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To cheering crowds greeting his return at the airport, Turkish Prime Minister Recep Tayyip Erdogan in general kept to his tough line in a closely watched speech early Friday, June 7, accusing protesters across the country of violating laws and damaging state property, and calling for an end to the demonstrations that have left three dead, thousands injured and over 900 jailed.

In the first extensive public show of support for the PM and his Justice and Law Party (AKP) since protests over the development of a small park near Istanbul's Taksim Square on May 31 snowballed into anti-government demonstrations across the country, thousands of supporters turned out to greet Erdogan from his return from a state trip.

Before he left to Morocco on June 3, Erdogan, who has won three successive elections with landslide victories, dismissed the protests as the work of a few bad apples unable to defeat him at the ballot box, despite widespread evidence to the contrary. The PM kept to that line June 7, saying he wouldn't allow "the dominance of the majority over a minority, and we would not accept the dominance of a minority over the majority either."

In remarks that are also sure to cause the protests to continue and risk further divisions in the country, he defended the construction plans for Taksim Square plans, saying they'll include rebuilding a "magnificent" Ottoman barracks, as well as a new opera house and theatre.

As to the charges that the police have acted heavy handedly and resorted too easily to violence, images that have shocked the world, he rejected calls by the protesters and opposition parties for tear gas to be banned, saying it's used all over the world.

According to newswires, Erdogan's speech, delivered from atop an open-air bus outside the airport terminal, appeared at first to make some mollifying noises about the protests, using words like "brotherhood". "They say I am the prime minister of only 50%. It's not true. We have served the whole of the 76m from the east to the west," he said, referring to his election win in 2011, when he took 50% of the vote. "Together we are Turkey. Together we are brothers... We have never endeavoured to break hearts. We are in favour of mending hearts."

However, in keeping with his prickly nature and authoritarian instincts that have done much to bring so many protestors onto the streets, he then launched into a denunciation of the usual suspects: "Those who call themselves journalists, artists, politicians, have, in a very irresponsible way, opened the way for hatred, discrimination and provocation."

Turkey has seen impressive economic growth, averaging over 5% a year, since his Islamist-rooted AKP took office in late 2002, as well as a raft of reforms that have reversed the power of the coup-prone military. Alongside this, though, have been signs of his authoritarianism and religious intolerance, such as a recent a new law pushed through with little debate restricting alcohol sales, which worries the secular elite. "More journalists are in jail in Turkey than in China. Mr Erdogan has locked up whole staff-colleges of generals. Within his own party, people are afraid to stand up to him. His self-belief long ago swelled into rank intolerance. His social conservatism has warped into social engineering," writes The Economist.

These tensions are the root cause of the protests that now endanger the remarkable progress Turkey has made over the past decade, which has left it as one of the few engines of growth for Europe and a darling for investors.

On Thursday, June 6, hints before Erdogan boarded the plane home that he would continue his tough line caused further turmoil in the Turkish markets. The previously booming stock market, which is up over 20% in the past year, slumped another 4.7% to its lowest since December. The index has lost 13% this week so far, and it tumbled 10% alone on Monday, June 3, the first day of trading after the riots exploded on May 31. Year-to-date it's now down 5%. Bond prices, boosted by recent rating upgrades to investment grade, have also dropped, while the local currency has tumbled to its lowest against the dollar since 2011 - and according to Bloomberg, a few more bad days would take it down to its weakest against the US dollar since at least 1981, when the newswire's records begin.

Of course, some point out that a correction was probably overdue after the recent run-up in Turkish assets. However, the fear is that the sell-off will continue unabated and with Turkey relying on foreign cash to finance its huge current account deficit, further falls could imperil the economy unless some accommodation can be reached between the two sides. "Obviously very disappointing from Erdogan, I am afraid elements of the administration are appearing a little bit out of touch at the moment. We continue to advise investors to reduce positions," says Tim Ash of Standard Bank.