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The Swedish Academy said that Pamuk "in the quest for the melancholic soul of his native city has discovered new symbols for the clash and interlacing of cultures."
Born into a wealthy family in Istanbul on June 7, 1952, Pamuk has never been far from controversy inside Turkey where he has critics both from the religious conservative camp and the secular establishment.
Last December a controversial trial against Pamuk for 'insulting Turkishness' was dropped by the Turkish Justice Ministry following international criticism.
The writer had talked about the massacre of Armenians in Turkey during World War I, which Turkey denies, and had spoken of 'one million murdered Armenians.' If convicted he faced three years in prison.
The 220-year-old Swedish Academy, which has handed out literature's top prize since 1901, had five candidates on its short list, drawn from hundreds of nominations sent by invitation only.
Of the five finalists, only the winner will be revealed; the other four names are kept secret for 50 years.
Critics say Nobel literature laureates have been getting edgier and more controversial, and the academy's choice often bring its share of criticism.
In 2004, Austrian Elfriede Jelinek won for what the academy described as her talent for revealing "the absurdity of society's cliches and their subjugating power."
Her detractors said her work, known for its frank descriptions of sexuality, pathos and conflict between men and women, was distasteful and unworthy of such a prestigious award.
"I think the prize has become more interesting than it was 10, 15 years ago. It is more surprising, and they also dare to give it to authors who could be controversial," said Pelle Andersson, a literature critic for Sweden's biggest daily, Aftonbladet. The Associated Press