A new page in the history of the European Union (EU) was turned in December 2004 when the current 25 European member states set the date for Turkey to start accession talks.
The EU has succeeded in including within its organization states with a high level of diversity. The political, economic and cultural differences of the new European countries are reflected in the wide geographical distances that separate them: from the Baltic States to the small Mediterranean islands at the very edge of the European continent. And the possibility of becoming part of the EU mosaic has enormous appeal for many other, even more diverse countries, with Turkey in the front line. However, unlike most other former EU applicants and now member-states, Turkey and its status as a prospective accession candidate is fraught with controversy.
Relations between Turkey and the EU started at the end of the Second World War, in 1949, when Turkey joined the European Council [1] [1]. Since then the EU has exercised a containment strategy towards this country, former head of the Ottoman Empire, aiming to set it on a European course, but at the same time steering clear of granting it membership. The hope of joining the EU, on the other hand, has driven major reforms in Turkey, including economic liberalization, human rights protection, and greater civilian control of the military. Although Turkey has shown an impressive ability to transform itself, and its political system has proved capable of radical change, Turkey will now have to comply with the further exacting accession criteria known as the 'Copenhagen conditions' [2] [2], along with other requirements involving further economic reform and the implementation of the EU's rule book, the 'Acquis communautaire'. [3] [3]
In Turkey itself, the centre-right AKP party, whose leaders have their roots in Islamic political parties, won a landslide election victory in November 2002. Prior to this date, the country was ruled by weak coalition governments which struggled to implement the reforms that the EU demanded. The overwhelming victory of the AKP party in 2002, gave it a much stronger mandate and a clear majority in parliament. This government has formed an uneasy and fragile coalition with the military in favour of the EU, convincing sceptical middle-class secularists and the armed forces to accept controversial reforms in the name of the EU. As Heather Grabbe states [4] [4], " EU aspirations are the glue that bind together Turkey's key groups: the Muslim democrats, arch-secularists, the armed forces and business". The AKP has promoted four major reform packages on in a number of areas: greater cultural, language and educational autonomy for minority groups, especially the Kurds; more civilian control over the military; the release of political prisoners; the abolition of the death penalty; reform of the judiciary, greater protection for the media and more freedom of expression. Substantial changes in foreign policy have also been made in order to conform with EU requirements. In 2003, Turkish Prime Minister Erdogan rejected the UN peace plan for Cyprus because of domestic pressure. By April 2004, however, Turkey's government was playing an active role in persuading the Turkish Cypriotes to vote 'yes' in a referendum on the plan for the island's future. Greek-Turkish relations have also improved greatly in the past few years, mostly due to the willingness shown by the Turkish side. Finally, Ankara has swung away from the United States, partly because of its opposition to the war in Iraq, and adopted an approach oriented more towards EU foreign policy.
Turkey's economy, however, remains fragile, highly indebted and dangerously dependent on the inflow of short-term money. It is hoped, however, that the affirmative EU decision of December will provide a boost of confidence, push down interest rates, ease the burden of debt service and raise inflows of foreign direct investment (FDI) from their currently low levels.
This essay will deal with the new challenges that lie ahead for Turkey and the European Union once negotiations really begin. Particular focus will be given to Turkey's economic dimension, its internal market, and related policies.
Turkey is located at a regional crossroad of strategic importance for Europe: the Balkans, Caucasus, Central Asia, Middle East and Eastern Mediterranean. Supporters of Turkish membership stress that the country could represent a bridge to the Islamic world and therefore be a very useful partner to help the EU achieve its foreign policies in the Middle East. On the other hand, opponents to Turkey's entry insist that the EU remain a geografically European organization, and warn that instability in the Middle East and the Caucasus could spill over into Europe.
In economic and demographic terms, Turkey is an important actor. It is the world's 21st economy in terms of size; it possesses important water resourses; as a secular Moslem country with a functioning democracy, it represents a factor of stability for the region, and as member of many economic and regional organizations, it contributes to the security of Europe and its neighbouring countries [5] [5].
The security interdependence between Turkey and the EU is definitely one of the major reasons for Turkey's EU candidacy. During the Cold War, Turkey was the main strategic ally against Soviet expansion in the Mediterranean. It controlled the Straits in the Middle East, where Europe has economic and political interests, and formed a bulwark state in the Black Sea, blocking the Soviet advance. Turkey's geo-political role became even more important after the revolution in Iran and the Soviet invasion of Afghanistan. Since the collapse of the Soviet Block, Turkey has become a front state to three major problematic zones: the Balkans, Caucasus and Central Asia. The threats to Europe derive from the insecurity of the region as a whole, and from the threat of massive numbers of refugees and immigrants flooding into a reluctant Europe. Against this backdrop therefore Turkey very probably could play a fundamental stabilizing role in the region. [6] [6] Another important element to take into consideration is the fact that Turkey has been a NATO member since 1952, and has the second largest European standing army. Turkish armed forces have contributed to peacekeeping procedures on several occasions, and the country can therefore can be considered to have gained vital experience. [7] [7]
Turkey's population of more than 71 million is the fastest growing in Europe. By the time of accession, Turkey would be larger than any other EU member-state, and since voting in the EU 'Council of Ministers' depends mainly on a country's population, Turkey would have a weight equivalent to 14% in EU decision-making. This is understandably a frightening prospect for the smaller member countries already worried about being marginalised within the EU. On the other hand, Turkey's young and growing population could represent a counterweight to the current EU's ageing workforce. [8] [8]
Turkey's population is also the poorest of any current member-state, with a large share of its people engaged in agriculture. In fact critics stress that Turkey's accession would bust the EU's budget and destroy the EU's 'Common Agricultural Policy', or CAP. According to research published on March 1, 2004 by the 'Osteuropa-Institut' Research Institute of Munich, Germany, Turkish membership could cost the Union up to 14 billion Euro a year, with Germany contributing 2.5 billion Euro. The report further predicts "considerable migration pressure" with an estimated 0.5 to 4.4 million Turks coming into Germany if Turkey joins the EU.
Despite Erdogan's economic liberalization and political reforms, opponents to Turkey's membership stress that the country's domestic political situation is still not up to scratch. Three military coups in two decades - the last in 1980 - and the military intervention in Cyprus in 1974, have all helped paint a rather negative picture of Turkey at the international level. In addition, the Kurdish issue, and violation of human rights make the situation even grimer. According to a joint report by the EU in May 2004 [9] [9] , shortly before the debate on Turkish accession, despite the reforms, Turkey's political system still preserves a large number of provisions that restrict the exercise of fundamental freedoms. The report is also critical of the role of the Turkish military, and presses for civil control of defence expenditure by the Turkish Parliament. On the question of respect for minorities, the EU's report refers to the case of Leyla Zana, elected in 1991 to represent the Kurdish constituency in the Turkish parliament, but arrested and given a 15 year jail sentence in 1994 when she openly identified herself as a Kurd.
But as 'The Economist' [10] [10] underlines: " … the biggest issue of all is Islam. Few people now insist that the EU is a Christian club, but the feeling that it should be is widespread, especially among Christian Democratic parties. September 11th, Iraq and the war on terror have all focused renewed attention on whether the EU is right to consider admitting a Muslim country. The arrival of the Justice and Development Party in government, so beneficial to Turkey's EU prospects in other ways, has not helped in this respect, for even within Turkey many suspect it of having a convertly Islamic agenda." The Special Report on Turkey published in September 2004 by 'The Economist' notes that Prime Minister Erdogan formally rejects the Islamist label, and describes his AKP Party as conservative, democratic and pro-western. Nevertheless, his party has without doubt Islamist roots and Erdogan's actions sometimes challenge Turkey's secularism. In fact, Turkey's Head of Government has twice put forward draft laws that would criminalise adultery and stop graduates from religious schools attending universities. The bills were eventually withdrawn in the face of fierce protest. Despite these arguments, 'The Economist' stresses that the suggestion that Turkey could be kept out of the EU simply because of its religion is not tenable: not only because Europe has already 12.5 million Muslims and two other potential candidates for membership, Albania and Bosnia, which are mainly Muslim, but also because Islam can be read as a plus, favouring Turkish entry. The West has been anxious to show that democracy and liberal economies are compatible with Islam: "One of the best ways to do this is to amit Turkey to the EU… a 'no' … would antagonise other Muslim countries, especially in the Arab world, who would see it as a slap in the face delivered by the West against Islam." [11] [11] With a view to demolishing this opinion, EU 'External Relations Commissioner' Chris Pattern has said that the Turkish integration perspective would help avert the scenario outlined by Samuel Huntington in his 'Clash of Civilizations', namely between the Western and Islamic world. In Huntington's words: "The proposition that Europe can be defined by religion, is a false one, not to say dangerous. In many ways, the European Union is a reaction against the idea that we can define ourselves by religion or ethnicity, and thus define others as beyond consideration". [12] [12]
Turkey is considered to be a lower middle-income economy. Its per capita income is relatively low compared to the other European countries. As Table n. 1 shows, measured in 2003 prices, Turkey's GDP was about 28.5% of the GDP of the 25 EU member states. Turkey's agricultural sector accounts for 11.5% of GDP, compared with only 2.1% in the EU-25. The one indicator that does not differ that much from the EU average is the ratio of public debt to GDP: 87.4% for Turkey in 2003 against 63.1% for the other European members. [13] [13]
TABLE 1: Comparison of main economic indicators of EU State Members vs Turkey [14] [14]
EU-25 TURKEY
Population
Millions
453.0
70.7
Employment
%
62.9
45.5
Unemployment
% of total labour force
9.0
10.7
Agricultural sector
% of total employment
5.0
33.9
GDP
billion Euro
9,716
212
GDP per head
Euro, PPP equivalent
22,300
6,300
Agriculture
% of GDP
2.1
11.5
Industry, construction
% of GDP
27.0
27.6
Services
% of GDP
71.0
60.9
Labor productivity
1.000 PPS
43.75
17.6
1,000 Euro
41.29
7.71
Exports of goods & services
% of GDP
32.6
41.8
FDI
Million Euro
2,276
68.0
% of GDP
0.02
0.06
Turkey's demographic trend differs significantly from the EU member states. With a population of 70 million, Turkey can boast an average population growth of 1.8%, compared to an average EU of 0.2%. Two thirds of the total Turkish population live in a few big cities like Istanbul, Ankara and Izmir which, especially in the last decade, experienced massive immigration from rural areas. As the 'Working Document' [15] [15] of the European Commission states, the country's richest regions are located in the west, while the poorest are on the eastern border. It is in these richest areas that most of the production and employment in manufacturing and services are located, whereas in most of the other regions, agriculture is the main source of income and employment. Koaeli, Turkey's richest region, is an important manufacturing area with a per capita GDP 90% above the national average. Agri and Van instead, have only about one third of the national per capita GDP (around 8%).
TABLE 2: East vs. West Turkey [16] [16]
Share of population
Share of GDP
GDP/head (US$)
East
37%
22%
2,500
West
63%
78%
5,300
The European Commission document underlines how the beneficial economic effects of Turkey's membership depend on the way the Turkish economy will cope with reforms and adjustments. The effects of reform are likely to be asymmetric, however, having a much greater impact in Turkey than in the EU as a whole.
As to the economic gains for the EU from Turkey's entry, increased investment opportunities is the first that springs to mind. As the ten new Member States have witnessed, the perspective of EU membership triggers substantial FDI by European companies.
As the EU Working Document underlines, higher and growing FDI inflows into Turkey would lead to capital accumulation as well as to a renewal of the capital stock and a transfer of technology, all key components of increases in the growth potential.
As a new Member State, Turkey would participate in the Economic and Monetary Union, even though it would not adopt the euro currency immediately. In order to prepare for an eventual full participation in the euro area, Turkey would have to treat its exchange rate policy as a matter of common concern, pursue disciplined and responsible macroeconomic policies, both monetary and fiscal, to ensure the stability of the economy and advance structural reform.
In 1995, Turkey formed a customs union with the EU, which required it to scrap tariffs on EU goods and adopt the Union's common trade policies for business with third countries. [17] [17] If Turkey wants to become part of the single market, it will have to adopt much tighter implementation and enforcement of rules than before. Under the single market, the EU will determine product standards for Turkish goods, health and safety regulations for its factories, and strict limits on the government's industrial subsidies. The EU will also take a keen interest in Turkey's budgetary and monetary policies. An economic crisis in Turkey would have a direct and immediate impact on the rest of the Union, especially if Turkey were to join the euro at some point. As Heather Grabbe points out, Turkey does not have to meet the 'Maastricht convergence criteria' for the euro prior to entry, but it does need to show the Union that it really can sustain single digit inflation and steady growth. It is understandable that the Union worries about the macro-economic stability of candidate countries since this is a key requirement for any functioning market economy.
The existence of the European Commission-Turkey Customs Union, within the framework of the Ankara Agreement of 1963 anticipates to some extent the participation of Turkey in the European internal market, particularly with regard to industrial products. Under the Customs Union, Turkey is committed to align with part of the internal market acquis, including free circulation of industrial goods, intellectual and industrial property rights, competition policy (state aid control and anti-trust), and to adopt the common external tariff. Although public procurement, services and establishment are currently not covered by the Customs Union, negotiations towards concluding a bilateral agreement liberalising market access has been underway since 2000. Free movement of workers, freedom of establishment and freedom to provide services were declared goals of the Ankara Agreement, but only the free movement of workers has been partly implemented.
The free movement of goods between the EU and Turkey established by the Customs Union covers all industrial goods, with the exception of certain steel products. The EU represents the main trading partner for Turkey, and following the latest enlargement, Turkey is now the EU's sixth largest customer and its seventh biggest supplier. On average, trade with the EU provided for more than half of Turkish imports and exports. [18] [18] In practise there are still a number of barriers to trade, some of which are caused by Turkey's non-compliance with its obligations under the Custom Union. Such difficulties relate to divergent rules for external trade, standardisation, import licences and technical trade barriers, as well as intellectual property rights, food safety and public procurement.
The financial sector too remains under-developed, and further efforts are needed to fully align Turkey's legislation with the acquis. At the same time, the European Commission recalls that sustainable integration of Turkey's financial sector will, to a large extent, depend on achieving macroeconomic stability, as well as on strengthening the legal and supervisory framework in this sector. Major efforts are required to prepare Turkey's financial sector for the impact of the internal market, by enhancing access to a potentially large and fast growing banking, insurance and investment market. Concerning non-financial services, Turkey will need to make major efforts to fully align with the acquis. This area could have implications for the labour market, as such services would have to be provided under the same conditions as those set by EU member states for their own nationals. Turkey is also a major service provider in the rapidly expanding tourism sector whose share in GDP is expected to grow substantially well before accession. Turkey's entry would definitely increase competition in the tourism sector within the EU.
Turkey experienced high outward migration after the early 1960s, when many European countries recruited workers. Net outward migration reached its peak in the first half of the 1960s, with about 80,000 net-migrants per year, or about 0.5% of the Turkish labor force. Since the 1980s, the flow of net-migration leaving Turkey has been some 40,000 persons per year, which is about 0.2% of the current labor force. [19] [19] In 2002, about 3 million Turkish nationals were officially registered in the EU-15, the main recipient countries being: Germany (2.3 million), France ( 230,000), Austria (135,000) and the Netherlands (128,000). Constituting by far the largest group of third-country nationals in the EU, Turkish migrant workers have become a well-established phenomenon. The status which Turkish workers at present enjoy under Community law lies between that of European Union citizens and third-country nationals. Their status is determined largely by decisions taken by the EU-Turkey Association Council following the 1963 Association Agreement between the European Commission and Turkey, and the interpretation of these decisions by the European Court of Justice. While the Agreement establishes free movement of workers, such freedom does not have a direct, full ranging effect. For example, Turkish nationals do not have the right to move to an EU Member State or between EU Member States in order to take up employment. However, once registered as belonging to the labor force of a particular Member State, Turkish workers enjoy a considerable number of individual rights. The Working Document published by the European Commission in 2004, stresses that there are perceptions that a possible substantial and uncontrolled increase in migration to the EU could lead to serious disturbances in the labor markets of some present member states. Other studies, on the other hand, emphasise the relative stability of overall migratory pressures regardless of accession, and cite the developments observed over time in Spain and Portugal, where initial emigration was subsequently reversed. Based on the experience that Turkish workers tend to migrate following networks created by already established relatives, the largest share of additional migrants to the EU would most likely go to Germany, France, Netherlands and Austria. As the United Nation Population Prospects [20] [20] underlines, the actual migration flows are influenced by pull factors such as wage differentials between Turkey and the recipient countries, but also by push factors, such as the labor market situation in Turkey itself.
If appropriate labor market policies were to be put in place in Turkey to integrate the young population into the labor market, the migration potential of Turks seeking employment outside their country would probably decrease. The UN Prospect adds that sustained progress by Turkey in areas such as social policy, employment, health and education could reduce the pressure of migration.
The EU does not impose restrictions on capital movements with Turkey, since the Treaty has extended the abolition of such restrictions to third countries. The process of accession of Turkey to the European Union would remove a few last obstacles and increase the confidence of investors. The accession process itself should lead to a significant increase of foreign direct investment originating from other EU Member States, improvement of the free circulation of capital, and reinforcement of the Turkish economy. Regarding capital outflow, full liberalization of capital movements requires the existence of a solid financial system, a stable economy and a sustainable external financial position. Considerable reforms have been initiated in Turkey, partly under the guidance of the IMF, and the increased structural strength of the Turkish economy should ensure more stability. The EU Working Document states that given Turkey's high level of corruption and the scant effectiveness of the anti-money laundering regime (in terms of prosecutions and convictions), major efforts would be required to ensure that Turkey's accession does not negatively impact the fight against financial crime across the EU. Therefore, the EU Commission suggests that the pre-accession period should be used to develop the administrative capacity of the Turkish law enforcement authorities, stimulate more effective joint action between agencies fighting money laundering within Turkey, and improve co-operation with their counterparts in the EU.
The adoption of the social acquis also represents a key element in promoting Turkey's convergence with EU standards and practices, raising living standards, promoting competitiveness and job creation and improving social cohesion. As the EU Working Document states, certain elements of the acquis for labor law, gender equality, health and safety at work have already been introduced into Turkish legislation but effective implementation is difficult. Stronger efforts are needed for full alignment with EU standards in these fields, in particular as regards the full respect of women's rights, improving the role of women in political, economic and social life, combating discrimination on the grounds of racial, ethnic origin, religion, belief, sexual orientation, age and disability.
Turkey's desire to integrate into the EU is beyond any doubt. As Yilmaz, Deputy Prime Minister stated on the 10th October 2000 [21] [21]:
"The dilemma that Turkey faces is not a choice between preserving our integrity on the one hand or joining the modern world on the other…because preserving Turkey's survival and unity comes before everything else.. EU membership does not carry the threat of breaking up the country or endangering the regime in any way. On the contrary, the road to real democracy passes through EU membership".
Despite the start of accession talks, a strong body of opinion in Europe is against Turkish membership. As the Special Report on Turkey published by the Economist in September 2004 states, the most negative attitudes are to be found in France, Germany, the Netherlands and Austria.
Besides "fretting about Islam", these countries worry about possible migration from Turkey and about the cost of accession. In France, President Jacques Chirac's UMP party has come out against Turkish membership, though Mr Chirac himself has declared he is in favor. In Germany the opposition Christian Democrats and their allies in the Christian Socialist Union are against.
The biggest reassurance to sceptics is the promise that Turkish negotiations will take many years. Turks themselves talk of ten years, with a target date of perhaps 2015 for actual entry. Others think it will be more like 15 or even 20 years. But for many, it is the travelling towards membership that counts, not the arrival.
In the words of 'The Economist': "Turkey lies mostly in Asia, and it borders such troublesome places as Iraq, Syria and Iran. Its economy has been a basket-case for decades, its currency has been repeatedly devalued, many of its banks are ailing and it is one of the largest debtors to the IMF. It is far poorer than even the poorest of the ten countries that joined the EU in May 2004. It has a history of military coups. Its dreadful human-rights record and its torture of prisoners are well documented. Its people are overwhelmingly Muslim, and it could soon be the EU's biggest member by population. In short, the EU should not touch it with a bargepole". Nonetheless, Turkey seems to be the next very probable candidate to EU membership. Indeed as 'The Economist' itself reluctantly admits, Turkey "is closer to it (membership) than anybody would have thought possible a few years ago".
