Statesmen think about the next generation, according to popular wisdom, while politicians only think about the next election. If so, then current Turkey-EU relations are being shaped by the narrow calculations of EU politicians rather than the intelligence of statesmen.
The majority of Turks feel that EU leaders are trying to turn Turkey into a bogeyman, somehow to blame for the pain which Europe is feeling during its transformation into a more competitive global economic actor. Turks increasingly consider they are neither welcome nor wanted in the EU, hence the collapse in popular support for Turkey’s EU application from 70% in October 2005 to 40% in November 2006.
Turkey is undergoing an historic transformation. In the last four years, its economic performance has mirrored the success of China, with growth above 7% for fifteen consecutive quarters. Since 2002, the cumulative rise in Gross Domestic Product has been a record 25%. If this Asian-style growth continues for another fifteen years, income per head will reach half of the EU-25 average – the level at which other EU candidates were allowed to join.
So far so good. But can Turkey sustain such growth?
Well, potentially yes. With Turkey still an “emerging economy”, there remain many new areas for investment. The private sector is driving expansion more than ever before, much more so than in other new EU members.
However, there are serious obstacles ahead. These include rising trade imbalances and unemployment in sectors such as agriculture and textiles which are lagging the rest of the economy. Turkey so far lacks an adequate risk-management strategy to deal with these looming problems.
Furthermore, Turkey must undertake fresh reforms to unlock its future growth potential, both to equip the labour force with new skills and to level the financial playing field for domestic and foreign investors.
Whether Turkey’s economic agenda for 2007 will include such reforms remains to be seen. However, it seems unlikely. Political and public attention is more likely to be distracted by presidential and parliamentary elections which are being held this year. Amid the tension of election campaigns, it will be tough for any government to maintain fiscal discipline, an essential condition for stability in Turkey’s vulnerable economy.
At the moment, therefore, Turkey would particularly benefit from having a strong outside authority to help the government keep economic reforms on track. Up until now, the IMF provided an anchor for our macro-economic programmes. Many Turks now believe that the EU accession process would be the logical source of stability for deeper structural and micro-level economic reforms in 2007 and beyond.
Sadly, few European politicians seem to agree. Instead, they are making negotiations with Turkey open-ended, with no guarantee of full EU membership as a result. This makes the whole process vulnerable to political blockages from inside the Union. With EU institutional reforms currently stalled, EU decision-makers seem willing to interpret public reluctance to accept further internal changes as hostility to external change as well, particularly Turkish membership.
This hostile attitude toward Turkey today risks dealing the EU a potentially fatal blow in the future. Since Turkey has the youngest population in Europe, and the people of “old” Europe are quite literally getting older, Turkey offers Europe a demographic “window of opportunity” to maintain economic growth for decades to come.
Education reform in Turkey now will provide skilled workers tomorrow. Just imagine the boost to EU competitiveness if all those young Turks entered the EU workforce already fully equipped with cutting-edge skills and knowledge. Of all the countries in Europe, reform in Turkey can yield the highest economic returns.
EU leaders also need to recognise that Turkey’s transformation affects her regional neighbours too. Turkey is the largest exporting nation within the Balkan region and accounts for 65% of the total volume of industrial exports from the Middle East and North Africa.
Turkey has the strongest private sector between Italy and China and, with 60% of Turkish exports going to EU markets, is already well integrated into western European economies. Turkish companies have already begun to help neighbouring countries to make the painful transition into open and competitive market-driven economies.
All of these trends show that a “win-win” situation is possible for the EU and Turkey together. If the EU block Turkey’s membership, then both sides are likely to lose. But if Turkey can manage to sustain the reform process and economic growth without help from the EU, then the biggest loser would be the Union itself.