ANKARA (Reuters) - Turkey kept up pressure on its one-time ally Syria Tuesday, warning President Bashar al-Assad his government was on a "knife-edge" and saying it may review its supplies of electricity to Damascus if it does not change course.
In a possible signal Turkey was readying economic sanctions against Damascus, the country's Economy Ministry also said it had established a Syria desk to monitor developments and to assist Turkish businesses doing trade in Syria.
"Nobody now expects the (Syrian) people's demands to be met. We all want the Syrian administration, which is now on a knife-edge, to turn back from the edge of the cliff," Prime Minister Tayyip Erdogan told a party meeting.
He also demanded an immediate apology following attacks on Turkey's diplomatic missions in Syria.
Non-Arab Turkey, after long courting Assad, has lost patience with its neighbor's failure to end an eight-month crackdown on protests against the president and implement promised democratic reforms.
"Right now we are supplying electricity there (Syria). If this course continues, we may have to review all of these decisions," Energy Minister Taner Yildiz told reporters.
Syria produces more electricity than it consumes and it has links with other countries such as Jordan and Lebanon so the impact of Turkey pulling the plug would probably be limited.
However, ending a supply route that began in 2006 would send a strong symbolic message about its disapproval and willingness to impose further sanctions.
Turkey is Syria's largest trading partner with bilateral trade worth $2.5 billion in 2010, and investments by Turkish firms in Syria reaching $260 million, Turkish data shows.
But Turkey now hosts and meets with the main Syrian opposition and has given refuge to defecting Syrian soldiers. It has also thrown its full support behind an Arab League decision to suspend Syria.
Underlining how much ties between the two powers have deteriorated, protesters armed with sticks and stones attacked Turkish diplomatic missions in Syria over the weekend, burning the Turkish red and white flag.
"I once again strongly condemn the attacks on Turkish officials and on the Turkish flag. We expect the Syrian administration to undertake immediately all the necessary steps to apologize and take responsibility," Erdogan said.
"Bashar, you are required to punish those who attacked the Turkish flag. We want the Syrian administration to not only respect the Turks in Turkey and the Turkish flag but also to respect their own people, we especially want this."
Syrian Foreign Minister Walid al-Moualem apologized on Monday for the attacks, which also included raids on Saudi and French missions. But Erdogan said Turkey expected a further expression of apology although he did not elaborate.
Turkish President Abdullah Gul warned of repercussions if attacks on its missions were allowed to happen again.
"It is not possible to accept these attacks on our citizens ... and diplomatic missions in Syria, we have already condemned these," Gul said at a news conference in Ankara alongside the Hungarian president.
"If they do not take the necessary measures and this happens again, our reaction will be different. Unfortunately, Syria today has entered a dead-end road. The Arab League decision is clear and we have also supported it."
Turkey's Foreign Minister Ahmet Davutoglu was expected to meet Arab foreign ministers in Rabat Wednesday.
But despite tough talk, Turkey has moved cautiously compared to its European Union and U.S. allies, which have been swift to approve sanctions against Damascus, as Ankara weighs the domestic and regional challenges involved.
For weeks, Turkey has said it is preparing sanctions that will target the Syrian government and not the people. But there have been few details on those sanctions or when they will be imposed.
Tuesday, the Economy Ministry said it was setting up a "Syria monitoring desk" and that Economy Minister Zafer Caglayan would meet Turkish firms Thursday to discuss any difficulties faced trading in Syria and to establish a "roadmap on what will be done."
Turkey has already imposed a weapons embargo on Syria and plans to jointly form a Turkish-Syrian bank have also been shelved, along with plans to increase ties between the two countries' central banks, according to Turkish media.
(Additional reporting by Orhan Coskun and Tulay Karadeniz; Editing by Alison Williams)