Turkey’s EU Membership: The Moment of Truth

William Chislett

Introduction: 41 Years Knocking at the EU’s Door

The European Commission took a momentous decision in October when it recommended, with certain conditions, that accession talks start with Turkey, the most secular state among the Islamic nations created by Mustafa Kemal Atatürk in 1923 from the ruins of the Ottoman Empire. The decision, however, has to be endorsed by the leaders of the European Union (EU) member states at their meeting in Brussels on December 17. No other country seeking full EU membership has stirred up as many passions in favour or against its entry as Turkey. The ‘problems’ raised by the prospect of membership of Greece (1981), Spain and Portugal (1986), Finland (1995) and this year eight former communist countries were insignificant compared to those of Turkey. Opinion polls in many countries, particularly France, show widespread opposition to Turkey’s EU membership. Turkey’s accession negotiations, expected to begin in 2005 with membership not until 2015, will be in a special category because of its size, poverty and Muslim religion. The Commission, in an unprecedented move, warned from the outset that it would recommend the suspension of negotiations in case of a ‘serious and persistent’ breach of human rights or European values. The reform-monitoring process will also be more stringent. Membership is thus far from guaranteed.

Turkey has the longest association with the European Union (EU) among past and probably future candidate countries. It has been knocking at the EU’s door since 1963 when it became an associate member of the then European Economic Community (see Appendix 1). In 1970, the year Spain signed a Preferential Trade Agreement (in response to a request made in 1964 for associate status), Turkey signed an Additional Protocol which envisaged its eventual membership. In 1987, one year after Spain joined the EU, the government applied for full membership and in 1996 the country became the first and so far the only non-EU member to form a Customs Union with the EU for industrial goods and processed agricultural products before becoming a full member. The decision of the December 1997 Luxembourg summit not to include Turkey among the 10 candidate countries, who joined in May 2004, and two more by 2007 caused a major rift with Ankara which virtually cut off relations with Brussels. The thaw lifted two years later at the Helsinki summit when Turkey’s status was upgraded from an applicant to a candidate country.

Once Turkey became a candidate country, because it was considered to have the basic features of a democratic system while at the same time displaying serious shortcomings in human rights and protection of minorities, the EU was boxed into a corner and could not put off accession negotiations for ever. A rejection, given the undeniable progress that Turkey has made, would have confirmed the saying of Atatürk that ‘The West has always been prejudiced against the Turks, but we Turks have always consistently moved towards the West.’ It would also have seriously dented the credibility of the EU project, particularly in the Muslim world, and triggered a backlash in Turkey for ‘double standards’.

For the EU, the home of secularism, letting in Turkey, whose population is officially 99.8% Muslim, would prove that the Union is not just a Christian club and that it is open to other cultures and religions. A Union with Turkey would be more cosmopolitan, more open-ended and perhaps even more secular. More than 14 million Muslims already live in the EU-25 (see Table 1) and including Russia and Turkey the number is over 100 million. As an EU member Turkey could be a beacon for the much-maligned Muslim world, particularly neighbouring Iran and Iraq which have embarked on democratization processes of varying degrees.

Table 1. Muslim population in Turkey and selected European countries (1) (in millions and as a % of total population)

Muslim PopulationAs a % of Total Population
United Kingdom1.482.5

(1) Estimates for 2003.

Source: IslamPopulation.com

Significantly, the text of the new constitution for the EU adopted in Brussels in June omits any mention of Christianity, to the chagrin of some governments which had called for the document to be amended in order ‘to recognise an historical truth’ and acknowledge ‘the Christian roots of Europe.’ Cardinal Joseph Ratzinger, the doctrinal head of the Roman Catholic Church, said Turkey had always been ‘in permanent contrast to Europe’ and that it should seek its future in an association of Muslim nations and not in the EU.[1] A New York Times editorial put the secular view neatly when it called Ratzinger a ‘meddlesome’ cleric who was ‘inflaming an important political debate. He is elevating religious differences over political process and personal beliefs over values that are universal, not a Judeo-Christian monopoly.’[2] The inclusion of Christianity in the constitution would have gone against the secular and tolerant nature of the European project (which is based on political rather than religious or geographical considerations) and sent a negative signal in the post-September 11 world where bridging the gap between the West and the Muslim world has taken on a fresh urgency. Turkey itself has not been free of terrorism (62 people were killed and 644 wounded in four terrorist bomb attacks in November 2003 attributed to al-Qaeda).

Turkey straddles Europe and Asia (97% of the country’s land mass is in the latter continent and around 90% of the population); and the Asian dimension would give the EU greater influence in one of the world’s most troubled areas. As well as Iran and Iraq, Turkey also has borders with Syria, Armenia (closed since 1993 due to the Karabag conflict between Azerbaijan and Armenia and other issues including historic tensions arising from the 1915-16 Armenian massacre), Georgia and Azerbaijan. As a member of Nato since 1952 (with the alliance’s second-largest standing army after the US), Turkey is in a position to make a significant contribution to the security and defence of Europe and help the EU to become a global foreign power and more of a counterweight to the unilateralism of the United States.

For Turkey, the benefits of full EU membership, particularly the economic ones, are much more tangible. It would anchor the economy into the free market system and over the long term bring much greater prosperity to its population of around 70 million. Spain’s progress in this sphere is a good example. Indeed, Spain is increasingly held up in Turkey as the model to follow; the Spanish government is one of the most active supporters of Turkey’s EU membership (see separate section). Foreign direct investment, which is miniscule in Turkey, should surge with EU membership and with it create jobs and probably reduce the country’s potential for massive migration to richer EU countries, one of the main fears regarding Turkey’s membership.

Turkey is a very big country. Its population today is only around 10 million less than Germany’s 82 million, and almost the same as the combined populations of the 10 countries that joined the EU in May. By 2015 Turkey’s population would be on a par with Germany’s 80 million (it is shrinking), although it would make up less than 15% of an EU that would then embrace around 600 million people, and in 2025 it would be larger at 89 million. The changes in surface area, population and GDP that would be brought about by Turkey’s EU membership are shown in Table 2.

Table 2. Impact of Enlargements

Increase inSurfaceArea (%)Increase inPopulation(%)Increasein TotalGDP1 (%)Change in perCapita GDP2(%)Average perCapita GDP2(EU15 = 100)
EU-27/EU-27 + Turkey318152.2-9.179.4

(1) In euros.

(2) In PPS, 2003 GDP data.

(3) Without prejudice to the accession of any other country in the meantime, eg, Croatia.

Source: Eurostat, NSI, calculations DG REGIO.

Under a key provision of Europe’s new constitution, known as double-majority voting, Turkey would automatically be accorded a strong position in EU decision-making. Under the constitution all decisions that do not need to be made unanimously –many matters, especially foreign policy and taxation, still do– must be backed by at least 65% of the EU’s population and 55% of member states. Put another way, any country would need support from 35% of the EU population and 45% of member states to block a proposal it did not like. According to Valery Giscard d’Estaing, the former French president and chairman of the European Convention (who believes that Turkey is ‘not a European country’ and its membership would spell ‘the end of Europe’), the double-majority voting system makes Turkish entry less probable.[3] ‘This is a rule that we can’t change, and the consequences would be much greater’, he said. ‘It would give Turkey a significant weight in blocking decisions’. However, with the fate of the constitution itself still unknown, pending referendums (Spain’s will be the first in February 2005), the issue remains theoretical for the moment. Furthermore, the formula could be modified to include a GDP factor. And even if Turkey is the most populous country it would not be able to block any decisions alone; it would need the populations of at least two other big countries to meet the required 35% mark.

It is the size of Turkey’s population and the country’s poverty that raises the spectre of massive migration of Turks to the EU countries. This frightens people and is already playing into the hands of populist politicians. An estimated 2.6 million of the EU’s 3.6 million people of Turkish origin live in Germany and around 370,000 in France (see Table 3).

Table 3. Turkish Population in EU Countries (thousands)

TotalTurkish NationalityEU Naturalised

Source: Report of the Independent Commission on Turkey, September 2004.

Turkey is in the midst of a demographic transition, reflecting a fairly rapid decline of the population growth rate, from the 2.5% to 3% range in the 1950s and 1960s, to less than 1.5% at the beginning of this century. Nevertheless, its population will still increase by another 25% over the next two decades. The positive side to this is that Turkey’s dynamic demographic profile comes at a time when the population of most of the rest of the EU is stagnating and ‘greying’. Spain’s experience so far in immigration is a good case in point. Its foreign population, based on registration, rose from 637,085 in 1998 to 3.1 million in July 2004 (7% of the total population) and over this period unemployment was substantially reduced. Immigrants are doing many of the jobs that Spaniards are no longer prepared to do.

Furthermore, the estimates made so far regarding further migration from Turkey indicate that EU countries will not be flooded with Turks. Applying the conclusions of the report by Germany’s DIW institute on potential migration to the EU-15 from the 10 new member states suggests that Turkey’s potential migration flows (once it is inside the EU) would be less than 250,000 people a year. Keeping Turkey out of the EU, and thus condemning it to permanent poverty (no one can deny that the EU has spread wealth across previously underdeveloped countries from Spain to Ireland) is more likely in the long run to encourage Turks to migrate.

Perhaps to placate public opinion, the Commission said in its landmark report that ‘permanent safeguards (against migration) could be considered in order to avoid serious disturbances on the EU labour market’. Olli Rehn, the new European enlargement commissioner, told the European parliament in October that he would insist on a permanent safeguard clause for Turkey. This would allow the EU to close its borders to large numbers of labour migrants at any point in the future –not just for seven years, as is the case for Poland and the other former communist countries that joined the EU in May–. This clause is discriminatory as it goes against free movement of people, a fundamental pillar of the Union, which cannot be denied for ever.

The same fears about migration were raised over Spain’s EU membership and were not fulfilled, but Turkey is a much poorer country than Spain was when it joined the EU in 1986. When Spain joined the EU-15 its per capita income was 72% of the then average compared with Turkey’s 27% in 2003 (see Table 4). In 2003, over one third of the Turkish labour force was employed in the agricultural sector while output only amounted to 12.2% of GDP. In the EU-25, the 5% of the labour force that is in agriculture generates 2.2% of total value added. Turkey has as many people working in agriculture as all of the EU-15 countries.

Table 4. Per Capita GDP of EU-25 and Turkey in 2003 in Purchasing Power Parities (EU-25 = 100)

United Kingdom119Czech Republic80

Note: purchasing-power parity rates give a more accurate comparison of living standards than market exchange rates as they reflect price differentials between countries.

Source: Eurostat.

In the UN’s latest Human Development Index, Turkey is ranked well below Romania, the least developed country which is scheduled to join the EU by 2007 (see Table 5).

Ranking1Life Expectancy
at Birth(2002)
Adult Literacy
Rate (% aged 15and above) 2002
Combined Primary,
Secondary & Tertiary
Gross Enrolment Ratio(%) 2001-02
GDP per Capita
(PPP US$)2002
20. Spain79.297.79221,460
27. Slovenia76.299.79018,540
30. Cyprus78.296.87418,360
31. Malta78.392.67717,640
32. Czech Republic75.37815,780
36. Estonia71.699.89612,260
37. Poland73.899.79010,560
38. Hungary71.799.38613,400
41. Lithuania72.599.69010,320
42. Slovakia73.699.77412,840
50. Latvia70.999.7879,210
88 Turkey70.486.5686,390

(1) Out of 175 countries.

Source: United Nations Human Development Report, 2004.

Turkey’s membership tends to be viewed more as a liability than an asset. Recep Tayyip Erdogan, Turkey’s prime minister, used more colourful language when he told the Bertelsmann International Forum in Berlin in January 2004, as one would expect him to do in this year of heavy marketing of his country, that Turkey should be viewed as a rose. Roses, of course, have thorns but that does not stop them being roses.

Is Turkey Part of Europe?

No country is eligible for EU membership unless it is deemed European, and the fact that the European Commission has given the green light to accession negotiations answers the question of whether Turkey is part of Europe or not, at least in the Commission’s mind. As this issue is one that has inflamed much of the public debate and will continue to do so, it is well worth pausing to examine it. When Turkey became an associate member in 1963 the then president of the Commission, Professor Walter Hallstein, declared: ‘Turkey is part of Europe. This is the ultimate meaning of what we are doing today. It confirms in incomparably topical form a truth which is more than the summary expression of a geographical concept or of a historical fact that has held good for several centuries’.

Influential voices have been raised against Turkey’s membership on ‘European’ grounds including that of the former French president Valery Giscard d’Estaing. His remarks, which some interpreted as an assertion that the EU is ‘a Christian club’, caused a storm in the Commission. They reflected in blunt language what many EU politicians whisper privately, though not Germany’s opposition Christian Democrats (CDU) and their allies in the Christian Socialist Union who say it out loud.

The EU itself has already rebuffed the geographical argument with the accession of Cyprus (most of which is east of Ankara) this year. Nevertheless it has not been lost on Turks that euro notes display a map showing North Africa and Asian (but not European, ie, west of the Bosporus) Turkey coloured in such a way as to show that it is different from Europe. Although 97% of Turkey’s land mass is considered to be geographically in Asia, this area played a key role in the Eastern Roman Empire and in the history of Christianity (the Virgin Mary’s last home and where St. Paul preached and extended Christianity beyond the limits of Judaism, thereby laying the foundations of a world-wide religion). Anatolia was one of the cradles of European civilisation.

Approaches by Morocco and Israel to join the EU were turned down on the grounds that they both lay outside the borders of Europe, although the fact that one of them is in the African continent and the other is part of the Middle East does not prevent them from taking part in the annual European Song Contest, as does Turkey (which won the contest in 2003). Turkey also deliberates in the Council of Europe and plays football in the European football championships, but this is hardly a serious way to identify the frontiers of Europe. The Economist and the BBC have no doubts about where Turkey stands: they put news on the country in their Europe section, and also Russia, but again this is hardly a definitive criterion for being considered part of Europe.

As the September 2004 report by the Independent Commission on Turkey points out, such objections against Turkey joining the EU should have been raised in 1959 at the time of Turkey’s first application, in 1987 when Turkey applied for the second time, or in 1999 before Turkey was given candidate status. ‘No government can claim that these decisions, including the conclusions of the Copenhagen European Council of 2002 on accession negotiations, were not taken in full knowledge of all circumstances’.

The problem is that Turkey is imperfectly European (Samuel Huntingdon, the author of the Clash of Civilizations, calls it a ‘torn country’). There is no clear cut answer as to whether Turkey is part of Europe, although the Ottoman Empire (from 1350 to 1918) included vast swathes of Europe (its army seized Constantinople in 1453 from the Roman Empire and was turned back at the gates of Vienna in 1529 and 1683)[4]. Indeed throughoutthe 19th Century the Ottoman Empire was known as the ‘Sick Man of Europe’ (not of Asia).Part of the problem lies in the fact that, unlike Australia, America and Africa, Europe does not really have clear geographical boundaries and a good deal of uniformity. The Ural mountains, the Black Sea, the Caucasus and the Caspian Sea are generally regarded as the traditional boundaries, but Europe is also part of the Eurasian landmass. Europe’s southern border –Spain– would appear to be clear since the expulsion of the Moors from Spain in 1492, but its eastern and western frontiers are more problematic.[5] History has seen continual changes in Europe’s eastern frontiers.

In the 16th and 17th centuries when people hypothesised about a Utopia-like future union of Europe, they assumed that Turkey would be in it for by then Turkey was part of the European system in a way that North Africa, Egypt and the Middle East were not.

European identity, particularly since the Enlightenment in the 18th century, has a cultural component to it as well as a physical geographical one. Most of the history of Europe since the Enlightenment has also been a history of the rise of national states, including Turkey, and of wars between these states, right down to the 20th century. The Council of Europe was established in 1949 in France as a first step, after World War II, in achieving greater unity between European countries, and the crucial step in building a community where armed conflict could never again become an acceptable alternative to cooperation and negotiation came in 1957 with the formation of the European Economic Community.

The evolution of the Turkish nation state, its conceptions of political sovereignty and even Turkish nationalism itself are inseparable from the overall historical matrix of European nationalism. Turkey’s ‘psychological’ distancing from Europe during part of the 20th century was essentially the by-product of the divisive effects on the continent of the Soviet occupation of Eastern Europe and the Balkans after World War II. Turkey’s ‘European’ case has also not been helped by the negative stereotype of the country accentuated in 20th century travel books, fiction and films, most notably Midnight Express[6].

Turkey shares the values of democracy, pluralism, freedom of thought, humanism, tolerance and scientific rationality that are the views broadly accepted across Europe, but again does this make it part of Europe? When Özdem Sanberk, a distinguished Turkish ambassador, is asked this question he tells people to look at the 30 or so main channels of Turkish television as they reflect a society that belongs irrevocably to 21st century Europe. Turkey is also part of Europe in the economic aspect (52% of its exports go to the EU and the EU supplies 46% of its imports), in terms of heritage, monuments and history, in terms of its security architecture (NATO), and it is likely to become an increasingly important part of the energy supply infrastructure (through a 1,750km oil pipeline from Baku on the Caspian sea to Turkey’s Mediterranean port of Ceyhan). Turkey is geographically and culturally close to 65% of all world oil and natural gas reserves.

Andrew Mango, the author of the definitive biography of Atatürk, reminds us in his recent book that Turkey copied the laws and institutions of republican France, its social networks are similar to those in Italy, its economic development through large family-owned conglomerates was paralleled in Portugal and the kulturkampf fought in Turkey between secularists and religious believers has ranged throughout continental Europe[7]. ‘If the Turks speak of “Europe” as a place outside their borders, so too did Spaniards, Greeks and other peoples now within the European Union’, he writes. Many Spaniards, 18 years after the country joined the EU, still say they are going on holiday to ‘Europe’ when they mean France, Germany or Italy.

However, the acceptance of Turkey into the EU would almost certainly open a Pandora’s Box of requests from other countries to join the Union. With Turkey inside the Union, it would be very difficult to reject Georgia and Armenia. Not only are they small countries, but they have a strong and specifically Christian identity. And if they applied, there is no doubt that the third Caucasian country, Azerbaijan, would also want to join. And why should the people of Belarus, Ukraine and Moldova be less entitled to a European standard of living than those of Estonia, Romania and Bulgaria? And what about Russia, whose population is twice as big as Turkey’s?

Political Criteria: A Bumpy Road[8]

It is one of the paradoxes of Turkey that the moderate Islamic government of the Justice and Development Party (AKP) has made more progress towards creating a fully fledged democracy since it was swept to power in November 2002 than any previous government. The AKP, with 34% of the vote, won 363 of the 550 seats. No government since Turgut Ozal’s single-party one of 1983 has had such a free hand. The absence of yet another ineffective coalition government rife with internal quarrels has undoubtedly made it easier to press ahead with reforms, and at a time when the clock is ticking away. (The Republic has had 59 governments in its 81 years). AKP also has a vested interest in speeding up reforms as it believes it would be better looked after by being inside rather than outside the EU and beholden to the fiercely secular establishment, headed by the military, the guardians of the constitution, which played a leading role in banning two previous Islamist parties.

The political criteria, unlike the economic ones, are basically intangible and thus progress is more difficult to measure, but it is generally accepted that while substantial advances have been made and Turkey has achieved a critical mass in this sphere there is still some way to go. The hub of the problem lies in the gap between reforms on paper and their slow and uneven implementation, and this, in turn, entails changing the mentality of what Turks call the ‘deep state’, a loose alliance of forces within the army, the security services, the bureaucracy and the judiciarywho are opposed to democratic reforms that challenge their power. Turkey’s constitution, drawn up by the military in 1982, is essentially written from the standpoint of the state’s as opposed to the individual’s rights. Mindsets do not change overnight, and not just in the status quo. For example, a Turkish man is no longer automatically treated by law as the head of the family, and women are entitled to an equal share of joint assets after a divorce, but old attitudes still linger, particularly in rural areas. Even worse, ‘honour killings’ (the murder by men of female relations deemed to have besmirched the family’s moral standing) still take place and are tolerated by a sizeable part of Turkish society. Almost all the crimes of honour are committed in eastern and south-eastern Turkey, where the suicide rate among women –imposed as an alternative to murder by a family member or to escape a forced marriage– is twice as high as in the rest of the country.

Parliament has approved reforms that impinge upon sensitive issues in the Turkish context, such as freedom of expression, freedom of demonstration, cultural rights for Kurds (who number around 14 million) and civilian control of the military. In June, taboos began to crumble as Turkish state television started broadcasts in Kurdish and four prominent Kurdish activists were released from prison, one of whom, Leyla Zana, was awarded the Sakharov Prize in 1995 by the European Parliament for defending human rights. Such is the reforming zeal of the AKP that parliament approved a Freedom of Information bill in October 2003, something that Germany and the UK do not have. The government has also taken steps to try to ensure effective implementation of the reforms by setting up a Reform Monitoring Group which holds weekly meetings.

Turkey has a multi-party democracy, but parliament is not truly representative of the country’s political spectrum because of the high threshold of 10% of the vote required for seats in the Grand National Assembly. This limitation makes it difficult for minorities to be represented in parliament and is essentially aimed at Kurdish parties, although originally it was also designed to keep small, left-wing parties out of Parliament, and to limit the need to build unworkable coalitions (which it failed to do). In the 2002 election only two out of the 18 parties running won seats in parliament (the Republican People’s Party, the main opposition, obtained 178 and nine independent deputies were also elected). The Democratic People’s Party (Dehap), a mainly Kurdish party, did not reach the 10% threshold, despite receiving over 45% of the votes (some 2 million people) in five of Turkey’s 81 provinces. In Spain, for example, the threshold is 5%, which has allowed the political wing of the Basque terrorist organization, ETA, to win seats. Reducing the threshold, however, is not a political condition of EU membership.

Another problematic area is the judiciary. The state security courts were abolished in May 2004, and a new Penal Code was adopted in September, replacing the 80 year old code. In general, the code adopts modern European standards in line with the recent developments of criminal law in many European countries. It strengthens sanctions against certain human rights violations and introduces new offences reflecting recent developments in international criminal law such as genocide and crimes against humanity, discrimination and abuse of personal data. The death penalty has been abolished.

As in Spain, however, there is an enormous backlog of cases and the system moves at a snail’s pace. The overwhelming caseload does not allow enough time for the hearings and results in inadequate reading of case files, which has implications for the rights of the defence. The main problem, however, is that the judiciary does not always act in an impartial and consistent manner or apply changes which parliament makes to the constitution or the Penal Code, although this is increasingly less the case. The principle of the independence of the judiciary is enshrined in the Turkish Constitution but it is to a certain extent undermined by several other constitutional provisions. The constitution provides that judges and prosecutors are attached to the Ministry of Justice as regards their administrative functions. In addition, appointment, promotion and discipline and, broadly speaking, the careers of all judges and prosecutors are determined by the Supreme Council of Judges and Prosecutors, which is chaired by the Minister of Justice and of which the Under-Secretary of the Ministry of Justice is also a member. The possibility of removal and transfer to less attractive regions of Turkey by the Supreme Council may influence judges’ attitudes and decisions. The influence of the executive is further enhanced by the fact that the High Council does not have its own secretariat and its premises are inside the Ministry of Justice building. It is also entirely dependent upon a personnel directorate and inspection board of the Ministry of Justice for its administrative tasks. A Justice Academy responsible for training both candidate judges and prosecutors as well as for the continuing training of serving judges and prosecutors started to operate in 2004.

In human rights Turkey has made progress in adopting international conventions, and in the principle of the supremacy of international and European treaties ratified by Turkey over domestic legislation has been enshrined in constitutional amendments. In March 2004 the Council of Europe closed its monitoring procedure for Turkey, in recognition of the progress made in democracy, human rights and rule of law[9]. The European Commission’s 2004 progress report says that says that ‘torture is no longer systematic, but numerous cases of ill-treatment, including torture, still continue to occur and further efforts will be required to eradicate such practices’. The government has committed itself to a policy of zero tolerance with respect to torture and legislation in this area has been considerably strengthened.

Corruption remains a very serious problem, and is cited by most businessmen as the main obstacle preventing the flow of more foreign direct investment into the country. The incentive for poorly paid civil servants to seek a bribe is considerable. Turkey’s corruption, however, is not as bad as in Romania (due to join the EU in 2007), according to the Transparency International Corruption Perceptions Index (see Table 6), and in the latest Opacity Index the transparency of Turkey’s business climate is ranked the same as Italy’s and just above Mexico’s (see Table 7). The Opacity Index measures the risks associated with unclear legal systems, regulations, economic policies, corporate governance standards and corruption in 48 countries. The final score is the average of five sub indices.

Table 6. Transparency International Corruption Perceptions Index, 2004

Score (1)Ranking out of 146 Countries
  United Kingdom8.611
New EU members and candidates
  Czech Republic4.249

(1) The CPI score relates to perceptions of the degree of corruption as seen by business people, academics and risk analysts, and ranges between 10 (highly clean) and 0 (highly corrupt).

Source: Transparency International.

Table 7. Selected Countries in the 2004 Opacity Index (100 = complete opacity)

United Kingdom13

Source: Kurtzman Group, Milken Institute.

Problems also remain in freedom of expression. Prosecutors have used provisions of the Penal Code and of the Anti Terror Law to limit freedom of expression, particularly regarding national unity and the secular structure of the country. The Commission’s report says ‘journalists, writers and publishers continue to be sentenced for reasons that contravene the standards of the European Court of Human Rights’.

More also needs to be done in the field of religious freedom. For example, it is almost impossible for non-Muslim religious communities to build churches or even repair existing ones, while Muslim communities face very few or no restrictions on building mosques in EU countries.

As regards political parties, the law has been changed to make it more difficult to dissolve a party. A three-fifths majority in the Constitutional Court is now required.

The government has increasingly asserted its control over the military, which has long played a leading role in the country, but the armed forces continue to exercise influence through a series of informal channels. General Dick Berlijn, the Dutch Chief of Defence Staff, raised the eyebrows of the Turkish military when he told a conference in Ankara in September 2004 that there was still a ‘lot’ to do to further align civil-military relations with European practice. The EU, however, has never spelt out clearly all that Turkey should do.

Atatürk was a general and ruled the country like an enlightened autocrat, but very shortly after the proclamation of the republic in 1923 he passed a law banning soldiers from holding political office unless they resigned their commands. By prohibiting active involvement in politics he stopped the military from becoming a corrupt institution (unlike the case of Latin America). His successor, Ismet Inonu, was also a soldier. He established a multi-party system and left power to the opposition who won the elections in 1950. This was the first transfer of power through elections in a country with a predominantly Muslim population. The armed forces mounted three coups d’état between 1960 and 1980 and one so-called ‘post-modern’ coup in June 1997 when they forced Turkey’s first Islamist-led government out of office (today’s ruling AKP grew out of the Welfare Party banned in 1998 and its successor, the Virtue Party, outlawed in 2001).

It was the failure of parliamentary democracy to provide prosperity, efficient government or political stability which brought the military back into the political arena from time to time; it never tried to establish a dictatorship and always returned to the barracks when it deemed that the civilian authorities were ready to assume their responsibilities[10]. According to the first expert report on civil-military relations by Dutch and Turkish think tanks, with the involvement of the military, ‘despite undemocratic appearances, neither the Turkish armed forces nor the Turkish electorate regarded any of this as fundamentally anti-democratic behaviour but, rather, as extraordinary action fully necessary to safeguard democracy’[11]. The military takes its guardianship role very seriously.

The armed forces are a popular and prestigious institution in Turkey, partly because they are seen to be above the discredited and generally corrupt political class, particularly the non-Islamist parties, and because they are viewed by the secular establishment as the bulwark against Islamic fundamentalism. The armed forces regularly top the lists of the most trusted institutions. This support for the military, which is not properly understood abroad where perceptions have not fully caught up with reality, is also underpinned by public perceptions of the security environment. Turks are taught, and most believe, that their country is under continual external and internal threat. Between 1984 and 1999, when Abdullah Öcalan the leader of the banned Kurdistan Workers’ Party (PKK) was captured, the army fought a war in the south-east of the country against the PKK, which claimed an estimated 36,000 lives. A state of emergency was imposed in the area in 1987 and was not entirely lifted until November 2002.

The long-time bête noir of the EU was the National Security Council (NSC), a powerful body composed of equal numbers of senior military officers and civilian ministers, whose General Secretariat acted as if it was a kind of shadow government. The military also has some informal mechanisms through which it can influence political life. A number of changes have been made to the NSC. The advisory nature of the NSC was confirmed in a law implementing the amendment of October 2001 relating to Article 118 of the Constitution (drawn up by the military in 1982), which also increased the number of civilians in the NSC. The provision that ‘the NSC will report to the Council of Ministers the views it has reached and its suggestions’ has been abrogated as have other provisions giving the NSC unlimited access to any civilian agency. The NSC now has a civilian secretary-general and is essentially the consultative body it was originally set up to be.

Defence spending is becoming more transparent. In May 2004, the defence secrecy clause was struck from the provisions governing the work of the Audit Court. The ‘books’ of the armed forces –the official budget and special supplementary funds– have long lain beyond serious scrutiny. From 2005 this will no longer be the case. The General Staff has also lost the right to select a member of the High Education Board, it no longer has a member on the High Audio-Visual Board and the state security courts have been abolished. Defence expenditure has also been reduced, and in 2004 was lower than education spending for the first time (2.6% of GDP vs 3.06%).

Although the EU has never said so, there are two respects where Turkey is perceived to be out of line, according to the conclusions of the first expert report[12]. One is how defence decision-making is organised, an area where the Turkish military appears to have too much authority and too little day-to-day political direction, and where the arrangement by which the General Staff is accountable directly to the prime minister, and not to the defence minister, seems to be construed (or misconstrued) not as guaranteeing civil control of the armed forces but as providing the military with privileged access to the head of government. The other is how democratic oversight of defence is provided for, an area where the Turkish military is thought to have too much de facto autonomy, since legislative oversight is inadequate, at least in comparison with best practice in Europe, and where there is not a great deal of wider societal oversight, partly due to the lack of all-round transparency.

Symptomatic of the changed situation and greater circumspection of the military was the ‘letters’ affair. In June 2004 the right wing Nationalist Action Party (NAP) wrote to 313 Turkish generals and admirals complaining about the government’s ‘passive attitude regarding some provocative Kurdish initiatives by leading members of a Kurdish-oriented political party’. On the instructions of the liberal General Hilmi Özkök, the Chief of General Staff, all the letters were apparently returned without comment, although the NAP insists this was not the case.

Political Islam: Is Turkey’s Variety a Threat?

The arrival in 2002 of Turkey’s first government fully controlled by a party with a strong Islamist tradition in a country with an avowedly secular constitution, has reignited the debate about the role of Islam in public life that has been at the heart of the Republic since it was founded in 1923 by Atatürk.

Atatürk, a visionary leader, set the country on a course of authoritarian modernization, abolishing the caliphate, replacing Islamic law with Western legislation, introducing the Latin alphabet and giving women the right to vote and enter all professions, a movement broadly known as Kemalism and one which has become a kind of rather rigid state religion. In fact, Turkey’s Europeanisation started before Atatürk during the ‘New Order’ of Selim III (1789-1807) and the ‘Tanzimat’ under Mahmud II (1808-1839). The distinguished British historian Norman Stone points out that ‘the fact that Turkey made so much use of the European model does mean that she had the genes in the first place, whereas a country such as Iran demonstrably did not’[13].

‘If Spain is the problem, Europe is the solution’, the Spanish philosopher José Ortega y Gasset had prophetically declared in 1911. Substitute Spain for Turkey, and Atatürk, a contemporary of Ortega y Gasset, could have made the same remark. Ortega y Gasset was referring to a constant of Spanish (and of Ottoman) history –its inability to be in step with liberal democratic Europe–. Just how far Turkey has progressed in the last 81 years, compared with the paltry advances of the Arab world which lags so far behind, can be appreciated by looking at the latest and unsparing Arab Human Development Report (see Table 8). The barrier to better Arab performance is not a lack of resources, but the shortage of three essentials: freedom, knowledge and womanpower, areas where Turkey does not have that much of a deficit. It might not seem important, but it is certainly illustrative of the flourishing culture in Turkey that the country produces more literary and artistic books a year than the Arab countries combined, and Turkey’s population is about one-quarter of their total. Newspaper circulation is slightly higher in Turkey than in Spain –13.1 per 100 people against 12.7–. The United Nations Educational, Scientific and Cultural Organisation (UNESCO) defines a culturally developed nation as one where more than one in ten of a country’s population is a newspaper buyer. So on this tenuous basis Turkey is more cultured than Spain.

Turkey, however, still has a very long way to go in the field of education: 73% of the 24 to 65 year old population had attained below upper secondary education in 2002 (82% in 1991) compared with 58% in Spain (78% in 1991). Only 9% of this same age group had tertiary education against 24% in Spain (see Table 9). Public expenditure on education in Turkey is 3.5% compared with 4.3% in Spain and an OECD average of 4.8%.

Daily Newspapers(per 1,000 people),1996TV Sets(per 1,000 people),1998Scientists & Engineersin R&D (per million people),1990-2000Patent ApplicationsFiled (per millionpeople), 1997Number of Book Titles(per millionpeople), 1990sNumber of TelephonesMainline (per 1,000 people),2000
Saudi Arabia57.0262.0730.452.1186.2137.0

Note: a negative number means that most of the registered patents were made by non-nationals of the country.

Source: United Nations Arab Human Development Report, 2003.

Table 9. Educational Attainment of the 24 to 65 Year Old Population, 1991 and 2002 (%)

SpainBelow upper secondary7858
Upper secondary and post secondary non tertiary1217
Tertiary education1024
TurkeyBelow upper secondary8275
Upper secondary and post secondary non tertiary1116
Tertiary education69
OECD country meanBelow upper secondary4533
Upper secondary and post secondary non tertiary3744
Tertiary education1823

Source: Education at a Glance (OECD, September 2004).

Turkey’s secularism was inspired by the French principle and practice of laïcité, the separation of church from state in post-revolutionary France and a cornerstone of republican values in both countries. However, there is one important difference between Turkey and France in the field of religion (less so with Spain which is not a fully secular state as the Catholic church receives funds from the government and still enjoys privileges in the field of education and other areas). Turkey’s Religious Affairs Directorate mico-manages religious life, subsidizing the Sunnis, the majority of the population, but not the Alevis (who are less dogmatic). The department has 80,000 imams on its payroll and other mosque staff and also sends prayer-leaders to serve Turkish workers abroad. Sermons are controlled. Theoretically, a fully secular state should neither subsidize nor control any religious body. One reason why it is done in Turkey is in order to keep Sunni Islam in line with republican modernity. The fact that Turkey has not abandoned this control (the AKP also finds it useful and it knows that to eliminate it would antagonise the army) underscores the nervousness of the secular establishment about what might happen if Islam was given free rein in Turkey. And until this happens Turkey will not be a fully-fledged secular state.

Islamic education in Turkey, unlike the rest of the Islamic world, is organized along European lines of instruction and not along traditional Islamic ones. Every reform during the first years of the Republic was closely related to the concept of secularism. For the founders, Islam was a system of belief that should be reduced to the private sphere and not be allowed to get organized and play an influential role in the public sphere as it was seen as a regression to the backwardness of the Ottoman past. Political Islam was not allowed to operate at all between 1924 and 1972, or only in brief bursts of activity. With the adoption of the multi-party system in 1946 secularism came to be one of the most important items on the agenda of Turkish politics. The Democratic Party and the Justice Party, which brought Turkey into NATO in 1952 and applied for membership of the EEC, were accused by the secularist establishment of the day of exploiting religion for political ends.

During the 1970s Islamist circles stayed out of the bloody left-right conflict which produced military coups in 1971 and 1980. Paradoxically, it was the military that helped the re-Islamisation of political life by granting some religious concessions in return for support from Islamic groups. For example, the number of imam-hâtip (Islamic) schools rose from 101 to 334 between 1974 and 1978. The military viewed the communist left, not political Islam, as the main threat. Religious instruction in state schools was made mandatory by the 1982 constitution, drawn up by the military, and government funding was provided for the imam-hâtip schools. The United States also looked favourably on the opening to Islamic groups as it fitted into its broad regional policy at the time of seeking to undermine Moscow through turning Islam against communism.

1972 marked a watershed in the development of Islamic party politics in Turkey as that was the year when the National Salvation Party (NSP) gained 11.8% of the vote and 48 seats in parliament[14]. In 1974 the NSP formed a coalition government with the Republican People’s Party and Necmettin Erbakan, the NSP leader, became Deputy Prime Minister (see Table 10). At the next general election, in 1977, the NSP vote dropped to 8.6% and the number of deputies dropped to 24, but it still played a brief part in power, as part of another coalition.

Table 10. Political Islam in Turkey (% of vote and seats in parliament held by Islamist parties, 1972-2002)

National Salvation Party11.8488.624
Welfare Party7.2016.96221.4158
Virtue Party15.4111
Justice & Development34.0363

Source: Turkish Interior Ministry.

During the 1980s, the successor to the NSP, the Welfare Party, remained outside parliament because of a series of factors emanating from the 1982 coup (restrictions on parties, a ban on individuals permitted to stand, including Erbakan, and changes in the electoral law which established a threshold of 10% of the vote for seats in parliament). In 1991, with Erbakan back at the helm, Welfare returned to parliament by joining forces with two other parties in order to pass the 10% barrier and in 1995, on its own, it emerged as the largest political party of all with 158 seats, shaking the political establishment. By then Welfare had successfully mobilized the urban lower classes, which had become poorer with the change in economic policies after 1980, and it had filled the vacuum left by the weakening of leftist parties. Welfare was particularly attractive to migrants to Istanbul and Ankara from the countryside who live in shanty towns and often work in primitive conditions, as it provided a network of welfare services not offered by the state. It is estimated that 350,000 people move a year to towns and cities. Turkey’s population rose by 32% between 1990 and 2000 and 67% now lives in urban areas (14% in 1927). Malise Ruthven points out that: ‘migration from the countryside to the city often leads to an increase in religiosity, as a more intense and self-conscious style of religious observance compensates for the more relaxed rhythms of village life… urbanised underclasses are particularly susceptible to the messages of populist preachers’[15]. The vote for Welfare also reflected the enormous loss of confidence in the corrupt and discredited political system and a belief that an Islamist party would be cleaner.

Welfare formed Turkey’s first coalition government led by an Islamist party, but it was forced out of office in June 1997 by the secular civilian establishment at the prompting of the military. The party was shut down in 1998 by the Constitutional Court and Erbakan banned again. Welfare’s successor, the Virtue Party, won 15% of the vote in the April 1999 general election, making it the largest opposition party with 111 seats. In 2001 the Constitutional Court outlawed Virtue and in 2002 the Justice and Development Party (AKP), headed by Recep Tayyip Erdogan, won a landslide victory in the general election (34% of the vote and 363 of the 550 seats in parliament). Nearly all the traditional parties were eliminated from parliament, a stunning blow to the political system that has emerged since the Republic was established and which has outlived its day.

Successive bans on Islam-based parties have had no effect; indeed quite the reverse for political Islam has become a mass force. The secular establishment failed to comprehend that Turkey’s Islamism is more a movement than a party as it is ‘rooted in local culture, interpersonal relations, and community networks, yet connected through civic organizations to national party politics’[16]. The AKP is a bottom-up movement which has successfully challenged the authoritarian, centralized top-down paternalism of the political system. This explains how it has managed to sustain political momentum, despite the bans.

Erdogan, a former mayor of Istanbul, had been sentenced to a ten-month jail term in 1999 and banned from politics for life for inciting religious hatred, after reading out a poem in public (‘Our mosques are our barracks, our domes our helmets, the minarets are our bayonets and our believers our soldiers’). Barred from holding a parliamentary seat because of the constitutional ban, he did not become prime minister until March 2003 after the AKP-controlled parliament amended the constitution and Erdogan won a by-election.

A party with a strong Islamist tradition, to the consternation of the secular elite, is now ruling Turkey and it could well be in power for a second term. It has much political capital to gain from being the party that paved the way for EU membership. The AKP has become a broad mosque party, a kind of Islamic version of a centrist Christian Democrat party, which does not have an open or apparently a hidden Islamic agenda and appeals to the poor as well as to Islamist yuppies (the AKP does not like the term Islamist and much prefers to be called a party of conservative democrats, in order to rebut the charge that they have a hidden agenda). Erdogan has generally showed himself to be much more pragmatic and much less provocative than the populist Erbakan. The AKP is markedly different to the Welfare/Virtue parties; the more hard-core Felicity Party, which is closer to Welfare and Virtue, only won 3% of the vote in 2002.

One of the most sensitive issues, and something of a Rubicon for the secular establishment, is whether Erdogan will try to lift the ban on the wearing of Muslim headscarves in government offices, parliament, schools and universities. Erdogan says he has far more important issues to deal with and shows no sign of wanting to lift the ban. He knows that to do so would be like waving a red flag at a bull; the controversial ban in France on the wearing of all ‘ostensible religious insignia’ in state schools, which enjoys broad cross-party support and became law in September 2004, should help him deal with the more radical elements in his own party on this issue. Rather than confront the arch-secularist establishment, Erdogan did not challenge the decision of Ahmet Necdet Sezer, the President and the former head of the Constitutional Court, not to invite the wives of ministers known to wear headscarves –including Erdogan’s– to the 80th anniversary celebration of the founding of the Republic in 2003. Emine, Erdogan’s wife, has been to the White House but she has yet to be invited to the presidential palace in Ankara. Sezer declared there could be no compromise on ‘secularism’. Nor has Erdogan broken with Israel –Turkey was the first Muslim state to recognise the country–.

The European Court of Human Rights in Strasbourg ruled in Turkey’s favour in June when it said that Turkish university students could not claim the ban violated their freedom of religion. The court rejected two separate complaints by Turkish students, one of whom was prevented from sitting an examination in medicine because her headscarf contravened the dress code. In its first judgement on the headscarf issue, the court said that a ban applied in the name of the separation of church and state should be regarded as ‘necessary in a democratic society’.

Nevertheless, the AKP did shoot itself in the foot in September 2004 when it presented proposals to parliament to criminalise adultery, raising the spectre of a move in an Islamic direction out of sync with the values of the European community it wants to join. The government was forced to back down and withdraw the proposals after the EU expressed disquiet at the measures which also brought a storm of criticism from Turkish civil rights groups. The move against adultery worryingly suggested that either Erdogan is not in control of his MPs or there is a hard-line faction overriding him. For the secular establishment, this incident confirmed their suspicions that the AKP is a wolf in sheep’s clothing. Earlier in the year the government was forced to scrap plans to give full university access to religious students in the face of fierce criticism from the secular establishment.

It is very difficult to gauge the real strength and intentions of the theocratic fundamentalists who would like to use democracy as a vehicle to establish an Islamic state in Turkey. The military, the self-appointed guardians of secularism, has taken no chances and until the AKP became the dominant political force it was able to bully, if necessary, or encourage politicians to take a tougher line against any Islamist advance.

As a result of the increased tensions arising from the Islamist-secular dilemma, TESEV, Turkey’s leading (and secular) think tank, conducted research in 1999 into the rise of political Islam.[17] It sought answers to questions like: how religious is Turkish society, does the public want religion to play a role in politics and the formation of state policies and do the Republican reforms find support? The results of the study were very interesting as they ran counter to the claim that Turkish society is polarized into two camps based on attitudes towards Islam and secularism, and that this polarization has created opposing groups who are intolerant of each other’s life styles. However, there is polarization at the political level.

The general findings included:

  • Turkey’s population neither supports the idea that religion should play a role in political life, as assumed by the Islamists, nor does it pave the way for the establishment of Sharia rule, as feared by the secularists.
  • Even though 97% of the Turkish population is Muslim, the Muslim identity does not occupy the forefront. While those who identify themselves first as Muslims constitute the biggest group (35.4%), those who identify themselves first as Turks or in terms of nationality constitute the majority of the society.
  • For the majority of the people, religious belief and worshipping is regarded as being bound by private life, and religion having an influence on public life and occupying a more visible place is not approved of. A secular Republic is supported by an overwhelming majority.
  • The Turkish people’s understanding of being a Muslim is highly tolerant.

The more democratic Turkey becomes and the more the military influence inevitably wanes, the more difficult it will be to rein in any Islamist gains achieved by a party that is freely elected to power, assuming they occur. The dilemma at the heart of any democracy, and particularly one like Turkey’s, is what happens when an undemocratic party seeks to use the system as a Trojan Horse for its own interests. The chances of this happening, however, seem slight, although from the perspective of the secularists the establishment of rule by Sharia in a country where almost all the population is Muslim is a constant risk.

The Economy: Progress but a Long Way to Go

The key criteria in the economic sphere are the existence of a functioning market economy, which requires both prices, and trade, to be liberalised and an enforceable legal system, including property rights, to be in place, and the capacity to cope with competitive pressure and market forces within the Union and so be able to adopt the acquis communautaire. Anyone who has shopped in Istanbul’s bustling Grand Bazaar can testify to the dynamism of Turkey’s market economy, but a great deal more is required.

The free interplay of market forces has continued to improve under the AKP government[18]. Key institutions such as the Turkish Central Bank and the Banking Regulation and Supervision Agency (BRSA) have gained independence. State interference has been reduced, for example, by winding down political influence on the state banks, and by liberalising important markets, such as electricity, telecommunication, sugar, tobacco and petroleum. However, Turkey was ranked 100th out of 123 countries, on a par with Malawi and Madagascar, in the 2004 Economic Freedom of the World Report published in July by Canada’s Fraser Institute (based on 2002 data) and it was 66 out of 104 countries in the 2004 Growth Competitiveness Index of the World Economic Forum.

Although state enterprises are still key players in some sectors, such as banking, the way in which they are managed is moving towards market conditions. The privatisation process, started several decades ago, has been slow to kick in and realised revenues have been very limited so far.

In agriculture, the system of support prices has been replaced by a direct income support system. Barriers to market entry and exit have also been decreased. The relatively high proportion of newly established companies (about 10% of the existing companies in 2003) underscores the low market entry barriers and a dynamic business class, which is dominated by large groups (Koc, Sabanci, Çukurova, Turkiye is Bankasi and Yasar, among others). However, SMEs face serious problems in borrowing capital from banks and heavy bureaucracy impedes the swift completion of the necessary legal procedures.

The banking sector, the Achilles’ heel of the Turkish economy, has been strengthened since the fierce financial crisis in 2001 but remains weak. There are still around 50 banks and the sector is dominated by two state banks (Ziraat and Halk), which account for about one-third of total assets, and a few private sector banks. So far no privatisation has taken place.

Until the BRSA was established in 2000, politicians –together with treasury and central bank officials– presided over lax and corrupt regulation of the sector, leading up to the crisis in 2001. State banks were controlled by ruling political parties that made them run up ‘duty losses’ of US$19 billion. Banking licences were issued to businessmen of dubious reputation who funnelled an estimated US$11 billion out of them. The BRSA put the total cost of cleaning up the banking sector since 2001 at more than US$47 billion, equivalent to 32% of GDP. This figure does not include US$6 billion that literally disappeared from Imarbank when members of the powerful Uzan family, which owned it before it was seized by the state in 2003, fled to evade arrest. The BRSA came under fire from parliament for not detecting the alleged fraud in the bank although its representative sat on the bank’s board and its inspectors regularly examined it.

Foreign direct investment (FDI) inflows are negligible (well below 1% of GDP a year and the total stock accounts for less than 10% of GDP). This extremely low level hinders the modernization of the economy and hampers access to export markets and thus is a brake on realising Turkey’s full economic potential. Some significant steps have been taken to improve the legal framework and to simplify administrative procedures; a special agency for investment promotion has been established. The main obstacles to FDI, however, are corruption, macroeconomic instability and a lack of rule of law.

Mexico provides an illustration of what Turkey could achieve in FDI. Turkey resembles Mexico not just because of the size of its population, its level of economic development and some of its social indicators, but because, like Turkey, with its Customs Union with the EU, it has a free trade agreement –Nafta– with the United States and Canada. Mexico’s macroeconomic stability has been rewarded with an investment grade rating from international rating agencies, one of the keys to unlocking the door to FDI and a status that Turkey would eventually acquire as an EU country (see Table 11).

Table 11. FDI in Turkey, Mexico and Spain, 1992-2003 (US$ billion)

1992-97 (annual average)199819992000200120022003

Source: UNCTAD, World Investment Report 2004.

Turkey’s Customs Union with the EU since 1996 for industrial goods and processed agricultural products, the most far-reaching development in the Turkish economy since the liberalisation measures taken in the 1980s began to create an outward-looking economy, has been positive for both sides. Turkey’s share in the EU’s total exports was 2.3% in 1995 and 2.7% in 1999 (the latest available figure). The same figure for imports was 1.7% in 1995 and 1.9% in 1999. As of 1999, Turkey is the EU’s 7th biggest export destination (up from 9th in 1990) and 13th biggest exporter to the EU (up from 17th in 1990). Turkey has almost completed the alignment with the Common Customs Tariff but not with the preferential tariff arrangements and further progress is needed in bringing customs legislation closer to the acquis.

Macroeconomic stability and predictability has not yet been achieved to a sufficient degree, although, in the Turkish context, the reduction of average inflation to possibly single digits in 2004 (25% in 2003 and 70% in 2002) and the fall in the general government budget deficit from almost 30% of GDP in 2001 to below 10% in 2003 are major achievements. The economy, however, remains very vulnerable to external shocks. According to some analysts, the real depth of Turkey’s fiscal morass is hidden by the primary budget balance, the yardstick used by the IMF for analysing financial risk[19]. The primary budget balance excludes interest expenditure (up to 60% of government spending in Turkey’s case). The primary fiscal surplus of the consolidated public sector is forecast to reach 6.5% in 2004, up from 3% in 2000. The size of the primary balance, however, has limited impact on public sector debt accumulation if the overall balance, including interest expenditure, remains in deficit. A much more accurate indicator of fiscal risk for Turkey is the public sector borrowing requirement, which reflects all public sector fiscal transactions. In spite of the country’s strong economic growth (10% in 2004), the PSBR remains near 10% of GDP. With retirement allowed at 46 it is not surprising that the social security system is running a deficit of 4.5% of GDP. Turkey’s endemically large PSBR, along with the realisation of substantial contingent public sector liabilities, has pushed total gross public sector debt toward 100% of GDP. Net public sector debt has fallen from 94% of GDP in 2001 to an IMF forecast of 70% at the end of this year. But for successive IMF loans (the current Fund programme is the country’s 18th), Turkey would be forced to default on some portion of its public sector debt.

The long distance that Turkey has to travel before it is on a par with EU macroeconomic stability and thus in a position to qualify to use the euro is shown in Table 12. But meeting the euro criteria is not a condition for joining the EU. Spain, for example, was far from reaching them when it entered the EU in 1986 (its inflation was 11% that year and its budget deficit 5.5% of GDP), although the criteria did not exist at the time. The challenge now is to transform the turnaround into stable growth and avoid the populism of the past which produced wasted decades.

(a) Inflation (% rise)
Reference (1)1.2
Maximum limit (2)2.7
Differential22.6 points
(b) Interest rates (%)
Reference (3)3.9
Maximum limit (4)5.9
Differential38.9 points
(c) General government deficit
Maximum limit (5)3.0
Differential5.3 points
(d) Public debt
Maximum limit (6)60.0
Differential35 points

(1) Average 12-month CPI of the three EU countries with the lowest inflation.

(2) Average 12-month CPI of the three EU countries with the lowest inflation plus 1.5 points.

(3) Average long-term interest rates of the three EU countries with the lowest inflation.

(4) Average long-term interest rates of the three EU countries with the lowest inflation plus 2 points.

(5) 3% of GDP.

(6) 60% of GDP.

Source: Eurostat

Written by William Chislett

William Chislett (Oxford, 1951) is Emeritus Senior Research Fellow at the Elcano Royal Institute. He covered Spain’s transition to democracy for The Times of London between 1975 and 1978. He was then based in Mexico City for the Financial Times between 1978 and 1984. He returned to Madrid on a permanent basis in 1986 and since then, among other things, has […]