The EU had a cold shower from the French and Dutch vetos in June and is, for the first time since its inception, questioning not only the expansion of the Union but also its very existence. Some populist politicians have attributed these vetoes to Turkey’s scheduled opening membership negotiations with the EU. Leaving aside the choice of Turkey as a scapegoat, the EU in any case needed this questioning of its objectives, values and institutions. At the end of this long but healthy debate, it is very likely that the EU will come to the rational conclusion that its enlargement process should continue and that Turkey should become a full member so as to help the EU reach the Lisbon objectives. Here is why:

 

What were the Lisbon objectives? In 2000, members of the EU set the goal of becoming the world’s most competitive knowledge-based economy by 2010. To attain this, economic growth in the EU would be driven by technology, IT and telecoms sectors. Then the members looked at the EU and realized a salient fact: the EU was already saturated with such industries, its markets were maturing, its population was aging and the unemployment rate was growing. That meant one thing: growth has to come from the non-EU States. These objectives were debated and re-affirmed early this year in Luxembourg.

 

The Lisbon objectives coupled with the EU’s need to grow to create employment opportunities for its citizens, are further forcing the EU to grow in the non-EU States. EU businesses support an expanding Europe to provide them with a growing and a more standardized economy, which creates predictable operating environments. A fundamental reason for worries about enlargement and the Constitution is that the peoples of the EU think they’ll lose their jobs if low cost labor starts competing with them in their respective countries. Yet to the contrary, the EU’s enlargement is a success story and last year 75m people joined the EU smoothly without a flood of migrant workers.

 

Is Turkey a threat to job security in the EU? Or can Turkey, on its road toward EU membership, offer a solution to the EU’s growth problems?

 

- Turkey presents many opportunities for growth. Its on-going reform process is laying down the foundations for future foreign investment. The shareholders and investors of the EU companies investing in Turkey, will benefit from increases in the shareholder value of their companies, which in turn will provide more wealth for Europe that can be invested back into the society.

- Turkey, with a GDP of $300bn, is one of the top 20 economies in the world. Many analysts miss a critical factor in determining Turkey’s true wealth. Household income based on purchasing power parity (there are approximately 4.3 members per family in Turkey in contrast to an average of 2 in many European countries) was $34,000 in 2004, comparable to many EU countries.

- Turkey, with nearly 40m mobile phone users, 19m fixed line users, a solid telecoms and IT infrastructure, 99% TV and white goods penetration, a strong media, a most closely monitored and audited banking system, excellent amenities for business travel and accommodation, presents readily available infrastructures for businesses to operate.

- With the recent launch of the Baku-Ceyhan pipeline, and with others on the way, Turkey is becoming an energy corridor for oil and gas transportation.

- Turkey today has one of the most advanced Capital Markets Boards and a stock exchange with recently instituted international accounting standards. It has well-established independent regulatory bodies in the banking and the telecoms sectors as well as a competition authority. All these are necessary elements for business to operate using global standards.

- The number of tourists visiting Turkey is reaching the 20m a year level. This will positively affect the growth of business because of additional capital and investments flowing in from around the world.

 

There seems little question, therefore, that Turkey can offer solutions for the EU’s growth problems. The more investment from the EU, the more the economy of Turkey and the EU will grow and the smoother the accession process will become.

 

There is also a bigger picture. From Eastern Europe to Ukraine and Russia, from the CIS to the Middle East and North Africa, very few foreign companies can operate successfully. And Turkish businessmen and professionals are at the top of the list. They are renowned for operating comfortably and effectively anywhere in the world. The reason is simple: Turks have had a long history in living and doing business from Europe to Asia, and therefore most aware and understanding of cultural facts in their business and daily dealings in these environments. Companies from EU countries partnering Turkish companies can therefore also penetrate these markets. Turkcell, a NYSE-listed company, is a perfect example of such a growing partnership. This partnership between Turkish and European investors not only paved the way for growth in Turkey, but also led the company to enter Kazakhstan, Georgia, Azerbaijan, Moldova, Northern Cyprus and Ukraine. Turkcell, with more than 25 million customers in Turkey alone, is the 4^th largest mobile operator in Europe. The Swedish-Finnish operator, TeliaSonera partnering with a Turkish conglomerate, The Cukurova Group, has benefited from all the riches of such growth.

 

Turkcell is not the only example. There are many other companies, with sizeable investments in almost every sector throughout the region. Investments by Turkish business have helped to improve respective operating environments and create better investment prospects, which may also help the EU companies if they enter these markets.

 

Turkish business people have learned to operate using Western standards in extremely challenging environments. Today, many multinationals are seeking Turkish professional help all around the world. By possessing such capabilities, coupled with the EU’s decision last December, Turkish businessmen will not only continue to invest in the non-EU countries but will continue to invest in the EU countries at an increasing pace. In addition to the $150bn of total trade where close to 60% is with the EU, Turkish businessmen are now starting to employ EU citizens in their companies and to contribute through their taxes to the EU economy.

 

The ideals of the EU, coupled with Turkey’s drive for further integration, will greatly help in the overall efforts to achieve the Lisbon objectives and to generate sustainable wealth for the EU and its citizens.