Bell Curve The Law Talking Guy Raised by Republicans U.S. West
Well, he's kind of had it in for me ever since I accidentally ran over his dog. Actually, replace "accidentally" with "repeatedly," and replace "dog" with "son."

Saturday, February 05, 2011

The EU, Turkey and the Emerging New Middle East

A couple of recent threads about Egypt have seen comments/posts by Law Talking Guy and US West about the emerging new Middle East, Turkey's place in it and the EU's possible increased interest in Turkey because of it. This all got me thinking about whether the EU would see Turkish accession to the EU as something that helped the EU in the new Middle East or a risky thing. It also gets wrapped up in the advantages/disadvantages of Turkish membership in the EU regardless of Turkey's geopolitical position or geographical location. I'll start with what we know and then move to a more speculative discussion.

What we, the Turks and the EU know:

The rules the EU uses to approve new members depend on a unanimous vote by the existing member states. There are currently 27 member states. It only takes one government to oppose Turkish membership for any reason they choose to justify that opposition for Turkish accession to be blocked.

Leaving aside any cultural considerations, there are reasons to believe that Turkey would be an economic liability to the EU. The EU's aggregate per capita GDP is $32,900 (see CIA world factbook). About 1.8% of the EU economy comes from agriculture with about 5.6% of the labor force working to produce that 1.8%. The largest share of the EU's budget (48%) goes to agricultural subsidies in the Common Agricultural Policy (CAP). Another 30% or so of the budget goes for cohesion/structural development funds (designed to improve economic development in areas lagging behind the rest of the EU). The CAP funds in particular a heavy and controversial drain on the EU budget.

Turkey's per capita GDP is $12,300 (see CIA world factbook) putting it at about a third of the overall per capital GDP of the EU. Turkey's economy is about 8.8% dependent on agriculture with 29.5% of the population working to produce that 8.8%. This suggests strongly that should Turkey join the EU, its ag sector could prove to a significant additional drain on the EU budget. This might not be a big deal if Turkey were a small country. But Turkey's population is 77.8 million which would make it the second largest (and second poorest, just beating out Romania to avoid being the poorest) member state in the EU. To put this in perspective, Greece is currently causing no end of economic headaches for the EU. Its per capital GDP is $30,200 with a relatively small (compared to Turkey) population of 10.7 million (see CIA world factbook). Another useful comparison for Americans might be that Mexico is somewhat wealthier and considerably less dependent on agriculture than Turkey.

The EU budget is derived from contributions from each member state based on their Gross National Income (a measure similar to but not exactly the same as GDP). Unless the EU dramatically changed the way the budget is paid for and distributed, dramatic change is not the EU's forte, Turkey would be among the largest net beneficiaries of the EU budget. That would mean that Turkey would get far more from the CAP and Structural/Cohesion funds than they contribute to the budget. This alone may be enough for one or more of the major net contributors to the EU (such as Germany, the Netherlands, and the Scandinavian members) to balk at Turkish membership. It might even be enough for one or more of the current major beneficiaries of the CAP and Structural funds to see Turkey as an unwelcome addition of countries with their spoons in the soup. Many in the EU look at Turkey and see a shadowy future of endless demands for agricultural and development aid perhaps combined with random shocks brought about by unforeseen bad government interludes (along the lines of Greece). If these fears and uncertainties lead just one out of 27 governments to veto Turkish membership, it won't happen.


But all that might be overlooked (it was for Bulgaria and Romania after all). Turkey's position in the world is unique. It straddles (literally and figuratively) Europe and the Middle East. One might expect that the EU would approach Turkey for membership in an effort to solidify democracy in the region. This motive is commonly put forward as a reason for the EU's rapid expansion in 2004 and 2007 to East Central Europe. This incentive however, has not made the difference so far. Turkey has been trying to to join the EU for a long time and the EU (or rather some governments within the EU) has always been reluctant. Only in the last decade has the process even gotten as far as official applicant status.

But the events in Tunisia and Egypt (and other countries?) may change the calculus. It might be that the case that if two or three new democracies emerge in the Middle East that the EU would see Turkish membership as less risky. They may see Turkey's established diplomatic and economic connections with newly energized (politically and economically) countries in the Muslim world as an opportunity. However, even in this more optimistic scenario the potential gains would have to outweigh fairly large known costs.

Alternatively, the unrest in Egypt could lead to greater instability in the region; either because conservative dictatorships end up being replaced by aggressive revisionist regimes or because the dictatorships are replaced by increased internal instability. In that event, the EU may look at Turkey as a kind of potential gateway to chaos that must remain shut (i.e. not included in the EU).


USWest said...

RBR put together a good synopsis about Turkey and the EU.

Ah yes, the CAP! Not to mention that Turkish Ag would threaten a lot of small farms in the EU. The arable land in Turkey is vast and the soil it rich. Yes, may nations would oppose Turkey on this alone.

But all this assumes Turkey still wants to join the EU. I couldn't find a source to confirm this, but my Turkish friends tell me that for the first time last year, the number of Turks against joining the EU surpassed the number in favor (42% for, 58% against). Turks are seeing economic progress at home. In 2010, Turkey's economy grew 7.3% (CIA World Factbook), much that based on domestic demand. The Factbook also notes that autos, constructions, and electronics now surpass textiles in terms of exports and they are growing. Industry makes up 26% of the GDP. Unemployment is still high by most standards at 12.4%.

Much of this economic strength has come from market reforms required by the EU for candidacy. So in the long run, whether Turkey is offered membership or not, it's been made the better for having tried.

The other reason Turks may not want to join the EU is that they now have more confidence in their political and economic system. They may not be ready to be constrained by the Union. As they forge their own foreign policy, they may not want to Kowtow to Brussels.

Considering the number of Western European and American companies that are opening plants in Turkey (Renault, Ford come immediately to mind)it may soon become a nice place to do business. Turkey is funding incentive plans to get Turks to invest in European companies. At the same time, it is looking to expand trade with the U.S. It will be outside of many EU regulations, but geographically located conveniently at Europe's door. In the end, what Turkey may seek is some sort of "Special Relationship" with Europe, maybe joining the EFTA. That would bot be a bad deal for either side in the end.

Raised By Republicans said...

US West,

Some of the more cynical Europeans might say that now that most Turks are opposed to joining the EU, it proves that Turkey is ready for membership. ;-)

You are absolutely right that at some point, the EU will place so many conditions on Turkish membership (adopt this new law, abolish that traditional practice) that Turkey's government will say "it's not worth it" and walk away. I think you're right that we may be coming to that point now.

Turkey is an associated state now as part of the process for joining the EU. Under these agreements, Turkey is obligated to adopt some but not all EU legislation and in return the country's exports get access to EU markets without tariffs being imposed. So Turkey might get A LOT of what they want out of EU membership simply by maintaining the status quo of intermediate status.

Raised By Republicans said...

Another thought. If I'm a European Union official and I see that the thinking in Turkey is "we are doing so well economically that we don't need the EU" my reaction would be that if Turkey only wants to join the EU to get the EU to pay for their economic development, then I really don't want them in until they are closer to parity with the EU average on major economic indicators.

The Law Talking Guy said...

I would prefer to see Turkey leading a group of moderate Arab Democracies including, Egypt, Tunisia and possibly Jordan perhaps to a common Levantine market, rather than as an outpost of Europe.

Raised By Republicans said...

I'm inclined to agree with LTG. I think Turkey's beneficial role would be maximized by their leadership of a kind of Near Eastern Community that could link economies from Iraq to Egypt (would it be too much to see Israel included?). A kind of modern, political-economic alternative to the Islamists' fantasies of a new Caliphate.

However, I think that is a remote dream for the moment.

The Law Talking Guy said...

We could call it something like the Byzantine Empire, for example.

Raised By Republicans said...

You think The Ottoman Co-Prosperity Sphere would be too loaded a term?