Weighing Progress

Turkey

Economic News

22 Jul 2010
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Earlier this week, the European Commission released its progress report on Turkey, which refrained from hatching any unpleasant surprises, as speculation over an imminent "train crash" between Turkey and the EU over Cyprus, and maintained projections of a possible derailment of EU accession negotiations continues.



The usual areas of concern were raised - ranging from the slow pace of political adjustment to agricultural reform, to the protection of minority rights and military/civilian relations - though Turkey's report-card included some positive features.



The most obvious element was the actual length of the document. Turkish Foreign Minister Abdullah Gul pointed to the fact that the report was 80 pages, versus the 160-page reports of old. Regardless, the Turkish government commented that the report was balanced.



Meanwhile, economic reform received measured though significant praise. Ankara's Pre-Accession Economic Programme (PEP), submitted to the Commission back in 2005, registering "good progress in institutional capacity building and important commitments to further reform," according to the report. The document also concluded that Turkey's current account deficit - rising to 7% of GDP in the first half of 2006 - can "easily" be financed, aided by the inflow of foreign direct investment (FDI). The country's tight-buckled monetary and fiscal policy along with major improvements in productivity was also praised. "Overall fiscal consolidation has been strong" with an improvement in fiscal transparency and reduction of risk in macroeconomic and financial stability thanks to "improvements in public debt structures and maturities", according to the progress report.



Areas of concern in the economy were still flagged by Brussels, including limited job creation, with unemployment registered between 8% to 10%. The progress report also highlighted that economic decisions could be ad hoc and that economic impact assessments were either lacking or made on the basis of incomplete information. The overlap or sharing of responsibilities - referred to as "fragmentation of responsibilities" in the document - between different government bodies has made co-ordination of economic policy more difficult.



Of greater concern for European politicians has been the pace of political reform in Turkey. To balance some of the recent criticism emanating from Europe, Brussels concedes that political adjustment continues in Turkey in spite of the slow pace in recent months. "In the public debate, one may get the impression that Turkey is backtracking on the reforms. This is not the case. Turkey has continued political reforms, even though their pace has slowed down over the last year," EU Commissioner for Enlargement Olli Rehn recently conformed. With presidential and parliamentary elections looming in 2007, it is hardly surprising the ruling Justice and Development Party (AKP) is reluctant to push through measures - whether economic, social or political - that risk alienating the electorate. Still, Brussels demands no let-up in the reform process, pledging to increase its monitoring of political reform in Turkey.



Freedom of expression remains one of Europe's chief concerns, with Brussels demanding that Turkey ensure freedom of speech without delay. While the European Commission acknowledges that debate on a wide range of issues has increased over recent years, it points to deficiencies in the current status quo. "Notwithstanding this trend (increased public debate) freedom of expression in line with EU standards was not guaranteed by the present legal framework." Still, there is some reason for optimism, with article 301 of the Turkish penal code, which makes denigration of Turkish identity or "Turkishness" punishable by law, likely to be adjusted. "NGOs are discussing Article 301 and Premier Erdogan asked them to suggest wording. We look at this very positively," according to Rehn in a recent statement. The EU specifically demands that Ankara repeal or amend the controversial article.



Also, the military - civilian relationship has received its fair share of scrutiny. Statements by the military, the EU holds, should be confined to military, defence and security matters and be issued with the consent of the government. Some observers explain the political dynamic as the military's distrust of the conservative ruling party and fear that the AKP will consolidate its grip on power by taking the presidency in 2007.



Then there is the issue of minority rights and religious freedom, with the EU reiterating its demand that Turkey broaden its definition of minorities beyond non-Muslim religious communities and increase measures to uphold their rights. "Alawites face difficulties in opening their places of worship. Cem houses are not recognized as places of worship or receive no funding from the authorities," according to the report. Greece has also had its input into the document. "Restrictions on the training of clergy and on foreign clergy to work in Turkey remain. Turkish legislation does not provide private higher education for these communities. The Greek Orthodox Halki seminary remains closed. The public use of the ecclesiastical title is still banned."



Questions over the independence of the judiciary, the lack of a comprehensive plan to address the situation in the south-east and plight of the Kurds were also raised. So were reports of cases of torture and ill treatment, in spite of an overall reduction in incidents nationwide. These emerge from a much longer list of areas of concern where reform needs to be accelerated in 2007.



While Brussels did not make any new announcements on the gridlock over Cyprus in the progress report, it has given Turkey until December 15 to open its ports and airports to Greek Cyprus - an EU member since May 2004. Ankara refuses to extend trade links with Nicosia unless the EU lifts the isolation of Turkish Cyprus - a promise that was made after the Turkish Cypriots voted in favour of the UN's Annan Plan for a settlement on the troublesome island in April 2004. The EU has not taken up Turkey's action plan, proposed in January, to simultaneously lift restrictions in both parts of the island. And Finland - which currently holds the presidency of the EU - has so far failed to offer an even-handed solution that the Turkish Cypriots and Turks could reasonably contemplate.

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