Kurds Set Afire Istanbul Store; 11 Are Killed : Ethnic strife: Turkey’s toll in two days of violence grows to 30. Government policy of moderation called into question.

Eleven people died in a store blaze ignited by Kurdish militants here on Wednesday as part of a new escalation of ethnic violence in Turkey that has resulted in the deaths of at least 30 people since Tuesday.

The fighting comes at a critical juncture and the government’s new policy of moderation seems in danger of failing to reconcile Turks and Kurds.

Conservative Prime Minister Suleyman Demirel struggled to maintain his month-old government’s innovative approach to the problem. It has recognized Kurdish cultural rights but backed the fight against separatist rebels.

“We are trying to extinguish this fire. As long as all of us have not accepted the need to break the hands of those spilling blood, it is hard to find a solution,” he said.

But exiled sources in the rebel Kurdish Workers Party said they do not believe that Demirel is in direct charge of events, especially in the heavily militarized southeast.

“The state machinery is running the show,” a source said in a telephone interview from Germany. “The Middle East doesn’t work on hopes but on actions.”

A period of relative calm preceded Wednesday’s arson. Christmas is not a public holiday in Muslim Turkey, and the store in suburban Istanbul was crowded when about 50 Kurdish separatist militants attacked, shouting anti-Turkish slogans and throwing gasoline bombs.

Flames quickly spread up the seven-story building, which belongs to a prominent pro-government Kurd. His brother is the governor of the emergency region of southeast Turkey where half of the country’s 12 million Kurds live.

“The smoke was choking . . . and we couldn’t find the keys to the emergency doors,” one survivor told Turkish television. Ahmet Cetinkaya, son of the store owner, was among the 11 dead.

The firebomb attack was not immediately claimed by any faction, but Turkish television displayed some of 70 people arrested at the scene and placards signed by the youth wing of the rebel workers’ party. It has fought a guerrilla war in Turkey for seven years in which at least 3,300 people have been killed. With support from Syria and bases in Lebanon, Iraq and Iran, it seeks a united, independent state for the 20 million to 25 million Kurds of the Middle East.

The Marxist-Stalinist party has uneasy relations with other more conservative Kurdish groups, especially in Iraq. But in recent months, its power has grown rapidly in the rugged mountains of the southeast.

Party leader Abdullah Ocalan has repeatedly threatened to take his struggle to prosperous Western cities like Istanbul if, as has happened, mediation attempts failed to produce a cease-fire or talks on some federal solution.

Turkish troops clashed with crowds at the funerals of party guerrillas in the hard-bitten southeastern Kurdish towns of Kulp and Lice on Tuesday. According to Turkish newspaper reports, three soldiers and eight civilians died. A party statement said 18 people had been killed.

In what the party said was a revenge attack, shortly after nightfall guerrillas surrounded a gray stone army barracks at Dereler on a barren mountainside in Sirnak province. Turkish state radio said nine soldiers, including two officers, were killed. Another officer was missing, possibly captured.