Political row hits Turkey shares

Turkish Prime Minister Bulent Ecevit has warned of a "serious" political crisis

ANKARA, Turkey -- Turkish share prices were sent tumbling after a row erupted between Prime Minister Bulent Ecevit and President Ahmet Necdet Sezer.

Ecevit stormed out of a meeting of political and military leaders on Monday, saying the president had insulted him, triggering a "serious crisis."

Turkish share prices fell -- eventually closing 14.62 percent down -- as fear spread that the country's commitment to an International Monetary Fund (IMF) financial reform programme may be damaged.

Ecevit held an emergency Cabinet meeting following the aborted talks of the powerful National Security Council.

He later interrupted the meeting to end growing speculation that the government might resign.

"The government is fully in charge," he said, while Treasury Undersecretary Selcuk Demiralp said markets would settle by Tuesday.

Ecevit gave no details of the dispute, but he and Sezer have frequently been at odds since the president was elected by parliament, with Ecevit's backing, last May.

Turkish markets are worried that instability could endanger the IMF financial reform programme, as the country struggles to recover from a financial crisis from the end of last year.

Turkish President Ahmet Necdet Sezer has been at odds with Ecevit since he was elected last May

"Nothing like this has been seen before... I left the meeting after finding the president preaching at me in a manner beyond the rules of politeness or the traditions of the state," Ecevit said.

"This is a serious crisis. We are going to have to reach a healthy solution to this, of course," added Ecevit, who heads a three-party coalition government.

"I was either going to answer him in the same style or leave. That is why I chose to leave the meeting."

The government has been angered by Sezer's recent move to have the transactions of state-owned banks over the last 10 years investigated.

Allegations of corruption within the banks scared off foreign investors and led to a financial crisis in November.

Turkey is just entering a crucial phase in a three-year IMF programme designed to cut inflation, which was as high as 100 percent in the 1990s.

The National Security Council brings together senior military leaders, including the powerful chief of general staff, and top government ministers.

It is chaired by the president, but the influence of the military is particularly strong.

Reuters contributed to this report.

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Turkish Prime Minister (in Turkish)
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