Mixed Messages on Turkey’s EU Path

Turkey

Economic News

22 Jul 2010
Share
Text size +-
Share
With the European Union deciding to wait two more years before deciding whether to start accession talks with Turkey, the EU Copenhagen summit seems to have been a setback for Turkey’s new government.



“We have made the following decision tonight,” said Danish Prime Minister Anders Fogh Rasmussen late December 12th. Denmark currently holds the EU’s rotating presidency. “If the European Council in December 2004, on the basis of a report and a recommendation from the Commission, decides that Turkey fulfils the Copenhagen political criteria, the European Union will open accession negotiations with Turkey.”



While last minute negotiations on the wording of the summit final declaration still promised some hope on bringing the date forward, or at least on clarifying when, after December 2004 those negotiations might start, the overall decision to wait and see exposes the country’s accession to a number of risks.



First among these is the fact that Turkey will have to get the agreement of an enlarged 25-member EU rather than the present 15-nation grouping. Ten other candidate countries are set to join in May 2004. Many analysts see these newcomers – which include Cyprus – as likely to block Turkish accession in order to advance their own case for more financial aid within the Union.



Turks are also disappointed that the EU was not satisfied with the programme of political reform already started by the previous government and set to continue at rapid pace under the current Justice and Development Party (AKP) leadership.



As economic analysts suggested though, simply being under the shadow of EU membership is a positive status for Turkey. The country’s high inflation, public debt to GDP ratio and balance of payments problems are all set to be influenced positively by progress towards the EU and negatively by anything perceived as a step back from Brussels.



Turkish Prime Minister Abdullah Gul said that he could not accept the offer as it stood December 13th. An earlier Franco-German proposal to decide at the end of 2004, and if everything was ok to start accession talks in July 2005, seemed remarkably similar to the decision announced by Rasmussen. This had earlier been rejected by Gul and AKP leader Recip Tayyip Erdogan, who have both put considerable effort into promoting an earlier, definite start date for talks.



The decision may also indicate a defeat for the pro-Turkey camp within the EU, led by the UK, Italy and Greece, which had pushed for a definite date for Turkey and an early start to talks.



The US responded positively to the December 2004 decision. A government spokesman said it was a welcome development, which followed lobbying on Turkey’s behalf by the US. Washington is anxious to see one of its key regional allies become firmly anchored to the West.



The question now is whether Turkey can satisfy the enlarged European Council. Political reforms are underway, but EU leaders such as Germany and France have stated that they wish to see these put into practice before announcing Turkey’s success in meeting the Copenhagen Criteria. Human rights, improvements in the legal system, the withdrawal of the army from politics and a number of other issues such as the rights of Turkey’s minorities will have to be seen to be addressed.



Meanwhile, economic stability and compatibility will also need to be demonstrated. Most analysts see these economic criteria as easier for the country to fulfil. Turkey has since 1995 been part of a customs union with the EU, while Turkish companies such as Arcelik and Vestel have been highly successful in the European market.



Meanwhile, Turkey’s IMF-backed economic programme requires the country to cut government spending, privatise state industries and slash its debt burden. Current indicators are that these are achievable targets – inflation has fallen from its 2001 high of around 80% to be currently on course to meet its end of 2002 35% target. Meanwhile, surging market confidence following the AKP victory has reduced the country’s debt burden by bringing down interest rates.



Turkish companies are not expecting the level of subsidies other countries received through joining either. Major grants for the EU Regional Development Fund amounted to some 2.5% of GDP for countries such as Ireland, Portugal and Greece. Turks expect nothing like this. Neither do they expect the huge agricultural subsidies currently being argued over by the new 10 accession states. However, Turkey’s farmers still constitute around 40% of the population – a proportion higher than that of Poland. Once again though, Turkish analysts point to the fact that this number has fallen dramatically over the last ten years and will likely be far lower still by the time Turkey joins.



However, much still remains to be done if Turkey is to catch the ever-elusive EU train.
Share

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart

Read Next:

In Turkey

Turkey’s electoral results show uptick in confidence

The return to single-party government and a commitment to fast track economic reforms have boosted investor confidence in Turkey, though rising inflation and low growth rates could hamper the...

Latest

Saudi Arabia: Year in Review 2019

A range of developments contributed to making 2019 an overall positive year for Saudi Arabia.