On the Start Line

Turkey

Economic News

22 Jul 2010
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Late on the night of October 3, and with a sigh of relief almost audible in Ankara, a negotiating roller coaster finally ended as accession negotiations began between Turkey and the European Union.



Yet there remains a long way to go, with the real test yet to begin - and more than a decade of further negotiations expected.



The last-minute marathon revolved around efforts to convince Austria that it should no longer insist Turkey be considered for a "privileged partnership" with Europe, as opposed to full membership.



Austrian hopes of halting the Turks once again were to be short-lived, however. This thanks largely to tremendous pressure from the UK, which holds the EU presidency, and Germany's Chancellor Gerhard Schroeder, who also fought Turkey's cause. A deal over Croatian membership also sweetened Vienna's final withdrawal of objections.



So, with privileged partnership dropped, the negotiation framework document - the roadmap for Turkey's accession process - seemed clear. Yet there was one more outstanding issue still rumbling on: Cyprus.



The Greek Cypriots had been lobbying hard for the EU to insist Turkey remove its current veto on Cyprus joining other international organisations - and wanted reference to this in the framework document.



This sent alarm bells ringing in Ankara. The prospect of losing a veto on Greek Cypriot efforts to join NATO caused much indignation in Turkey. The US sprang to the rescue, with US Secretary of State Condoleezza Rice reassuring the Turks that Washington would veto a Greek Cypriot bid to join the military alliance if Ankara's hands were tied.



The EU for its part announced that it would release a separate declaration to ease Turkish concerns.



The result was Turkish Foreign Minister Abdullah Gul finally boarding the plane to Luxembourg.



Now though, the government in Ankara is faced with the enormous task of working its way through the 35 chapters of the accession negotiation agreement.



A screening process is set to begin on October 20, which will finish off a similar process begun five years ago and assess what still needs to be put in place - if anything - before the talks proper can start.



Many analysts suggest that the UK will also want to get this over with as quickly as possible, and probably want to close the first of the 35 chapters before the end of its presidency on December 31. This will likely mean a relatively straightforward chapter will begin the talks, such as science and research legislation.



There will also be a European Commission report on Turkey coming out in November however, which will likely be critical of human and minority rights issues, potentially delaying the process, as some take the opportunity for a little domestic grandstanding.



However, as the chapters tick by - and the order in which they are taken will likely be very important - a number of more substantive issues will inevitably arise. The Cyprus issue will return when the chapter on free movement of goods and services comes up, if Turkey has still not opened its ports to Cypriot traffic.



Prime Minister Recep Tayyip Erdogan appeared to be offering an olive branch on this issue on October 4 however, when he told reporters the only condition he had for opening the ports would be the ending of the international isolation of the Turkish Cypriots. Some analysts saw in this an appeal for a face saving move from the Greek Cypriots, perhaps such as freeing the EU funds promised Turkish Cypriots after the 2004 UN referendum.



Then, however, there is agriculture. With some 40% of the population still working on the land, this sector is really the EU's greatest nightmare, as the spectre of colossal subsidy and restructuring bills haunts Brussels. There are other problems here too - not the least of which is that Turkey's agricultural sector produces a variety of products for which there is almost no demand in the rest of Europe, given gluts of tomatoes, olive oil and oriental leaf tobacco.



After that, the other big stumbling block is the environment chapter. This covers all manner of regulations for businesses, with an estimated 35bn euro price tag for bringing Turkish firms up to EU standards.



The money promised by Brussels to Turkey works out at some 350m euros a year for the next three years and about 600m euros a year after that until 2018. The figures mean that the vast bulk of the investment for environmental regulations will have to come from the state and businesses themselves.



Last but not least, there is also the political problem. Opening ports to Greek Cypriot ships, while having almost zero impact economically on either Cyprus or Turkey, will have a major political fallout. So will restoring property rights to Turkey's ethnic Greek and Armenian minorities. So will normalising relations with other neighbours such as Armenia. All will be exploited by ultranationalists and those who should know better in the Republican People's Party (CHP). The road ahead will likely still have some major bumps.

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