Turkey’s Prime Minister called for national unity last night after the high-stakes tussle between the secular Establishment and moderate Islamists over the choice of a new president triggered a plunge in financial markets.

“Unity, togetherness, solidarity — these are the things we need the most,” said Recep Tayyip Erdogan in a televised address.

The Turkish lira at one point fell more than four and a half per cent, while the stock market, in its first reaction since the military vowed late on Friday to act to protect secularism, plummeted by eight per cent at the opening. All markets later recovered slightly but were jumpy as the political crisis continued to unfold.

May Day rallies today are expected to become a focus of further protests after anti-Government demonstrations at the weekend. Mr Erdogan’s address contained many references to the foundation of Turkey as a secular republic and the Government’s commitment to its aims of taking Turkey to the “highest levels of civilisation”, in a riposte to opponents who claim that he harbours a secret desire to undermine the strict division between religion and the state.

“As long as we preserve tranquillity and stability Turkey will multiply its current fast pace of development,” he said. With the prospect of elections clearly in mind, he also listed his Government’s achievements, which include a doubling of annual average incomes and securing Turkey’s long-sought accession talks with the European Union.

The stakes have been rising steadily since Mr Erdogan’s ruling Justice and Development Party (AK) last week chose as its presidential nominee the internationally respected Foreign Minister, Abdullah Gul. Like many party members, he is a former Islamist now professing to be a conservative democrat.

While it has occasionally raised alarm bells on issues such as Koranic schools and criminalising adultery, AK, formed from the moderate wing of a now-banned Islamist party, has presided over a rare period of stability, reform and economic improvement.

All eyes are now on the Government to see if it capitulates to secularist calls for snap polls ahead of the scheduled date in November. The Constitutional Court could also force early elections if it agrees with an Opposition objection to the first round of presidential voting last Friday. The influential parliamentary Speaker, Bölent Arinc, promised that the disputed presidential election would not stop.

The Government issued an unusually robust dismissal of the military’s warning that it might intervene in the political process. Criticism of the military’s stance has been echoed by the EU and the United States, which are watching developments with alarm.

AK’s secularist opponents contend that it has been filling bureaucratic posts with allies, which, they say, is the first step to a steady Islamisation of the country.

As it became clear that AK was poised to follow precedent and select one of its own calls rose for early general elections, allowing the new parliament to choose the president.

Financial market players say elections could calm down the situation for now. The leading Turkish business body criticising the military’s stance, said that democracy was as important as secularism. “For the present situation not to hurt democracy, the immediate announcement of an early general election has become a necessity,” it said in a statement.

The prospect of a postelection return to the decades of ineffectual coalitions is also a worry for financial analysts, as is the question of what would happen if AK won an even bigger majority against a still discordant opposition and returned to elect the president of its choice.

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