February 27, 2010 2:00 am

Turkey frees ex-service chiefs amid fears of deepening political crisis

A Turkish prosecutor has released the three most senior commanders under investigation in connection with an alleged plan to overturn the ruling AK party government, easing fears their detention could trigger a political crisis.

Ibrahim Firtina, the former air force chief, Ozden Ornek, former naval chief, and Ergin Saygun, the former army commander, were freed on Thursday after questioning in connection with the so-called Sledgehammer documents, which date from 2003 and supposedly contain plans for a military coup.

The men may still face charges but were considered unlikely to escape or destroy evidence, Turkish media reported. Many officers remain in detention, and around 30 have now been charged with trying to unseat the government.

The commanders' release lessens the risk of an immediate escalation in tension between the AK party and its opponents in the military and judiciary. The lira recovered and shares on Istanbul's stock exchange closed up 2 per cent, stemming their worst losing streak since Lehman Brothers' collapse in 2008.

However, the arrest yesterday of a further 18 officers kept investors on edge as a court questioned Cetin Dogan, a general who is supposedly the mastermind of the alleged coup attempt.

Recep Tayyip Erdogan, prime minister, told a party meeting the inquiry would be "painful but beneficial for 72 million people". On Thursday, he angrily denied rumours of early elections, saying they were damaging the economy.

Abdullah Gul, president, told business people in Ankara not to worry as the issues would be solved within the constitutional framework, the Anatolian news agency reported.

But analysts warned of the return of political risk to Turkish markets, mulling a new attempt by secular judges to have the AK party closed down, or a fresh government push for constitutional change.

Mr Erdogan has hinted the AK party is working on a constitutional reform package that it could pass only by seeking popular support in a referendum.

"The mistrust between the AKP government on one side and the higher judiciary and the military on the other has reached a level where it will be very difficult to muster sufficient motivation on either side to find a more lasting equilibrium," said Christian Keller, economist at Barclays Capital. "There will be no return to the previous situation, where markets could largely discount domestic political risks."

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