By Ece Toksabay and Nick Tattersall
ANKARA/ISTANBUL, Turkey (Reuters) - President Tayyip Erdogan accused the West of supporting terrorism and standing by coups on Tuesday, questioning Turkey's relationship with the United States and saying the "script" for an abortive putsch last month was "written abroad".
In a combative speech at his palace in Ankara, Erdogan said charter schools in the United States were the main source of income for the network of U.S.-based cleric Fethullah Gulen, who he says masterminded the bloody July 15 putsch.
"I'm calling on the United States: what kind of strategic partners are we, that you can still host someone whose extradition I have asked for?" Erdogan said in a speech to local representatives of multinational firms operating in Turkey.
"This coup attempt has actors inside Turkey, but its script was written outside. Unfortunately the West is supporting terrorism and stands by coup plotters," he said in comments which were met with applause, and broadcast live.
The 75-year-old Gulen, who has lived in self-imposed exile in Pennsylvania since 1999, denies any involvement in the failed coup. President Barack Obama has said Washington will only extradite him if Turkey provides evidence of wrongdoing.
The fallout from the abortive coup, in which more than 230 people were killed as mutinous soldiers commandeered fighter jets, helicopters and tanks in a bid to seize power, has deepened a rift between Ankara and its Western allies.
Erdogan and many Turks have been frustrated by U.S. and European criticism of a crackdown in the wake of the putsch, accusing the West of greater concern about the rights of the plotters than the gravity of the threat to a NATO member state.
More than 60,000 people in the military, judiciary, civil service and education have been detained, suspended or placed under investigation since the coup, prompting fears that Erdogan is pursuing an indiscriminate crackdown on all forms of dissent and using the situation to tighten his grip on power.
"If we have mercy on those who carried out this coup attempt, we will be the ones to be pitied," he said.
The leader of the main secularist opposition CHP, which has condemned the coup and been supportive of the government's reaction so far, said a state of emergency declared in its aftermath now risked being used to make sweeping changes to the security forces without appropriate parliamentary support.
"There is no doubt that the law on emergency rule was issued in line with the constitution. But there is concern that its application is being used to exceed the goal," Kemal Kilicdaroglu told a meeting of the CHP.
"It may be necessary to restructure the state, undoubtedly, but this subject must go before parliament."
AN ARMY "LIKE SADDAM'S"
Erdogan has issued two decrees dismissing around 3,000 members of NATO's second-biggest armed forces since the coup, including more than 40 percent of generals. He has also shut down military high schools and brought force commanders under tighter government control.
The nationalist opposition, which like the CHP has so far largely backed the government's response to the coup and has vowed to support any move to reintroduce the death penalty for plotters, also criticised the military overhaul.
Its leader Devlet Bahceli said the changes risked turning Turkey's army into a force like that of former Iraqi strongman Saddam Hussein or former Libyan leader Muammar Gaddafi.
"If the traditions and principles of the Turkish Armed Forces are trampled upon in an effort to fix its structural problems, it will resemble Saddam's or Gaddafi's army," Bahceli told members of his MHP, describing the changes as rushed.
He criticised a move to have force commanders report directly to the defence minister, saying it would "ruin the chain of command".
In his palace speech, Erdogan said the military overhaul was necessary to prevent Gulenists attempting another coup.
"If we didn't take this step, the members of this Gulenist organisation (FETO) would take over the military, and they would point the planes and tanks bought with the taxes of our people against them," he said. "There is no turning back."
Erdogan told the representatives of global firms listening to his speech that he understood the sensitivities of the business community, vowing reforms to make foreign investment more attractive and saying the economic outlook was improving again after a fluctuation following the coup.
Customs and Trade Minister Bulent Tufenkci was earlier quoted earlier as saying the cost of the coup attempt was at least 300 billion lira ($100 billion).
"Orders from overseas have been cancelled. People couldn't come because the coup plotters made Turkey look like a third-world country," the Hurriyet daily quoted him as saying.
WARRANTS FOR ARMY MEDICS
The coup and the resulting purges have raised concern about Turkey's reliability as a NATO ally and its ability to protect itself against the threat from Islamic State militants in neighbouring Syria and Kurdish militants in its southeast. Both have carried out suicide bombings in Turkey over the past year.
"It is essential for national security that the Turkish Armed Forces are restructured to face new threats and to expend all of their energy on their fundamental activities," Prime Minister Binali Yildirim told a meeting of the ruling AK Party.
Yildirim said civilian authorities had taken over factories and shipyards that had been under the control of the military as part of the ongoing restructuring.
Warrants to detain 98 doctors at the prestigious GATA military hospital in Ankara were also issued on Tuesday, an official said, over their alleged role in enabling Gulen's "Hizmet" network to infiltrate the higher ranks.
"GATA is crucial because this is where fitness and health reports are issued. There is strong evidence suggesting (Hizmet) members infiltrated this institution to slow down the career progress of their rivals within the military and fast track their supporters," the official said.
Erdogan also pledged to strengthen Turkey's intelligence agencies and flush out the influence of Gulen, whose grip on the security apparatus he blamed for the lack of intelligence in the run-up to the coup. The MIT intelligence agency has already suspended 100 staff and Erdogan has suggested bringing it under the control of the presidency.
Erdogan accuses Gulen of harnessing his extensive network of schools, charities and businesses, built up in Turkey and abroad over decades, to create a "parallel state" that aimed to take over the country.
Pakistan promised Turkey's visiting foreign minister on Tuesday it would investigate schools Ankara wants shut for alleged links to Gulen but stopped short of agreeing to close them. Turkey has had similarly non-committal responses from countries including Germany, Indonesia and Kenya to its requests in recent weeks.
($1 = 2.9827 liras)