ANKARA, Turkey - After a decade of dominance over Turkey's political scene, Prime Minister Recep Tayyip Erdogan appears to have been thrown off balance by a rapidly expanding corruption scandal that has brought down members of his cabinet and strained ties to the U.S.
Forced to fire three of his ministers -- one of whom immediately implicated the prime minister in the scandal -- and struggling to contain the scope of the investigation, Erdogan seems unlikely to come out of the crisis unscathed.
But many observers say it's too early to write off the savvy politician who has weathered a series of crises since his Islamic-based party came to power in 2002.
"If the allegations are true, this would without doubt be the deepest crisis the government has faced," said Murat Yetkin, editor in chief and political commentator for the Hurriyet Daily News newspaper.
In comments published Thursday, Erdogan said he believes he is the ultimate target of the probe but declared that those trying to enmesh him in the scandal will be left "empty-handed."
Erdogan, 59, was long hailed as a transformational leader who came to power on a promise to crack down on corruption and carried out spectacular economic and political reforms. He turned Turkey into a relatively stable and prosperous country, curtailing the powers of the military and raising the nation's international profile.
More recently, though, critics say he has cut a more authoritarian and erratic figure, often reverting to conspiracy theories to deal with crises. Those tactics have damaged his image as an international statesman.
He has blamed the scandal on a rival Islamic movement led by Fethullah Gulen -- a cleric who is living in self-imposed exile in the U.S. and whose followers are widely believed to have a strong foothold in Turkey's police and judiciary. Gulen has denied any involvement.
Erdogan has also suggested the United States is behind the investigation, prompting American officials to warn the government not to endanger ties between the close NATO allies with unfounded allegations.
The scandal erupted on Dec. 17, when police launched a probe targeted at Erdogan's allies, focusing on alleged illicit money transfers to Iran and bribery for construction projects. Dozens were detained in police raids, including the sons of three key government ministers. Two of the sons were later arrested on bribery charges.
Erdogan resisted calls for the dismissal of the three ministers for a week but finally gave in on Wednesday, forcing them to step down and then distancing himself from them.
The move backfired when one of them, Environment and Urban Planning Minister Erdogan Bayraktar, refused to go quietly and mounted an unprecedented attack on Erdogan, calling on him to step down too. Bayraktar said construction projects under investigation were launched at the prime minister's instructions.
The crisis has upset the markets, and the Turkish lira plummeted to a record low on Thursday against the dollar.
"It is a pity that a leader who in his first two terms as prime minister served the country so well has since the last general election turned increasingly arbitrary and authoritarian," said Professor Sahin Alpay of Istanbul's Bahcesehir University. Erdogan "more and more is looking like a train without brakes, like a loose cannon."
The scandal could damage Erdogan's government in local elections in March, when he could lose some key cities. But Turkey's opposition parties appear weak and without a viable alternative, and his party could still win national elections in 2015.
Only three legislators have quit Erdogan's close-knit party in the past weeks.
Some observers said Erdogan is a resourceful politician who has come out of tricky situations before and will do it again.
"There is no doubt that he has suffered a blow," said Yetkin, the newspaper editor. "But is this a deadly blow? It doesn't look as though it is. A party which has received 50 percent of the vote cannot be brought down with just one blow."
In 2008, Erdogan survived an attempt by prosecutors to have his party disbanded for alleged anti-secular activities, and in 2007, he thwarted a military effort to block his ally Abdullah Gul from being elected president.
His government also weathered a wave of nationwide anti-government protests during the summer that were sparked by a police crackdown on a peaceful environmental sit-in to prevent the destruction of an Istanbul park.
"We have come out of all crises we have faced stronger and more successful," said Zafer Caglayan, the outgoing economy minister.
Erdogan has engaged in political maneuvering to prevent new arrests or probes in the corruption case - moves that have outraged opposition parties and critics.
Dozens of police officials believed involved in the probe have been replaced, a step a judicial watchdog has called unconstitutional. Erdogan has also amended police regulations to force investigators to seek permission from superiors for inquiries and arrests.
On Thursday, a prosecutor complained that he was being prevented by judicial officials from widening the corruption investigation and that police were not carrying out orders. But Istanbul's chief prosecutor denied that and said the prosecutor had been removed from the investigation for not proceeding according to law.