PM says fight against PKK is in Turkey, not Iraq

ANKARA, June 12 (Reuters) Prime Minister Tayyip Erdogan signalled today Turkey should focus on battling Kurdish guerrillas at home rather than in northern Iraq.

The powerful armed forces have recommended a cross-border offensive into northern Iraq, where an estimated 4,000 PKK rebels are based and from where they are accused of staging attacks into NATO member Turkey.

The AK Party government has said it backs the army but has not reconvened parliament to approve such a controversial move.

''Has the fight with the 5,000 terrorists finished domestically, that we should now be talking about Iraq?'' Erdogan said when reporters asked him about a cross-border operation against separatist Kurdistan Workers Party (PKK) rebels.

''We will reach our final decision in consultation with them (armed forces).'' Financial markets were rattled last week by reports of a major incursion into northern Iraq, which Turkey denied had happened. Military sources said there had been a limited raid.

The PKK is considered a terrorist organisation by the United States, NATO, the EU and Turkey. Washington opposes any major operation into north Iraq, which could destabilise the region.

NATO Secretary General Jaap de Hoop Scheffer told reporters during a visit to Ankara that the alliance hoped a solution could be found with a maximum of restraint. He condemned the killing of Turkish soldiers and civilians by terrorists.

Erdogan began an emergency security meeting with top generals later today to discuss the mounting death toll from suspected rebel attacks across the country and the recent build-up of Turkish troops along the Iraqi border.

At the funerals of three soldiers yesterday mourners booed ministers and accused the government of murder.

''The people who shout 'killer government' will have to pay for it. Nobody has the right to call a 'killer' a government which governs the country day and night with self-sacrifice,'' Erdogan said. ''Our Interior Ministry is following this issue.'' MOUNTING DEATH TOLL Ankara blames the PKK for the deaths of more than 30,000 people since the separatist rebels launched an armed campaign for autonomy in southeast Turkey in 1984.

Analysts said the threat of an incursion into northern Iraq was as much to do with domestic politics ahead of a July 22 national election as with security.

Investors fear a major incursion would wreck Ankara's relations with the United States and the EU, and destabilise mainly Kurdish northern Iraq.

''It would be a catastrophe, very clearly...there are already enough people fighting in Iraq and Iraqi Kurdistan is one of the few places where things are still under control,'' Alain Deletroz of the International Crisis Group think-tank said in Brussels.

The armed forces have deployed tens of thousands of soldiers along the border with Iraq and bombed suspected rebel positions inside Turkey.

Turkey's armed forces have had observation posts several km (miles) inside northern Iraq since the late 1990s.

Firat News Agency, which has close links to the PKK, reported the PKK as saying they would act only in self-defence.

''Guerrillas... are being forced to defend themselves in the face of operations aimed at destroying them and are naturally using their right of retaliation,'' the PKK statement said.

REUTERS GP BST2130