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Turkey and the EU-Turkey Relations by Georg Erber and Burcu Erdogan. Presentation for the d elegation of the European Union to Turkey in partnership with hosting partner organizations. 12. February 2010. Some basic facts of the Turkish Economy. Inflation. Exchange rate. Fiscal deficit.
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Turkey and the EU-Turkey Relationsby Georg Erberand Burcu Erdogan Presentation for the delegation of the European Union to Turkey in partnership with hosting partner organizations 12. February 2010
Summing up • High growth in real GDP, but some sharp recessions • Relatively strong recovery expected in 2010 with 3.4% • Inflation decreased significantly since 2000, but still high with regard to the 2% Eurozone target rate with expected 6.7% in 2010 • Small spread in the short-run and long-run interest rate (flat yield curve) • Long-term interest rate of 17% to 15% indicate that a further decline in inflation below the 6% rate is quite unlikely, currently inflation will increase again beyond 7% • Fiscal deficit is significantly above 3% (Maastricht criterium) with -6.6% (2009) and -5.2% (2010) • Public debt to GDP-Ratio still low with 40% (2008) and 48.5 (2009) • Turkish lira relatively stable to the US Dollar, but less so to the Euro (Why more a US Dollar crawling peg than a Euro peg?)
Structure of the Turkish economy • Turkey's dynamic economy is a complex mix of modern industry and commerce along with a traditional agriculture sector that still accounts for about 30% of employment. • It has a strong and rapidly growing private sector, yet the state remains a major participant in basic industry, banking, transport, and communication. • The largest industrial sector is textiles and clothing, which accounts for one-third of industrial employment; it faces stiff competition in international markets with the end of the global quota system. • However, other sectors, notably the automotive and electronics industries, are rising in importance within Turkey's export mix.
Challenges of the Turkish economy • Political: In 2007 and 2008, Turkish financial markets weathered significant domestic political turmoil, including turbulence sparked by controversy over the selection of former Foreign Minister Abdullah GUL as Turkey's 11th president and the possible closure of the Justice and Development Party (AKP). • Financial: Turkey's financial markets and banking system also weathered the 2009 global financial crisis and did not suffer signifcant declines due to banking reforms implemented during the country's own financial crisis in 2001. • International trade: Economic fundamentals are sound, but the Turkish economy may be faced with more negative economic indicators in 2010 as the global economic slowdown continues to curb demand for Turkish exports. BoT will become negative in 2010. • Foreign investors confidence is fragile: Turkey's high current account deficit leaves the economy vulnerable to destabilizing shifts in investor confidence.
EU accession • The earliest date that Turkey could enter the EU is 2013, the date when the next financial perspectives (the EU's six year budgetary perspectives) will come into force. • Ankara is currently aiming to comply with EU law by this date, but Brussels has refused to back 2013 as a deadline • In 2006 European Commission President José Manuel Barroso said that the accession process will take at least until 2021. • Question: What is the current assessment of you?
Pros • Proponents of Turkey's membership argue that it is a key regional power with a large economy and the second largest military force of NATO. • That might enhance the EU's position as a global geostrategic player; given Turkey's geographic location and economic, political, cultural and historic ties in regions with large natural resources that are at the immediate vicinity of the EU's geopolitical sphere of influence; such as the East Mediterranean and Black Sea coasts, the Middle East, the Caspian Sea basin and Central Asia. • Question: What is your view on these considerations?
Cons • Censorship and Article 301 • Women rights • Treatment of ethnic minorities (Kurds, etc.) • Unsolved conflicts with Greece over Cyprus • Azerbaijan issue • Question: What is your view on these considerations?
Cons • Upon joining the EU, Turkey's 71 million inhabitants would bestow the second largest number of Member of the European Parliament. • Demographic projections indicate that Turkey would surpass Germany in the number of seats by 2020. • This would change the nature of the EU fundamentally, i.e. in religion Christian-Islamic-Mix and culturally with regard to values. • Question: What is your view on these considerations?
Vanishing enthusiasm in Turkey: The opening of membership talks with the EU in December 2004 was celebrated by Turkey with much fanfare, but the Turkish populace has become increasingly skeptical as negotiations are delayed based on what it views as lukewarm support for its accession to the EU and alleged double standards in its negotiations particularly with regard to the French and Austrian referendums. A mid-2006 Eurobarometer survey revealed that 43% of Turkish citizens view the EU positively; just 35% trust the EU, 45% support enlargement and just 29% support an EU constitution.
