By Ece Toksabay, Samia Nakhoul and Nick Tattersall

ANKARA (Reuters) - Turkish President Tayyip Erdogan pledged to overhaul the army in response to last week's failed coup, a sign that a newly imposed state of emergency would be used to press on with a purge that has alarmed the West.

In a sign of Turkey's dismissal of outside criticism over how it has responded to the coup, the justice minister said Turkey would not bow to pressure from the European Union to rule out restoring the death penalty to execute the plotters.

Western countries backed Turkey's government during last week's failed putsch, but are increasingly worried about Turkey's subsequent crackdown against thousands of members of the security forces, judiciary, civil service and academia.

On Wednesday Erdogan announced a state of emergency, a move he said would allow the government to take swift action against those who plotted the coup that killed more than 246 people and wounded more than 2,100 before it collapsed within hours.

The possibility of Turkey bringing back capital punishment for the plotters has put further strain on Ankara's relationship with the EU, which Turkey seeks to join but which demands candidates forego the death penalty.

Turkey outlawed capital punishment in 2004 as part of its bid to join the bloc and European officials have said backtracking on that would effectively put an end to the EU accession process. But crowds at rallies have demanded the coup plotters be executed, and the government says it must at least consider it.

"People demand the death penalty and that demand will surely be assessed. We have to assess that demand from the standpoint of law, and not according to what the EU says," Justice Minister Bekir Bozdag told broadcaster CNN Turk.

Western governments worry about instability and human rights in the country of 80 million, which plays an important part in the U.S.-led fight against Islamic State and in the European Union's efforts to stem the flow of refugees from Syria.

Erdogan accuses Fethullah Gulen, a charismatic U.S.-based cleric, of masterminding the plot against him. In a crackdown on Gulen's suspected followers, more than 60,000 soldiers, police, judges, civil servants and teachers have been suspended, detained or placed under investigation.

In an interview with Reuters late on Thursday, Erdogan compared the Gulen movement to a cancer and said he would restructure the military to give it "fresh blood".

Gulen, who has lived in self-imposed exile in the United States for years, has denied any role in the attempted putsch, and accused Erdogan of orchestrating it himself.

Turkey wants the United States to extradite him, but U.S. President Barack Obama repeated Washington's stance on Friday when he said that Ankara must first provide clear evidence of his involvement.

"America's governed by rules of law, and those are not ones that the president of the United States or anybody else can just set aside for the sake of expediency," Obama said.

He also said the United States supported Erdogan's democratically elected government and that any reports that Washington had prior knowledge of the attempted coup, or that there was any U.S. involvement, were completely false.


Erdogan told Reuters the government's Supreme Military Council, which is chaired by the prime minister and includes the defense minister and the chief of staff, would oversee the restructuring of the armed forces.

"They are all working together as to what might be done, and ... within a very short amount of time a new structure will be emerging. With this new structure, I believe the armed forces will get fresh blood," Erdogan said.

Speaking at his palace in Ankara, which was targeted during the coup attempt, he said a new putsch was possible but would not be easy because authorities were now more vigilant.

"It is very clear that there were significant gaps and deficiencies in our intelligence, there is no point trying to hide it or deny it," Erdogan said.

Erdogan also said there was no obstacle to extending the state of emergency beyond the initial three months - a comment likely to spark concern among critics already fearful about the pace of his crackdown. Emergency rule permits the president and cabinet to bypass parliament in enacting new laws and to limit or suspend rights and freedoms as they deem necessary.

Addressing parliament late on Friday - his first address to the assembly since the coup attempt - Erdogan said that authorities would maintain fiscal discipline. "I call on investors to continue investing as the public will move forward with major projects," he added to loud applause from lawmakers.

Germany called for the state of emergency to end as quickly as possible. An international lawyers' group warned Turkey against using it to subvert the rule of law and human rights, pointing to allegations of torture and ill-treatment of people held in the mass roundup.

EU foreign policy chief Federica Mogherini said the reaction to the coup must not undermine fundamental rights.

"What we're seeing especially in the fields of universities, media, the judiciary, is unacceptable," she said of detentions and dismissals of judges, academics and others.


For some Turks, the state of emergency raised fears of a return to the days of martial law after a 1980 military coup, or the height of a Kurdish insurgency in the 1990s when much of the largely Kurdish southeast was under a state of emergency.

"There is a lot to worry about. A state of emergency was implemented for many years in this country, and if we face that again, those worries will grow," said Senel Karatas, chair of the Istanbul branch of a rights group, Human Rights Foundation.

Opposition parties which stood with the authorities against the coup have expressed concern that the state of emergency could concentrate too much power in the hands of Erdogan, whose rivals have long accused him of suppressing free speech.

Western observers and rights groups are particularly worried about pressure on the media. On Thursday authorities detained rights activist and lawyer Orhan Kemal Cengiz at Ataturk airport, preventing him from attending a conference in London, his wife, Sibel Hurtas, told Reuters.

Hurtas said the incident may have been related to his previous legal defense work and journalism for a pro-Gulen newspaper.

Swedish radio reported on Friday that Turkey is asking its nationals living abroad to report people and organizations that support Gulen.

Erdogan, an Islamist, has led Turkey as prime minister or president since 2003.

"We will continue the fight ... wherever they might be. These people have infiltrated the state organization in this country and they rebelled against the state," he told Reuters, in reference to the Gulen network.

Around a third of Turkey's roughly 360 serving generals have been detained since the coup attempt, a senior official said, with 99 charged pending trial and 14 more being held.

The Defence Ministry is investigating all military judges and prosecutors, and has suspended 262 of them, broadcaster NTV reported, while 900 police officers in the capital, Ankara, were also suspended on Wednesday. The purge also extended to civil servants in the environment and sports ministries.

The state of emergency went into effect after parliament formally approved the measure on Thursday.

(Additional reporting by Orhan Coskun in Ankara; Humeyra Pamuk, Seda Sezer and Gareth Jones in Istanbul; Daniel Dickson and Violette Goarant in Stockholm; Writing by David Dolan; Editing by Peter Graff and Pravin Char)