Why Erdogan Will Survive The Corruption Scandal Rocking Turkey's Government

ISTANBUL (Reuters) - Turkish Prime Minister Tayyip Erdogan still enjoys the fierce loyalty of pious voters and wealthy elites, which should be enough to keep him in power in the face of a corruption scandal that has rocked his government and reached his family.

But the suggestion by members of his AK party that a general election could be brought forward to next year shows that he is more worried than ever about his grip on a country he has transformed during a decade in office.

A less feisty leader might already have been sunk by the corruption scandal involving accusations of wrongdoing at a state-run bank.

Two members of the cabinet have resigned after their sons were arrested. Another minister who quit said the prime minister knew what was going on and should resign as well.

The affair turned more personal this week when Turkish media published what appeared to be a preliminary summons for Bilal Erdogan, one of the premier's two sons, to testify. The authenticity of the document could not be verified.

Investors are nervous and the lira currency has swooned.

But the scandal has only brought out the fight in Erdogan, who has consistently said that the entire affair is a foreign-backed plot against him. He has sacked police officers including the Istanbul police chief, exchanged diatribes with a powerful cleric and steadfastly insisted he has done nothing wrong.

The document naming his son was just another example of the conspiracy, he said: "If they try to hit TayyipErdogan through this, they will go away empty-handed. Because they know this, they're attacking the people around me."

So far, opinion pollsters predict that support for Erdogan's AK party, which enjoys wide support in Istanbul and the conservative countryside, has probably fallen by a few percentage points but still remains over 40 percent.

That is hardly enough of a slide to force it out of power. The last election saw it win more than two thirds of the seats in parliament with 50 percent of the vote, an unprecedented success.

Still, one senior official in Erdogan's AK party predicted the next general election, due in 2015, could be brought forward to early next year "if events take a dramatic turn", a sign that the party is revising its calculations to contain the fallout.

PUGNACIOUS

Much depends on the resolve of the famously pugnacious three-term premier, 59, who has already transformedTurkey by curbing the powers of the secularist military establishment and presiding over a spectacular economic boom.

Defiance worked for Erdogan six months ago, when he was beset by unprecedented anti-government street protests. Accused of being authoritarian, he ordered a police crackdown in which eight people died. Polls found his popularity almost unchanged.

To his conservative followers, corruption allegations could prove more damaging than accusations of authoritarianism.

"The (summer) protests were viewed as having been taken over by several disparate interest groups, which could explain why it has not had a major impact on his supporters," said Nazli Ilicak, a well-known Turkish columnist who worked for the pro-government daily Sabah until last week.

"But within the conservative electorate, the sense of justice - that what rightfully belongs to the people has been usurped - these are not seen as issues to be taken lightly."

She said Erdogan, who has hunkered down with a reshuffled cabinet of loyalists, would need to "come clean" and address the corruption allegations head on if he wanted to keep votes.

MUNICIPAL VOTE A TEST

Erdogan became prime minister in 2002, winning the loyalty of pious Turks who were sick of corrupt politicians. His image sits poorly with TV news pictures of police seizing shoeboxes filled with cash from the houses of corruption suspects.

Bekir Agirdir, director of polling firm Konda, which said there could have been a 3-5 percent slide in support for Erdogan's AK Party, said how the party manages the crisis will determine if its rating slides further or bounces back.

A March municipal vote in Istanbul, which is both Turkey's commercial hub and a longtime pro-Erdogan bastion, will be a bellwether. Trying to unseat the AK mayor is Mustafa Sarigul of the main opposition party CHP.

Erdogan faithful sound confident they will hold the city, yet they also fear Sarigul could reap grassroots support from a rival Muslim social network, Hizmet, whose charismatic leader Fethullah Gulen, a U.S.-based preacher, fell out with Erdogan last year and now openly excoriates the premier.

Hizmet claims to have at least one million followers worldwide, including in the upper tiers of the Turkish police and judiciary. In private conversations, AK officials say they will work to prevent Hizmet "defaming" Erdogan's government - a possible harbinger of dragnets for suspected Gulenists.

"Right now the situation in Istanbul seems to be under control," said one senior party official. But it remains to be seen whether similar operations by Hizmet to rally opposition to Erdogan take place in other cities.

Stewardship of the economy has long been Erdogan's most impressive boast, and the impact of the scandal on the business climate could determine whether support holds up.

Turkey's currency has hit consecutive new lows against the dollar, though the plunge was slightly softened last week by the central bank's sale of foreign currency.

But many investors are likely to keep faith in Erdogan and his economic team for now, having seen them successfully navigate stormy waters in the past.

"Erdogan is a political survivor, and a shrewd political operator. I think he can ride through this," said Timothy Ashof Standard Bank.

"He has strong underlying support, and as long as he retains the support of the economy team I think markets will give him the benefit of the doubt."

(Additional reporting by Seda Sezer and Gulsen Solaker; Writing by Dan Williams; Editing by Peter Graff)

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