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Turkey’s EU Membership Process

Short Term Problems and Long Term Perspectives

Overview

Turkey faces a momentous time and challenges in its increasingly complex and frustrating (for both sides) accession negotiations with the EU. There is still talk of the EU-Turkish relations once again heading towards another critical turning point (or a “train crash” in the words of the enlargement commissioner Olli Rehn) this autumn if both sides fail to reach common ground.

Reasons for this are diverse, including commonly recognised slowdown in political reforms in Turkey, the EU’s loss of political credibility in mishandling the Cyprus issue and thus triggering unprecedented euro-scepticism in Turkey. A further complicating factor in the period ahead will be the coming presidential (May 2007) and parliamentary (November) elections both in Turkey and in some key EU member countries, which could divert attention to more immediate domestic priorities.

The public mood vis-à-vis in Turkey has dramatically changed. The EU’s effective “golden carrot”, namely the attraction of its membership, is no longer enticing Turkish leaders and public at largei.

Indeed, the latest Eurobarometer showed support for EU membership among Turks slipping to 44 percent2 – a stark contrast to Turkish support levels of around 85 percent two years ago. This decline is largely due to EU’s failure to keep its promises on Cyprus.

Turkey was explicitly asked by the EU to support and adopt the UN peace plan for the reunification of the island before its accession to the EU in 2004. It complied with this and the Cypriot Turks voted overwhelmingly in favour of the UN Peace Plan. However the Greek side voted “no” and the island joined the EU without Turkish Cypriots in it. The Greek part, taking the seat of a member state, has then started to exercise its veto power against any positive development concerning Turkey and Turkish Cypriots.

Other EU states were unable or unwilling to overcome this obstacle and moreover in some of them, especially in France and Austria, Turkey’s European credentials have been once again questioned by populist politicians provoking in Turkey the growth of nationalistic reactions. In this saga the most obvious recent frictions are over the extension of a customs protocol to include the Republic of Cyprus. Turkey has studiously ignored pressure to implement this, and open up its ports and airports to Cypriot trade, as it does not officially recognise the government. Turks feel that they are being bullied by Brussels into making further concessions over the divided island before the EU starting to treat fairly the Turkish community who voted “yes”, to Europe and to the unification of the island unlike their southern neighbours. In addition, Prime Minister Recep Tayyip Erdogan’s domestic pressures have led to an overdefensive attitude from the government that may have alienated some support. His ruling AK Party, which came to power in 2002 promising to take the country into Europe, is sensing an eventual yet not confirmed shift in the attitude of its grass-roots supporters.

Meanwhile, the economic performance, though impressive, is not distributing much dividends to its shareholders. Turkey’s growth rate will likely average 6-8% for the next 5-6 years. The unemployment is in decline from 10% to 8.5 in the last 4 years and the commercial and social life is flourishing converting the country into one of Europe’s most dynamic, creative and trendy market place.

Rating Turkey’s political risk
So many factors do influence Turkey’s political risk from struggle to find a settlement for Cyprus, enhancing the institutional framework of the EU-Turkey relationship, implementation of the human rights reforms, fight against the terrorism (PKK) and Turkey’s recent efforts to promote peace in the Middle East…

If one has to judge the most critical political issues till the autumn of 2007, the two forthcoming elections (presidential and parliamentary) as referred earlier are of the prime importance in shaping the Turkish stance vis-à-vis the future of relations with the EU. Turkey’s foreign and security policy choices in the volatile Middle East, increasingly assertive Russia and Eurasia, growing antagonism against Islam in the West, too will affect the future orientation of this partnership.

Ultimately Turkey’s accession to the EU will depend on a whole series of factors – some external and some internal – converging over the short to middle term, that would transform the Turkish polity, economy and civil society. For this transition to take place, Turkey first needs to remove the ‘Cyprus problem’ from the list of obstacles in such a “win-win” way not compromising its sine qua non vital interests; otherwise its European track will continue to be seriously derailed – for as Costas Simitis bluntly put it in 2003: ‘the Green Line in Nicosia separates Ankara from Brussels’3.

Furthermore, one of the most stubborn obstacles to improved EU-Turkey relations is Ankara’s inability to implement fully the European standards on human rights. The situation in today’s Turkey has considerably improved compared with a decade ago. This by no means justifies Turkey’s failure to make faster progress towards changing outmoded laws, introducing tougher standards of disciplining officials who commit violations, or modernising the methods used by the police to handle public order at demonstrations and similar occasions.

The PKK terrorists continue to attack military targets as well as civilians. There has been greater US pressure on the Kurdish leadership in northern Iraq to take action against the PKK’s bases in the Qandil Mountains. The US and Turkey have agreed to co-operate closer than before in tackling this problem through appointment of coordinators on both sides.

The other key issue bedevilling minds in the EU is the contest between political Islam and the secular state. Regardless of its outcome, this issue too raises some long-term issues for Europe and Turkey. A re-Islamised Turkey would undoubtedly be a very difficult partner. Turks who believe that mosque and politics should remain separate — and they are fairly clearly a majority of the population — reply that the above arguments prove both the need for secularism and for Turkey’s integration into Europe. According to the European Commission President Barroso, a supporter of Turkey’s EU membership, rather than looking at where else Turkey might turn, the West should consider the cost of poor relations with Turkey.

An important asset Turkey offers is its strategic location with respect to Europe’s future energy supplies from the Middle East and, more importantly, from the Caspian/Central Asia region. In light of recent concerns over Russian energy politics and Iran’s burgeoning nuclear programme, Turkey has emerged as an important player in regional energy transport, aided by the recent opening of the Baku-Tiflis-Ceyhan pipeline and coming Southern Caucasus gas pipeline.

Clearly, Europe requires a stable, modernizing and democratic Turkey to (hopefully) keep radical Islam from Europe’s borders.4

Turkish economy: any further crisis in sight?
Even though in recent years Turkey has undergone significant political and economic transformation which has increased stability and led to economic growth, Turkey is generally considered by international investors to be an emerging market. It has a dynamic entrepreneurial milieu and, despite the past crises, could experience a tremendous economic development.

Turkey continued its streak of economic expansion through 2005 and into the autumn of 2006, with the opening of EU accession negotiations, the government’s IMF-sponsored fiscal austerity programme and single-digit inflation only fuelling the forward momentum. Yet the questions remain as to the sustainability of Turkey’s expansion, the Central Bank’s fight against the ever-present threat of inflation and the government’s efforts to rein in the national debt, 2005’s bonanza of privatisation deals, the lingering problem of the unregistered economy, the Turkish deficit and the successful adoption of the New Turkish Lira.

If calculated in terms of purchasing power parity (PPP) Turkey is the world’s 19th largest economy with a 2004 GDP of around $430 billion. With an average 5-6 percent growth up to 2015 and 80 millions of population by then, we are talking about an economy which will have $10,000 per capita GDP and an overall GDP of $800 billion. These figures imply an economic power that cannot be neglected by the EU. It is believed that Turkey can do better over the longer term, judging from the performance of dynamic Asian economies, if it can pursue a “high growth” (6-8 percent per annum), “investment in people” and “leap to the highest levels in technology” strategies.

Much of the economy is not anymore agricultural but there are still structural problems linked with the rural world. The size of Turkey’s workforce engaged in agriculture is no longer above 50 per cent, as it was in 1989, but it is less than 30 per cent (compared with around 2 per cent in the United Kingdom).

The agriculture’s share in the GDP is below 12% and 95% of the Turkish exports are industrial goods. The rural workforce of over 10 million people is larger than the population of several EU member states and its income levels are far below even the average for Turkey. Shifting it out of traditional agriculture and into modern economic activity will require enormous and prolonged structural reforms.

Turkey has a lot to offer European investors and the accession process is expected to increase the foreign direct investment (FDI) inflows from EU economies to Turkey. With more than 60 percent of the population under the age of 35, its domestic market has a great potential for growth; its labour force is hard-working and cost-effective; and its unique location gives it access to Europe, Central Asia and the Middle East. More than 6,000 foreign companies have invested in Turkey. Yet, its performance is far from satisfactory in attracting larger FDI inflows.

In the past decade, the country had attracted on average only $1 billion a year in FDI, considered well below what an emerging economy of Turkey’s size should receive. Data released by Central Bank of Turkey in August 2006 showed that FDI in Turkey increased from $ 1,215 million in January-June 2005 to $ 8,828 million in the same period of 2006. The number of FDI companies established in Turkey reached to 13,351 as of the end-June 2006. According to data released by the Turkish Treasury, 7,156 of total companies are of EU origin, in which Germany leads with 2,338 companies followed by the United Kingdom with 1,147 and Holland with 1,052 companies. Banking, retail, telecommunications and the automotive have been the main sectors attracting the FDI to Turkey If the government manages to create a more favourable bureaucratic and legal environment, these decisions could also lead to an influx of much-needed European investment that would help take the Turkish economy to the next level of development. The government has, among other measures, decided to cut income and corporate taxes in order to attract $15bn of foreign investment over the next three years5.

Key messages
If the relations are not carefully managed between now and the autumn of 2007 a muchtalked “train crash” would be unavoidable. Such a crash could wreck beyond any repair the very foundations of the long standing EU-Turkish relationship. It is most likely that the accession process will be partially frozen only in some chapters of negotiation (such as free movement of goods and services and transport) linked with Turkey’s failure to open its ports and airports to Cyprus.

The real dividing line about Turkey in the EU is between those focusing on internal aspects of the EU and those giving greater priority to external issues, especially to the Union’s role as a global actor. Those who want a more globally responsible EU to engage more actively in international relations, and especially in the Middle East peace process, argue in favour of Turkish membership6. Supporters of Turkish entry believe that the Union would gain influence in the region once it had borders with Syria, Iraq and Iran. Turkey would dramatically increase the population of the EU, and over the longer term expand the European economy, the single market and ultimately the scope of the euro.

A long term scenario in which Turkey or any other candidate country is ready for membership and the EU finds itself in the position of lacking the so-called the capacity of absorption is a very pessimist one. In such case, the EU will anyway no longer be attractive for any candidate country, let alone for its current members. In the longer term, we see at least conditions for the EU to be able to enlarge in the next decade:
1. Economic growth and competitiveness generating a more positive social atmosphere in favour of the European project and its enlargement;
2. Better political coherence among the EU member states; and
3. As a corollary of these two conditions, a more efficient European institutions and decision-making system to be implemented through the revision of the actual European treaties.

Turkey will become ready for accession only when it solves its domestic problems and fulfils the conditions of membership following a radical transformation of its legal, political and social system. Meanwhile, Europe will still need to be a larger and better functioning single market and political unity. The rise of the Asia-Pacific, the future developments in the transatlantic relationship and the WTO, the energy considerations and the internal and external security matters will eventually justify a well organised enlargement of Europe’s political, legal and economic area.

Turkey’s geography, history, cultural and religious links and security environment makes it both a European and a regional player. It can act as bridge between the two. This is an area where both Turkish and EU leaders should work harder to achieve a mutually beneficial convergence of interests, particularly in the initial stages of the accession negotiations, towards full membership by 2015.

Endnotes
i Mehmet Ögütçü, Turkey and the EU: How to Achieve a Forward-Looking ‘Win-Win’ Accession by 2015?, Turkish Daily News, March 22, 2005.
2 Global Insight, ‘Turkey: EU Official Speaks Out over Slump in Turkish Support for Bloc’, July 13, 2006
3 Michális S. Michael, ‘From Ankara to Brussels, Transit via Nicosia’, Commentary, , Zaman, 14 August 2006,http://www.zaman.com/?bl=commentary&alt=&trh=20060814&hn=35624
4 Bill Park, ‘Turkey’s European Union Candidacy: From Luxembourg to Helsinki – to Ankara?’, International Studies Association Working Paper, July 2000, http://www.ciaonet.org/isa/pab01/
5Mensur Akgün and Sylvia Tiryaki, ‘Turkey as an Asset’, EUOBSERVER, 14 December 2004,http://euobserver.com/?sid=7&aid=17979
6 Ulrike Guérot, ‘Europe Could Become the First “Post-Modern” Superpower, in European Integration’, Fall 2004,http://www.europeanaffairs.org/current_issue/2004_fall/2004_fall_36.php4

Kader SEVİNÇ (MEP Adviser – European Parliament, Brussels)

Source: Insight Turkey – July-September 2006, Volume 8 / Number 3

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