Turkey 'takes $100 billion hit' from political turmoil

Ankara: The political crisis engulfing Turkish Prime Minister Recep Tayyip Erdogan has cost the economy $100 billion, the financial markets rebounded after days in freefall.

Deputy Prime Minister Bulent Arinc said a sweeping corruption probe that has shaken the core of Erdogan's adminstration was a “plot aimed at tarnishing Turkey's prestige at home and abroad”; a frequent government refrains since the scandal erupted.

“We are talking about damage of over $100 billion,” Arinc said after Turkey's first cabinet meeting since a major reshuffle last week forced by the resignation of three ministers over the probe.

Turkey had been seen as a model of democracy in the Muslim world and an emerging economic power but the crisis sent its currency and shares plunging.

The lira rallied to 2.1239 against the dollar after hitting a record low of 2.17 last week as Erdogan faced mass protests and growing calls to resign.

The Istanbul stock exchange surged 6.42 per cent.

Erdogan, struggling to keep his grip on power after 11 years as the country's almost unassailable strongman, has vowed he would survive what he has branded a “dirty” plot to try to topple him.

A string of public figures including high-profile businessmen and the sons of three ministers were rounded up on December 17 over allegations of bribery for construction projects as well as illicit money transfers to sanctions-hit Iran.

It is the worst crisis since June when Erdogan faced a month of mass street demonstrations against what critics said was his increasingly authoritarian rule and attempts to impose his Islamic values on society.

The turmoil has exposed rifts within his own Justice and Development Party (AKP) and a power struggle with an influential US-based Muslim cleric, Fethullah Gulen.

It has also sullied the reputation of his party which took office in 2002 with a pledge to root out corruption and which takes its name from AK, meaning “clean” and “pure” in Turkish.

The government has suggested that Gulen loyalists, who wield considerable influence in the police and judiciary, were forcing the corruption inquiry to undermine Erdogan in the runup to the March elections.