The economics of Turkish accession By Katinka Barysch ★ Many West Europeans fear that the accession of Turkey – poor, populous and often unstable – will harm the EU economy. But Turkey’s economy is tiny compared with that of the EU-25. And what little economic impact Turkey’s EU entry will have is likely to be positive. ★ Turkey already has a custom union with the EU, and in many ways it is better prepared than the Central and East Europeans were when they started accession talks. But Turkey’s accession process will be more difficult to manage than that of the East European countries. Turkey’s large pile of debt leaves it unusually vulnerable to swings in investor confidence. Moreover, Ankara will not be able to use EU accession as an anchor for economic reform in the way the East Europeans did. ★ Turkish workers will not gain the right to apply for jobs in other EU countries until after 2020. By then, many West European countries may well be wooing Turkish workers to help them compensate for the ageing of their own workforces. ★ Eastward enlargement is already forcing the EU to change in a way that will, eventually, make it easier for Turkey to join. By then, the EU will hopefully have more efficient institutions and decision-making procedures. And it will have sorted out its labour market problems. If not, the EU of 2015 or 2020 will be slow-growing, gridlocked and unwelcoming. Turkey would not want to join such a club.
Countries that want to join the EU need to comply with four accession criteria: One is political, one is related to EU law and two concern economics. Turkey has already made much headway with fulfilling the EU’s criteria on democracy, the rule of law and minority rights. Although the EU will continue to watch Turkish politics closely, the main focus of the accession negotiations – scheduled to start in October – will be on economics. According to the so-called Copenhagen accession criteria, EU aspirants need to have a well-functioning market economy and they need to be able to compete within the EU’s single market. In its 2004 assessment report on Turkey, the European Commission concluded that despite good progress in recent years Turkey did not yet fulfil either condition. So Turkey still has a lot of work to do to get its economy fit for membership. The economic entry criteria are vague, and that is intentional: They allow the EU to get involved in everything from banking sector liberalisation to education policy. If previous enlargements are anything to go by, the EU will be making a lot of demands on Turkey. The EU accession process has the potential to transform Turkey’s economy. It certainly did so in the case of the Central and Eastern European countries that joined in 2004. These countries reaped massive economic gains in terms of growth, investment and better policies long before they actually joined the Union. Can Turkey look forward to similar gains? Perhaps. But Turkey may find it a little harder to benefit economically from accession than its East European peers did, for two reasons: First, Turkey has already benefited a lot from EU integration through its customs union with the EU. And second, Turkey will find it more difficult to use the EU as an external anchor for reforms.
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