Tattersall and Ralph