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Propping Up Turkey

Why is accession to the European Union the only cure for Turkey’s ailing economy?

May 21, 2001

Why is accession to the European Union the only cure for Turkey's ailing economy?

The Ottoman Empire, the precursor to modern Turkey, spent much of the 19th century on its deathbed. Neighboring Russia eagerly awaited its demise, eyeing choice strategic possessions around the Black Sea and in the Balkans. Too impatient to wait every now and then, Russia would attempt to play Dr. Kevorkian — and administer a bit of euthanasia.

That was usually the moment when Great Britain and France would enter the picture. The two dominant powers of the time, they were not keen to see Russia’s position strengthened in strategic parts of Southern Europe and the Near East.

To underscore their determination, they even went to war with Russia in 1854, to curb Russian ambitions — and to prop up the Ottoman Empire.

This so-called Crimean War may have been a minor conflict and few people today know much about it. Yet, at the time, it was a major decision for governments in London and Paris. It marked the first time European states fought one another since the end of the Napoleonic wars nearly 40 years before.

Today, Turkey is once again the sick man of Europe. And, extraordinarily, the turmoil that engulfed the fringes of the far-flung Ottoman Empire a century and a half ago has not gone away.

Recent bloody conflicts in Europe and on its fringes have all taken place within the old Turkish borders. They include the decade-long civil war in former Yugoslavia, the Western attempts to contain Iraq, the separatist war in Chechnya, and the conflict between Israelis and Palestinians in the Middle East.

The more things change, the more they stay the same, says the French proverb. This is particularly true with regard to Turkey.

It may no longer be a dominant player in the Balkans, as it was in the 19th century, but otherwise its strategic position — and its importance in Western geopolitical calculations — remains unchanged.

To begin with, the country is still a counterweight to Russia’s southward expansion. In the Caucasus, a region that Russia seized from the Ottoman Empire in 1829, Russia is suddenly encountering the same dogged resistance to its rule as it did when it first took over from Turkey.

Chechnya, which resisted Russia for decades, is once more in rebellion, and Turkey provides tacit support for Chechen separatists.

Turkey is also a major pro-Western force in the Middle East, helping the United States and Great Britain keep Saddam Hussain’s ambitions in check in Iraq and maintaining an overall balance in the Middle East.

At the same time, there is a totally new part in Turkey’s strategic equation which did not exist in the 19th century, but may prove extremely important for the future.

Since the collapse of the Soviet Union, the Central Asian republics have become independent states. Because of their shared history, language, culture and religion, most of them gravitate toward Turkey.

Little known to the rest of the world, Turkey is a key trading partner for Azerbaijan, for whom it provides 15% of imports, second only to Russia. Kazakhstan, Uzbekistan and the rest also trade extensively with Turkey.

Little wonder then that Turkish businessmen have been active in that part of the world, which more established Western investors have shunned because of widespread poverty and political uncertainty.

Turkish property developers and construction crews build most of the high-visibility projects in the region.

What makes this association potentially so lucrative is the fact that Central Asia is a region extremely rich in natural resources. Azerbaijan has been a major oil producer for more than a century.

Italy currently buys the lion’s share of its oil. On the other shore of the Caspian Sea, Kazakhstan looks set to become an even more important oil supplier later in the century.

The offshore Kashagan field is believed to be the largest find of crude in three decades, since the discovery of Alaskan oil.

Geologists estimate it may contain up to 30 billion barrels, which would make Kazakhstan the world’s second largest oil producer after Saudi Arabia — once the Kashagan is operational.

But getting all this oil to world markets is tricky. Turkey remains the only stable, pro-Western country in the region — and all the plans of geostrategically-minded oil managers to bypass Russia have hinged on a pipeline to Turkish ports.

Just as in the 19th century, the rotten domestic system is at the root of Turkey’s problem. But back then it was primarily a matter of political malaise, whereas today it is more an issue of economic and financial blight.

For a variety of reasons, propping up Turkey today may be more important than it was 150 years ago. But finding ways to do so may not be so easy. Gone are the days when one could send an expeditionary force to fight economic problems. Throwing money at them, as the IMF has found out, is not going to do the trick, either.

Economic reforms mandated by the IMF and tied to the latest $19 billion financial package may work, but they will take time.

Political turmoil, of the type that has accompanied financial and economic crises in Indonesia and the Philippines, may erupt in the meantime. This is a risk neither Western Europe nor the United States can afford to take.

There is a long-standing animosity between Greeks and Turks and they would probably resent comparisons with one another.

However, it should be worth noting that Greece, at the time it joined the EU in 1981, was just about as politically unstable as Turkey — and not much wealthier.

However, it has turned around completely. As a member of the EU, it has enjoyed an average growth rate of 1.9% over the past two decades, and currently has GDP on a per capita basis of nearly $17,900 — compared to Turkey’s $6,700.

Furthermore, by joining the EU, Greece has avoided currency fluctuations. In 2002, the Greek drachma was replaced by the euro after 2,650 years of existence.

Turkey was admitted as a candidate member to the EU in 1999. But even at the time, the prospect for actual membership in the exclusive club was considered a very remote one.

Now, of course, the eurocrats in Brussels think that the Turkish economic crisis has got them off the hook completely and postponed the date into some undetermined future. Before long, however, political realities may point them to an opposite conclusion.

If the West wants to retain Turkey as an effective ally in a key strategic region, the Turkish economic crisis makes it imperative that the country’s membership in the EU be brought decisively forward.