1) What is Erdogan up to? With his attacks on the Kurds and ISIS both, he is inviting blowback in the form of terrorist reprisals from ISIS and the PKK inside his own country, as happened at Suruc.
Is the sentence correct?
What does 'as happened' really mean here?
That he 'invited blowback in the form of terrorist reprisals' at Suruc?
That there was 'blowback in the form of terrorist reprisals' at Suruc?
That there were 'terrorist reprisals' at Suruc?
I think 'as happened' should refer to the verb preceding it, so I would go with the first option, but whether that is what the author intended or not is another matter.
There were undoubtedly terrorist reprisals at Suruc. That is not in doubt.
I think your first is correct with the addition of "as". By his action Erdogan invited blowback in the form of terrorist reprisals, as at Suruc.