My only disagreement with you statement is that it is Erdogan and his supporters who are living in a fantasy world, not all of Turkey. There is likely no shortage of military, political, legal, academic, and economic people who can see the train wreck coming. However, in the current climate those folks who are not in prison, are desperately trying to keep a low profile.
Erdogan is backing himself and others, Kurds especially, into a corner. They will soon realize that the time for talking may be ending and that they will have little choice but to fight. You could see a local or general Turkish civil war, or worse, a general Mideast war to sort out all the tensions that have built up there since the Ottoman collapse a century ago.
I agree with you, I used “Turkey” in a sloppy way. AKP is the demise of Turkey.