Turkey`s Erdogan Plans Reshuffle Soon

Erdogan had said that after his AK Party lost votes in last month`s local elections a cabinet reshuffle was on the table.

Turkish Prime Minister Tayyip Erdogan will announce a cabinet reshuffle in the coming days, a government source said on Friday, a move analysts said may help the EU candidate to tackle a recession more aggressively.

The appointments are not expected to bring big changes in policies in Turkey, which is under pressure to sign a deal with the IMF to weather the global economic crisis and speed up reforms to shore up its troubled European Union accession bid.

But the replacements would reinvigorate Erdogan's Islamist rooted AK Party government, which was punished with a reduced share of the vote in local elections last month amid record unemployment and a perception it has become out of touch.

Erdogan maintains a tight grip on government policies, but some shifts may suggest he will bring in people with experience and seek to broaden his powerbase and include others.

The source, who declined to be named, said Erdogan had not yet made an appointment to present his new cabinet list to President Abdullah Gul. The source declined to say which ministers would be sacked, but some newspapers said the cabinet may see some 10 new faces.

"We don't expect any appointment with the president until Sunday at the earliest," the source said. Gul headed on Friday for Bulgaria for an official visit.

Turkish media have speculated that Economy Minister Mehmet Simsek may lose his post, after the government came under fire from business groups for failing to reach an agreement with the IMF after several months of protracted talks.

Foreign Minster Ali Babacan, who as economy minister between 2002-2007 led Turkey's successful recovery from a deep crisis in 2001, has been tipped as Simsek's replacement.

Turkey's once-booming economy is expected to shrink by up to six percent after the global financial crisis hammered exports and domestic demand and markets would welcome a man like Babacan.

"Babacan has good knowledge of dealing with the IMF, so this might signal that Erdogan wants a trusted point man to coordinate the looming IMF standby agreement," Tim Ash, from Royal Bank of Scotland said in a research note.

Simsek has been criticised for being a weak minister with no experience in public administration and no influence on Erdogan.

Traders said the cabinet reshuffle has long been speculated and it made no impact on the markets. The lira <IYIX=> firmed 2 percent on the hopes of an imminent IMF loan deal.

FOREIGN MINISTER

Newspapers have speculated that Ahmet Davutoglu, Erdogan's chief foreign policy advisor, may be the new foreign minister.

Davutoglu has assumed an active role in Turkey's Middle East mediation efforts between Israel and Arab countries and in solving conflicts in the neighbouring Caucasus.

Turkey has come under criticism for the slow pace of reforms since it started EU entry talks in 2005. Davutoglu is an expert on the Middle East, but his appointment would bring new energy to the post as Brussels expects Ankara to make more progress.

Another man who might lose his job is Education Minister Huseyin Celik, who has infuriated the secularist establishment with statements on religion and controversial proposals for the education system.

Removing Celik and bringing in moderates into the cabinet would suggest Erdogan, whose AK Party is rooted in political Islam, is seeking to operate more on consensus with the secularist opposition. Erdogan's confrontational style has raised domestic tensions in Turkey.

Finance Minister Kemal Unakitan may have to retire due to his poor health, the media speculated. He was respected for successfully handling privatisation of many state companies, but faced corruption charges by the opposition parties.

"Of course it is important who will take up which post but I do not think the government's line will change ... stronger signals will come or should come that pre-election fiscal loosening will be compensated in the medium term," said Serhan Cevik, economist at Nomura International PLC.

The government has boosted public spending to stimulate the sharply slowing economy, but economists are worried about a fast-rising budget deficit and the government borrowing requirement.