By Daren Butler
ISTANBUL (Reuters) - A Kurdish militant group said on Monday it was keeping its side of the bargain in a peace process with Turkey to end a 29-year-old insurgency, rejecting Prime Minister Tayyip Erdogan's accusation it had failed to withdraw most of its fighters.
In the latest salvo in a war of words highlighting distrust between the two sides, the Kurdistan Workers Party (PKK) said Ankara had failed to take steps beyond halting military action to end a conflict which has killed more than 40,000 people.
PKK leader Abdullah Ocalan, jailed on an island near Istanbul, declared a ceasefire in March after months of talks with the Turkish state and his militants began moving to Iraq in May under a deal envisaging boosted Kurdish rights.
Erdogan was quoted as saying last week that the PKK had not kept a promise to withdraw from Turkey, with only 20 percent of PKK rebels leaving, mostly women and children.
"Our forces have followed the withdrawal decision to the letter and the implementation process is continuing," the PKK said in a statement, without specifying how many fighters had left. It added it would continue to do what was required.
The ceasefire has largely held but PKK commanders have warned of new clashes if Turkey does not take concrete steps to advance the process by September.
In addition to more Kurdish-language education, the Kurds, who dominate Turkey's southeast and account for about a fifth of the population, want anti-terrorism laws softened, the electoral threshold to enter parliament lowered from 10 percent, and more powers for local governments.
"The Turkish state and the AKP government have taken no step other than to halt annihilation operations and has not made any changes in practices regarding the Leader Apo (Ocalan), who is the architect of this process," the PKK said.
To keep the process on track, the government is expected to begin debating a package of reforms this week aimed at bolstering Kurdish rights and boosting democracy.
A senior justice ministry official told Reuters last week the cabinet would discuss the "democratization package" - ranging from wider Kurdish-language education to changes to anti-terror laws - at its weekly meeting on Monday.
Erdogan, under pressure from nationalists for offering concessions to militants, said last week the measures would not "disturb the Turkish public". He ruled out any general amnesty for PKK fighters, according to Turkish newspaper reports.
Turkey, the United States and European Union all call the PKK a terrorist organization. It took up arms to carve out an independent homeland in the southeast but later scaled back its demands to greater cultural rights and autonomy.
(Editing by Nick Tattersall and Elizabeth Piper)