ISTANBUL (Reuters) – Turkey’s lira slid to a two-month low against the dollar yesterday amid concern that efforts to repair relations with Washington may lead to a split in the ruling party over plans to send Turkish troops to Iraq. Fears that the government may clash with Turkey’s powerful military over the latest set of EU-inspired draft reforms added to the political uncertainty, which also sparked drops in the main stock index and local debt. Turkey’s lira closed at 1,439,000 to the dollar from Monday’s 1,416,000 despite news that Parliament had wrapped up key IMF-backed laws reforming Turkey’s social security system. «The reservations of the chiefs of staff to the seventh EU reform package and statements on the Iraq issue are sparking concern,» said Serdar Ceylan at Gedik Investment in Istanbul. The stock index closed down 1.13 percent at 10,478.27 points, led by a 1.41 percent fall in the market-heavy banking sector. The busy August 18, 2004 debt weakened to yields of 48.44 percent from a previous 47.6. The ruling Justice and Development Party hopes shortly to pass a package of political reforms designed to secure for Turkey’s membership talks with the European Union. But laws diluting the power of the military in politics are causing disquiet among Turkish generals, who have moved to topple four governments in as many decades. Parliament is due to consider the package today. Investors are also watching for government moves to raise extra revenues under the budget, measures the International Monetary Fund has said are needed before it can meet to consider releasing a $500 million loan under Turkey’s $16 billion pact, delayed since early June.