EUROPE IS MAKING A BIG MISTAKE IN CASTING TURKEY ASIDE!

This is my first article of 2012. Happy New Year to All!

For this first article I chose to write about Turkey because AALEP has been approached to organize a special Lobbying Workshop in Istanbul.

Turkey will be one of the most influential states in the next decade in terms of contribution to the global economy. Economic growth will be 4% in 2012 which is 4 times the rate of growth predicted for the Eurozone. Turkey is a dynamic country with over 73 million inhabitants, of which 75% live in cities with a median average age of 29 years. Turkey has been successful in a variety of sectors including automobile, defense, renewable energy, banking, energy and tourism.

The current relations between Turkey and the EU are currently stuck and are considered no longer attractive. The EU is clearly not in Ankara's priority at this moment. To the extent that this is a response to the EU's own reluctance to move the accession forward this is understandable. But the can Turkey really do without the EU connection? Can the Turkish economy do without the EU and the assurance of continuing foreign direct investments from the main European countries?? Turkey makes 50 percent of its trade with the EU, and 80 percent of its foreign direct investment (FDI) comes from Europe and 70 percent of the country's tourist revenues come from European tourists. Today, Turkey has developed into a popular destination for foreign investments not only because of its competitive export sector, particularly in automobiles and consumer goods, but also because of its large domestic consumer. On the macro-economic front, Turkey stands out as a country that appears to be fundamentally strong, despite its chronic current account deficit arising from imports such as energy. Inflation is now under control which provides more confidence in the Turkish economy and its policy makers.

Since the implementation of the customs union agreement with the European Union (EU) in 1996, Turkey's trade with EU countries has grown substantially in certain areas. In particular, the Turkish automobile sector has been growing at a fast pace and has become highly competitive. Leading international manufacturers have invested heavily in the Turkish auto sector along with local Turkish partners, and a diverse range of auto component producers have also been attracted to establish operations in Turkey. One advantage driving these investments is the skilled and well-educated Turkish labour force that has sharply improved productivity in this area over the years.

The energy sector in Turkey also presents significant potential for investors. The country has begun to privatize its own power generation and transmission operations, with local as well as foreign investors competiting for licenses and existing infrastructure. There are plans to further develop traditional energy sources such as gas, oil and coal, as well as various initiatives to build out Turkey's capacities in solar and wind energy. Turkey's regional importance as an energy corridor is highly significant, not only because of the Nabucco pipeline, which will stretch all through Turkish territory, but also because of Turkey's proximity to swiftly developing energy-producing countries such as Iraq, Kazakhstan and Azerbaijan. Turkey is also exploring potential for its own oil and gas fields along the Black Sea shore.

Last but not least, Turkey has a large and fast-growing tourism industry and boasts a long heritage in this sector. Tourism income has grown year after year, and Istanbul's Ataturk Airport acts as a major hub cnnecting Europe and Asia. Both transfer traffic and traffic into Turkey have grown in excess of 20% per year over the past few years.

Geographically at the center of Europe and Asia with the Levant and Gulf regions at its doorsteps, Turkey realizes that its orientation towards Europe is just as important as its role as a regional power in the Levantine and Gulf regions. The Arab Spring has highlighted the Turkish model in the eyes of Europeans who have been extremely worried about the direction Arab revolutions would take. By openly declaring that the Turkish model could be a source of inspiration or even useful, the revolutionary leaders of Tunisia, Egypt, Yemen, and Morroco have offered some sort of appeasement for Europe. While Turkey-EU relations have gone sour, the Arab Spring has presented a new area of cooperation between Turkey and the EU. This represents an opportunity that should be exploited. Instead, 2012 seems like it will be a year of crisis between Turkey and the EU, especially as the Greek Cypriots assume the EU presidency.  One should also mention the lack of enthusiasm on the part of Turkey's “friends” to create a new momentum in talks, as almost every country is obsessed with the economic crisis. Europe's political landscape, which has strongly shifted in the direction of Christian Democratic and right-wing parties that are either outright against Turkish membership or lukewarm at best, also does not help.