* Show of strength risks inflaming nationalist sentiment
* Ankara yet to announce reform package
* PKK calls for Kurdish 'rebellion' to pressure government
By Daren Butler
ISTANBUL, July 16 (Reuters) - A surge in Kurdish militant activity in southeast Turkey is fuelling fears that a peace process with Ankara could unravel, complicating the government's task of enacting reforms without inflaming nationalist sentiment.
Jailed Kurdistan Workers Party (PKK) leader Abdullah Ocalan and Ankara launched peace talks last October with the goal of ending a conflict which has killed 40,000 people in three decades and stunted the mainly Kurdish southeast's development.
But the process has faltered with Ankara complaining a Kurdistan Workers Party (PKK) withdrawal into northern Iraq is happening too slowly and the PKK renewing attacks in frustration at the lack of government action on minority reforms.
"If it continues like this, forget the process, Turkey may be swept into a more troubling spiral than in the past," said veteran columnist Taha Akyol from the mainstream Hurriyet daily.
Kurdish frustration is now finding expression in militant youths, their faces concealed by scarves, parading in southeast towns with PKK flags and carrying out roadside identity checks on drivers, according to images screened on Turkish television.
The PKK has also attacked military outposts in the region, breaking a ceasefire announced in March.
At the weekend, several thousand Kurds attended a ceremony in Diyarbakir province for dead militants at a newly inaugurated PKK cemetery decked with Kurdish flags and a portrait of Ocalan.
Such images add to the anger of Turks opposed to talks with a group designated a terrorist organisation by Ankara, the United States and European Union. A prosecutor is now investigating the cemetery, according to media reports.
The images also make it hard for the government to announce the "democratisation package" - reforms boosting minority rights - which it says it is working on, according to Abdulkadir Selvi of the pro-government Yeni Safak newspaper.
"At a time when PKK fighters with their faces concealed are blocking roads and conducting identity controls, when military elements are holding 'martyrs' cemetery ceremonies, which political power could present such a package to parliament?" Selvi said in a column.
Prime Minister Tayyip Erdogan, who has championed the detente with the PKK, is also facing the biggest test of his decade in power after weeks of violent anti-government protests.
PKK STRATEGY
The PKK's show of strength coincides with its naming of a veteran militant viewed as a hawk as co-head of its KCK umbrella political group, stoking speculation it will take a harder line.
Erdogan's chief adviser Yalcin Akdogan played down the personnel changes, saying they had been sought by Ocalan himself and were not expected to have a negative impact on the process.
But doubts about the prospects for peace have also been fostered by a PKK call last week for its guerrillas to assume an "active defence" position and for "rebellions" by the Kurdish people to exert pressure on the government.
"In this way they want to dynamite the peace process from within. They are not just doing this against Turkey, but against Ocalan," Selvi said.
Pro-Kurdish politicians are stepping up pressure on the government to push through reforms, including abolishing an anti-terrorism law under which thousands have been imprisoned for links to the PKK, granting full Kurdish-language education and lowering the threshold of votes need to enter parliament.
Peace and Democracy Party deputy Pervin Buldan called on Monday for parliament, now on summer recess, to reconvene after the current Muslim month of Ramadan to pass the reforms.
The PKK took up arms against the state in 1984 with the aim of carving out a Kurdish state, but subsequently moderated its goal to regional autonomy. Kurds represent around a fifth of Turkey's population of 76 million people. (Additional reporting by Gulsen Solaker in Ankara; Writing by Daren Butler; Editing by Nick Tattersall and Alistair Lyon)
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