The prospect of a series of by-elections has fuelled speculation that Prime Minister Tansu Ciller will call a general election. The prime minister has denied the rumours, but officials from Ciller's True Path Party (DYP) say they have been told to prepare for an election campaign.

According to the constitution, by-elections have to be contested if the number of vacant seats in parliament exceeds 5 per cent. If the house accepts the resignation of Naci Sabuncu, a DYP back-bencher, that limit will be surpassed.

DYP officials fear that the Islamist Welfare Party (RP) could build on their local election successes in March if by-elections are held. Rather than allow the RP to add to its present 40 seats, Ciller might prefer to use a general election to forge new alliances and re-build her troubled coalition government, political analysts say.

The DYP has been drawing closer to the right-wing Nationalist Action Party (MHP) in recent weeks. This may signify that Ciller is preparing to end the DYP's coalition with the weak and divided Social Democratic Populist Party (SHP), for an election alliance with the MHP, analysts add.

There are mixed feelings in banking, business and industry about the prospect of an early election. While an election might free Ciller from the dead weight of the SHP, whose members have obstructed privatisation legislation, there are fears that a long election campaign might undermine business confidence and erode the achievements of the government's recovery programme.