Ali Babacan said an upcoming meeting Monday between Prime Minister Recep Tayyip Erdogan and President Bush "will determine the steps that Turkey would take." But if Turkey sends its troops into Iraq, "any cross-border attack would be aimed at hitting terrorist bases and would not be an invasion," he said.
Still, he indicated growing frustration with the government of the semiautonomous Kurdish region of northern Iraq, accusing it of inaction against the rebels, who stage attacks on Turkey.
"We have doubts about the sincerity of the administration in northern Iraq in the struggle against the terrorist organization," Babacan said. "We want to see solid steps - we hope our point of contacts understand the seriousness of this job."
CBS News military analyst Col. Bob Stewart, a former NATO commander, says the difference between a military invasion and an incursion is more than simple semantics.
"Incursion means you withdraw. Invasion means you might withdraw," Stewart told CBSNews.com on Thursday.
He said an invasion force would enter a country intending to remain there for an extended period of time, whereas an incursion, or "lightning force" - which would require much less in the way of logistics and planning - would more often be used "to do a punishment, or a particular job."
Pentagon officials are now saying publicly that the U.S. is flying manned spy planes over the border area, providing Turkey with more intelligence information, and that there are standing orders for American forces to capture rebels they find.
CBS News national security correspondent David Martin reported last Friday thatto gather intelligence on Kurdish terrorists.
Babacan also said some economic measures aimed at rebels of the Kurdistan Workers' Party, or PKK, in northern Iraq have already been put in place, and Turkey is also considering stopping flights to the region.
"We are not going to announce them, but will implement them when needed," he said, elaborating only to say that flights to northern Iraq "might be" restricted as well.
"We have all kinds of options on the table against the PKK right now," Babacan said.
He said any economic measures put in place would be targeted specifically at the rebel fighters.
"We would not want to hurt either the Iraqi people or the people living in Turkey with these economic measures," Babacan said. "They are carefully evaluated and aimed at the economic resources of the terrorist organization and those who give support to it."
With tension over the border conflict rising, Babacan's message that any military maneuvers would not impact the greater Iraqi population may due little to assuage the fears of a people who see the last, tentatively tranquil region of their country under threat.
A Turkish incursion would also put the United States in the middle of a fight between key allies: NATO-member Turkey, the Baghdad government and the Iraqi Kurds of Iraq's semi-independent Kurdistan region.
In other developments:
A lawmaker from the Kurdish bloc in Iraq's parliament, Bayazed Hassan Abdullah, said Thursday that he worried economic sanctions by Turkey would end up hurting businesses in Iraq's northern Kurdistan region with no links to the rebels.
"It will not be good, and it'll be a loss for the Turkish government too," Abdullah told The Associated Press. "It will affect the Kurdish region because there are strong economic relations between Kurdistan and the Turkish government."
Other Iraqis said they believe Turkey has a right to use economic measures to crack down on what they consider aggression by the PKK, which has bases in the rugged border region between Turkey and Iraq.
"Turkey should impose severe sanctions," said Khamas al-Janabi, a doctor living in Baghdad.
"Kurdish parties... should either prevent (Kurdish rebel attacks) or force the PKK elements to leave the northern part of the country, otherwise Turkey has the right to launch attacks on PKK bases," al Janabi said.
So far, the Turkish military has limited its assaults against PKK fighters in Iraq to shelling and bombing just inside Iraq's side of the border zone.
Monday's talks between Erdogan and Bush could be key in averting a Turkish military incursion deep inside northern Iraq.
White House press secretary Dana Perino said Wednesday that Bush would use the meeting to emphasize that Washington expects the Iraqi government to act against the group, which is labeled a terrorist organization by both the European Union and the United States.
Iraqi Foreign Minister Hoshyar Zebari, a Kurd, has said Iraq will try to stop PKK cross-border attacks. He also pledged that his government would set up more checkpoints set up along its northern border to halt shipments of fuel, food and other supplies to Kurdish insurgents.