EU-Turkey building bridges for prosperity

Selim Kuneralp 18.05.2011


I should first like to say that I am grateful to the organisers of this Summit for having scheduled a session focusing on relations between Turkey and the European Union. This constitutes a valuable opportunity for the importance of the relationship to be highlighted in front of the distinguished audience present here this evening. Had it not been for the approaching general elections in Turkey, the Turkish government would have been represented here this evening at ministerial level.

To my mind, the operative word in the title for this session is prosperity. As we all know, one of the fundamental objectives of the European project has been to increase prosperity by integrating economies. A better way of life and a higher standard of living are keys to peace and security. The founding fathers of Europe who had lived through the Great Depression and had understood its impact as a root cause for World War II wanted to ensure that the experience was never repeated again.

Whatever the difficulties that European economies are facing now, it is undeniable that over the course of its existence so far, the European Union has been able to deliver prosperity to its people on a scale that has never been observed before. Without the EU-wide Customs Union and later the Single Market and Monetary Union, it is unlikely that quite the same performance could have been achieved.

Turkey has always been attracted to the European project because of the promise of peace, prosperity and stability that it offered. Those are exactly the reasons that have motivated practically all the countries that have acceded to the Union or its predecessors. The path of economic integration with the EU underpins the association that has linked us to the Union since 1963 when we concluded our first agreement with the then European Economic Community.

Economic integration has always been seen as a channel for full membership. That has been the basic philosophy behind our relationship. The Customs Union which we completed with the European Union was envisaged as a stepping stone towards full integration with the EU. In the same way, the Customs Union that the original six members of the EEC completed amongst themselves in the 1960s was intended to be the harbinger of deeper integration. Indeed, it is a fact that once customs tariffs are eliminated and free trade is established between any two countries or groups of countries, a level playing field among them can only be achieved through gradual elimination of other restrictive measures. It is that logic that has led in stages to monetary union and perhaps tomorrow to full political union.

It is for that reason that our relationship cannot remain static and that it needs to deepen in order to survive. What is true for the EU itself is equally true for the relationship between Turkey and the EU. That is why sticking to the existing relationship, as some advocate is not a feasible option. Like Walter Hallstein’s proverbial bicycle, if the Turkey-EU tandem does not move forward, it will fall.

Unfortunately, our tandem has not moved very fast in recent months. The accession process has not been allowed by some member states to proceed as it should have. Political obstacles have been raised by countries that have had increasing doubts about the whole enlargement process, disregarding the fact that enlargement is undoubtedly one of the most successful policies that the EU has ever adopted. As a big country with a large population, Turkey is seen unfairly as a threat to the perceived unity and homogeneity of the EU. The rise of intolerant, extremist and indeed racist political movements in many EU countries has been helped by the deepening economic crisis that the EU has been suffering from for more than three years already. This has made it more difficult to convince doubters of the contribution that we can bring to Europe.

Since we are talking about prosperity, let me start with the contribution that Turkey as a large market brings to European Union countries. We are today the EU’s fifth biggest market, bigger than Japan, for instance or Brazil, India and Korea. Not only are we an important market for the EU, but our trade with the Union registers an enormous surplus in the latter’s favour, around 20 billion euros. There is therefore a net and substantial transfer of resources from Turkey to the EU as a result of this surplus. If Turkey had not been linked to the EU through the Customs Union which has eliminated barriers to trade, it is unlikely that trade between them would have flourished quite to the same extent. Before I am accused of making mercantilist comments, let me assure you that we are not complaining about imports from the EU which help increase our own production. However, it is a fact that in times of crisis such as the one that the EU is going through at the moment, our trade with the EU creates valuable jobs in many EU companies. The Turkish banking and insurance sectors have also been opened to investments from abroad and European companies have been the ones that have made the most of the opportunity thus created. In some sectors of the insurance industry, 70% of the market is in the hands of EU companies. This would not have been possible if our legislation had not already been largely aligned with that of the EU in the area of financial services, despite the fact that we have not been able to open the Financial Services Chapter of our accession negotiations. The banking sector has also been penetrated by EU companies. Because the Turkish economy has recovered from the global economic downturn more quickly than many EU economies, foreign banks have made in Turkey profits that improved their balance sheets at home.

There are many other examples where the economic integration of Turkey with the EU has led to increased shared prosperity for both. I could go on for much longer in this vein but our time is limited. Let me underline that were it not for the perspective of membership, we would clearly not have adopted EU legislation and implemented it in the way that we have. European business people operating in Turkey would not have found the predictable and stable environment that has attracted them in such large numbers.

But the advantages of our association with the EU are not limited to the sphere of economic interests, however important those are. As a longstanding NATO ally, Turkey has traditionally shared the same objectives as the West. Throughout the period of the Cold War, Turkey loyally played a vital role in defending the continent from possible threats that would have come from the East. Many of the potential “adversaries” of the time are now honoured members of the EU while Turkey is being kept waiting. I would be hypocritical if I did not point to the bitterness that this leads to in many of my compatriots.

Nevertheless, we continue to work together with NATO and the EU in many parts of the world, particularly in our turbulent neighbourhood. We do this because we share the same interests as the EU. The EU itself values our support, whether it is in the Balkans where Turkish troops and police forces serve under EU command, or in other parts of the world where we try to use our influence to help reach common objectives. Our Foreign Minister is in constant contact with Cathy Ashton and our interests converge on almost all the problems that beset our wider region. At a time of increased turbulence in our part of the world, we remain a pole of stability whose value is appreciated by all sensible players.

It is important and in the interest of both parties that this relationship be developed and deepened. The more Turkey aligns its legislation and practice with that of the EU in preparation for accession, the better the climate will be for investors. The business community does not need to be convinced of the advantages of membership for both the EU and Turkey. However, at a time of increased scepticism, it can continue to use its influence over governments, parliaments, the media and public opinion in general to promote that message. That would be a very valuable contribution to an effort whose successful outcome will bring more prosperity to all the parties concerned and help reach one of the most fundamental objectives of the EU.