Turkish left eyes merger, ruling AK Party pressured

ANKARA, May 8 (Reuters) Turkey's largest opposition party was poised today to strike an alliance with a smaller left-wing party that could further hamper the ruling AK Party's efforts to win a fresh majority in a July 22 election.

Investors fear more political instability and slower economic reforms in Turkey if the centre-right AK Party, still tipped to win most seats, is forced into a coalition government.

The main opposition Republican People's Party (CHP), nominally centre-left but nationalist-minded, has said it has agreed in principle to include candidates from the small Democratic Left Party (DSP) on its electoral list.

CNN Turk private broadcaster said today the DSP would give its final decision on the proposed alliance in the next day or two. DSP, party of the late Bulent Ecevit, a former prime minister, is anxious to preserve its separate identity.

Last week two centre-right parties, True Path (DYP) and Motherland (ANAP), struck a merger deal.

That alliance poses a greater threat to the AK Party because it could lure away middle-class urban voters who have supported the government's economic reforms and efforts to join the European Union but are worried about its Islamist roots.

Prime Minister Tayyip Erdogan was forced into calling the election in July, three and a half months ahead of schedule, after opposition parties boycotted voting in parliament on AK's presidential candidate, Foreign Minister Abdullah Gul.

Turkey's secularists, including judges and army generals, feared Gul, a former Islamist, would try to undermine the country's separation of state and religion. Gul and Erdogan deny any Islamist agenda. Gul has now withdrawn his candidacy.

Underlining Turkish unease about AK intentions, up to one million Turks joined anti-government protests in Istanbul. The powerful military also weighed in with a threat to intervene if required to defend the secular state.

Analysts still expect AK, architect of Turkey's strong economic growth, to win most seats. But the more parties that can cross a high 10 percent threshold to enter parliament, the greater the risk of a coalition government.

An opinion poll conducted just before the ANAP-DYP deal had suggested only the AK Party, the CHP and DYP would enter parliament after the next election. But the crisis, which has reinvigorated the opposition, and the rash of tie-ups it has helped trigger, could alter the arithmetic.

AK sailed to outright victory in the last election in November 2002 amid a deep financial crisis that had discredited the older parties. Some failed to enter parliament at all.

REUTERS HK RK1852