Sept. 22 (Bloomberg) -- Any business leader would shudder at a $2.5 billion tax fine. When penalties reach those levels, it’s a safe bet that more is going on than just tax delinquency.

This was true in Russia in 2003, when President Vladimir Putin went after Mikhail Khodorkovsky’s oil company, OAO Yukos, for $3.4 billion in unpaid taxes. Now a similar case, with a $2.5 billion tax bill attached, has erupted in Turkey against a powerful media group that owns more than half of the country’s newspapers and two major TV stations.

The stakes in this fight are huge, and not just for Aydin Dogan, the group’s 73-year-old owner. The whopping penalty looks, and feels, like an assault on the freedom of the press. It is already said to be having a chilling effect among other newspaper publishers and journalists, and it has drawn international criticism at a crucial moment in Turkey’s effort to join the European Union.

Its origins appear to be both personal and political, and can be traced to a long-running feud between Dogan and Prime Minister Recep Tayyip Erdogan, whose party, in power since 2002, has pushed through significant democratic change in Turkey.

As part of its pitch to Europe, Turkey needs to sell itself as a fully functioning democracy, with a free and independent press. It can’t afford to fall into the Russian pattern, set by Putin months after he took office in 2000, with an attack against the independent Media-Most group, ostensibly for non- payment of past debts.

Back to Europe

The Turkish government’s attack against the Dogan Yayin Holding AS media company comes at a bad time. After having been distracted from needed changes by a dramatic domestic political battle, Turkey has been showing tentative signs of getting back on the Europe-bound track.

It has undertaken important diplomatic initiatives in its own neighborhood, with overtures to Armenia and to Iraq, notably with the opening of a consulate in Kurdistan, once considered enemy territory. It has even sent signals suggesting it wants to help solve the stalemate over Cyprus, a major roadblock in the Turkey-EU relationship.

Of course, Turkey alone wasn’t to blame for the deadlock with the EU. Opposition to its membership, notably in France and Germany, have fed what a group of senior European leaders, in a report issued this month, called a “vicious circle.” They recommended “deeper convergence” between the EU and Turkey, partly as a way to encourage Turkish democracy.

Attacking newspaper owners and intimidating journalists isn’t the way to go.

Murdoch of Turkey

Many observers hesitate to take sides in the nasty dispute between Erdogan and Dogan, often called the Rupert Murdoch of Turkey. “It is a domestic quarrel between two very powerful people, with a lot of interests at stake,” said Hugh Pope, who represents the International Crisis Group in Istanbul.

The Turkish Finance Ministry insists that the $2.5 billion fine against the Dogan Yayin media group was the result of an ordinary everyday tax audit.

But Erdogan, a practicing Muslim, has made no secret of his bitter feelings about the Dogan group, a pillar of Turkey’s secular establishment that has challenged the government with investigations of sensitive political cases. The prime minister told supporters at a campaign rally last February not to buy “newspapers that print lies,” and warned Dogan that he could no longer throw his weight around as he had with other prime ministers. “This prime minister is different,” Erdogan shouted.

Vindictive Behavior

Since then, the government has stepped up its attacks. In February, it sent a bill to the Dogan group for $592 million in back taxes and fines, stemming from the sale of a 25 percent stake in its television unit to Germany’s Axel Springer AG. In April, it banned Dogan companies from bidding on government contracts. Last week, it came up with a new tax claim.

This kind of vindictive behavior fits with Erdogan’s rough political style, honed by fights with Turkey’s secular elite and its powerful military. It’s not the first time he has gone too far: In 2004, he alarmed Turkey’s supporters in Europe by trying to pass a law that would criminalize adultery. He dropped the idea, after being hit by a wave of criticism at home and abroad.

Those kinds of reprimands will need to come pouring in from Europe’s capitals again to make the Turkish government understand the risks of following Russia’s example.

(Celestine Bohlen is a Bloomberg News columnist. The opinions expressed are her own)

To contact the writer of this column: Celestine Bohlen in Paris at cbohlen1@bloomberg.net

Last Updated: September 21, 2009 18:01 EDT