ISTANBUL — PRIME MINISTER Turgut Ozal last week recalled his ambassador to Iran - a sign of how sensitive an issue Islamic fundamentalism now is here. Turkey's population is 96 percent Muslim. But the country has a strong secular tradition dating from reforms in the 1920s by Mustafa Kemal Ataturk, the founder of modern Turkey. Even such religious gestures as wearing the fez and face veil were banned.
However, local elections in March demonstrated the growing power of fundamentalists.
``The fundamentalist revival started because of the government's leniency, and now has exploded into support for a real religious party. Ozal has been trying to play both sides, but ... it's now got out of his control,'' says Emre Kongar, head of a public opinion polling agency.
The fundamentalists' Welfare Party captured a surprising 10 percent of the vote and the mayor's post in five major cities. Mr. Ozal's ruling Motherland Party won only 22 percent - down from 40 percent five years ago - and one major mayoral seat.
The two main non-fundamentalist opposition parties captured Turkey's three largest cities, and beat the Motherland Party in the overall voting.
Ozal blamed his party's showing on voter unhappiness over the nation's 75 percent inflation. But most political analysts say the vote reflects dissatisfaction with his concessions to religious groups.
Indeed, the flap with Iran arises from an election ploy aimed at the fundamentalist vote. Ozal passed a law allowing women university students to cover their hair with a scarf in accordance with Islamic dictates. Ozal's action was unnecessary, since scarves, though officially forbidden, were tolerated in practice.
President Kenan Evran vetoed the measure. The parliament, controlled by Ozal's Motherland Party, overrode the veto. Finally, Turkey's Supreme Court declared the law unconstitutional.
This overturning sparked protests in several cities. The government blamed the unrest on denunciations broadcast by Iran, where sympathy demonstrations took place.
While Iran may be trying to inflame fundamentalism in Turkey (no proof has been made public), its influence is exaggerated, political analysts say. Iranians are Shiites, while Turks are Sunnis, and the two Islamic sects are antagonistic. In addition, Iran simply does not have the money to build a strong base in Turkey.
On the other hand, largely Sunni Saudi Arabia has been quietly nourishing Turkey's fundamentalists for years. Analysts say the Saudis' keen interest in fostering a revival here stems from their desire to lead the Islamic world.
``The influence coming from Iran is rather marginal .... The Saudi influence is much more important ... on Islamic fundamentalism here,'' says Gencay Saylan, a writer on Islamic fundamentalism and politics.
In 1981, the Saudi Arabia-based Muslim World League received permission to pay the salaries of Turkish religious teachers sent to Europe, and to finance religious organizations and schools in Turkey, according to Ugur Mumcu, an investigative journalist. His reports on Saudi involvement in Turkey through the League led to withdrawal of this permission in 1987, though it continues to be tolerated unofficially.
Mr. Mumcu calls the Saudi influence ``dangerous'' because ``they have plenty of money and the chance to build off their links to Turkey through the prime minister and his brother.''
Korkut Ozal, a prosperous businessman and well-known fundamentalist, is a board member of al-Baraka Turkish Financial Corporation. The Saudi-backed venture's partners include the Motherland Party's Istanbul leader.
Al-Baraka and other Saudi-backed financial institutions are exempt by act of parliament from normal banking laws. Government officials say these privileges were granted to increase the flow of Arab capital into Turkey. And some analysts contend Islamic ideology is penetrating faster than petrodollars.
Turkey is not about to face an Islamic revolution, the analysts say. But Ozal's reliance on support from Islamic movements is backfiring; these groups no longer can be easily manipulated for political ends, as the local elections showed.