There are 3 possible ways of dealing with the situation: 1) Give in to Erdogan's demands and back off (this will further embolden Erdogan and increase support for him in Turkey and in Islamic world) 2) Sanctions on Turkey similar to sanctions on Iran and North Korea but also with complete travel ban, naval blockade and everything to collapse Turkey within months or a year or two (Europeans must prepare border security to prevent refugee flow after) 3) War or simply arrest or assassinate Erdogan. Turkey most likely won't retaliate, but if she does, retaliate back even harder.

There's no dealing with Erdogan and Turkey diplomatically just like there wasn't with Hitler.