ISSN 2330-717X

Europe’s Increasing Importance For Turkey – Analysis

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By Mustafa Kutlay*

After a long period of silence and apathy, Turkey-EU relations have entered a new phase following the bilateral summit on November 29. For Europe, Turkey’s importance has made a strong come back as an outcome of unprecedented number of refugees flocked into the European countries. The EU is now trying to take new measures to stem flow of migrants and Turkey has a particular place in this regard. On the other side of the coin, Europe’s importance for Turkey is on the rise for economic and geopolitical reasons as well.

From an economic perspective, the significance of European markets is likely to become more central than the last decade. Turkish government declared the revised Medium-Term Program (MTP) a few months ago. The MTP presents a macro framework for economic reforms and policies that would be carried out during 2016-2018. Yet this comes as the Turkish economy is expected to face considerable challenges in the post-2015 term. The economy has grown by just 3.2 percent between 2008 and 2014, whereas it had once grown by 6.8 percent between 2002 and 2007.

In the post-2015, Turkey needs to grow more rapidly; however, regional and global conditions are not likely to play a facilitating role. As a result of the spectacular collapse of state structures in the Middle East and North Africa after 2011, market opportunities in the region are rapidly shrinking. Turkey’s trade with the region, for instance, fell to $55.8 billion in 2014 from $64 billion in 2012. According to the figures from January-November 2015, Turkey’s imports from the region declined by 34 percent while its exports declined by 10 percent. The crisis erupted with Russia after the downing of Russian jet due to its violation of Turkish airspace is also likely to deteriorate regional economic balances.

The disappearance of Turkey’s markets in its nearby has led it to seek alternatives. In this context, western markets have once again come to prominence, and the Prime Minister’s recent meetings in both Great Britain and Davos were conducted with this changing geo-economics in mind. Similarly, Europe is also important for attracting investors. Foreign direct investment in Turkey, which amounted to around $20 billion before the global financial crisis, fell below $15 billion per annum in the post-crisis period. Moreover, within the first eleven months of 2015, portfolio investments decreased by $15 billion year-on-year. Considering that emerging economies are losing their attractiveness as the Fed raises interest rates, it shall become more critical than the past for Turkey to attract foreign investors.

The return of geopolitics

From a geopolitical perspective as well, Europe’s importance is on the rise for Turkey. In fact, we have recently witnessed the return of geopolitics in Turkey-EU relations: the wave of migration stemming from the Syrian civil war, and Europe’s failure to cope therewith, has pushed bilateral cooperation to center stage. Thus, the geopolitics of Turkey has once again become a key variable to be considered by European politicians. However, there are significant problems that stand in the way of full cooperation between the parties in resolving the refugee issue.

First, Europe does not have a coherent policy mix to tackle the acute crisis. Merkel, who is pursuing a milder approach and insisting on close cooperation with Turkey, is facing growing pressure and isolation both in Germany and all across Europe. Several EU countries that have opposed the fair distribution of refuges by means of compulsory quotas have brought the reinstatement of border controls back onto the European agenda.

Second, the design of the Turkey-EU Joint Action Plan requires the careful maintenance of a delicate balance. According to the plan, it is expected that Turkey would pursue a tighter border control to stem the influx of refugees to Europe while also exerting a more concerted effort to better integrate Syrian refugees in to Turkish labor market. It is also expected that Turkey would fulfill the provisions of the readmission agreement, and therewith gain access to ‘visa-free Europe’ as of November 2016.

The risk of a new vicious cycle

The devil is in the detail, however: before Turkey is offered ‘visa-free Europe,’ it must fulfill the detailed requirements and conditions of the readmission agreement, which should later be confirmed by the EU members. For obvious reasons, it will not be politically easy for many European countries to make the decision to grant Turkish citizens visa-free travel within the Schengen zone. Thus, the two parties will need to exert a great amount of effort to actualize both the readmission agreement and the target of ‘visa-free Europe.’ If this process is not carried out with the utmost sensitivity, relations might risk falling into a new vicious cycle. In such a case, as a product of the action plan’s dysfunctionality, the EU could come to criticize Turkey for not fulfilling the conditions of the readmission agreement. Turkish side could then counter that the EU is not willing to fulfill its commitment to allow Turkey access to ‘visa-free Europe’ and is therefore failing to heed the principle of pacta sunt servanda.

The parties therefore must work hard to restitute the mutual trust and promote an institutional framework that ensures their adherence to the roadmap. In this sense, the continuation of Turkey’s EU accession process and the opening of new negotiation chapters and the activation of the EU anchor by accelerating the reform process of Turkey are crucial. Making progress on the political problems that have hampered the negotiations up until now, especially the Cyprus problem, stands out as a fundamental prerequisite for the establishment of a new equilibrium in this direction.

In conclusion, Europe has once again come to prominence on Turkey’s political and economic agenda. As the global economic balances shift against developing countries and the economic consequences of the state failures in Turkey’s surrounding geography is now the new normal, western markets have become all the more attractive for Turkey. Meanwhile, regional instability, the refugee crisis, and an increasing wave of terrorism also necessitate deepened cooperation between Turkey and the EU. It obviously depends on the political elites on both sides whether to invest in bilateral relations or not.

Asst. Prof. Mustafa Kutlay is the Director of Centre for European Studies at the International Strategic Research Organization (USAK). He is also a faculty member at the TOBB University of Economics and Technology.

JTW

JTW

JTW - the Journal of Turkish Weekly - is a respected Turkish news source in English language on international politics. Established in 2004, JTW is published by Ankara-based Turkish think tank International Strategic Research Organization (USAK).

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