ISTANBUL, March 30 (Reuters) - For a man who rarely accepts defeat, the disappointment expressed by Prime Minister Tayyip Erdogan over Sunday's local elections suggests the ruling party will address its shortcomings and in turn boost democracy.
The AK Party won 39 percent of the municipal vote, but the results were below its 47 percent target and the worst since it first came to power in parliamentary elections in 2002. The results are a wake-up call for a party grown comfortable in office and a prime minister allergic to criticism, analysts say.
Erdogan, who made the local polls a referendum on his 7-year rule, clearly misjudged voter dissatisfaction over his government's handling of the $750 billion economy, seen going into recession in 2009 after years of stellar growth.
"We think that Prime Minister Tayyip Erdogan will read the results correctly and concentrate on economic problems," said Yarkin Cebeci, a senior economist at bank JP Morgan in Istanbul.
"The Turkish electorate sent a clear warning to the ruling AKP, stating its dissatisfaction over the recent economic downturn," he said.
During campaigning, which had all the trappings of a general election, Erdogan played down the effects of the global financial crisis on Turkey and blamed incompetent businessmen for rising unemployment, currently at a record 13.6 percent.
The AK Party failed to win key cities it had campaigned hard for, particularly Diyarbakir in the mainly Kurdish southeast, Izmir and Adana. The party also saw its lead in the capital Ankara and Turkey's largest city, Istanbul, shrink considerably.
Local elections have traditionally been important in Turkey, with governments severely handicapped if they failed to score well. The results are not expected to halt reforms but may force Erdogan to seek compromises with the opposition to achieve his goals, which may in turn strengthen democratic institutions.
Erdogan has pledged to reform the constitution drafted by the military in 1982 and change the way the Constitutional Court works -- steps that would remove some obstacles to EU membership but could revive tension with secularists who accuse him of pursuing an Islamist agenda. Erdogan denies this.
"As an example of a positive effect (of the results), we can say that political cooperation on constitutional changes which will come onto Turkey's agenda soon has become more important or even inevitable," wrote Erdal Safak, editor of Sabah newspaper, seen as having close ties with the government.
SULTAN NO MORE?
Heads will undoubtedly roll as a consequence of the AK Party's poor showing, but Erdogan said on Sunday any changes in his cabinet would not be done because of the election results.
"We will have some ministerial changes but only Erdogan knows which ones and the timing of them," a senior government source, who declined to be named, told Reuters before the polls.
Will the boy of Kasimpasa, a poor neighbourhood in Istanbul where Erdogan learned the politics of the street, take note of the election and shed his confrontational style -- at full display in a war of words with Israel's President in Davos?
Judging by past promises, maybe, but only partially.
Erdogan presides over his Islamist-rooted AK Party government like a sultan would over his court. He follows in the footsteps of Turkish politics where leaders are rewarded at the ballot box for their toughness, not compassion.
But businesses, including association TUSIAD, and analysts say his style is sowing divisions at a time when Turkey needs to urgently address economic, political and social reforms.
Erdogan pledged a new era of compromise when his party won a landslide re-election in 2007, a poll sparked by a row with the secularist opposition over the direction of the country.
Instead shortly thereafter, he pushed for lifting a ban on female students wearing the Islamic-style headscarf at university, sparking further political tensions and a court case to close the ruling AK Party for Islamist activities.
Erdogan is the brains behind the AK Party's successive wins. Charismatic yet severe, he is currently Turkey's most popular politician and heads the most stable single party majority government in decades.
On a recent campaign trip to Sivas in central Turkey, Erdogan's influence was all too noticeable. Silence fell as he entered his party's campaign bus and soon after he was taking mobile phone calls to issue orders ranging from finance approval for a local municipality to national politics.
"Erdogan runs the show. He is the boss," said a close aide.
It will now be up to Erdogan to address the weakening economy and push ahead with reforms, including greater rights, as voters in southeast Turkey clearly expressed by voting for the pro-Kurdish Democratic Society Party.
Launching a Kurdish-language state television channel and handing free washing machines to locals did not convince them that the AK Party would address decades-old grievances over rights for the Kurdish minority.
"We think it is important to take lessons both from achievements and from failures," Erdogan said on Sunday night. (Additional reporting by Daren Butler; Editing by Dominic Evans)
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