Tag: euro crisis

Turks to European Union: No, Thanks

By Emre Peker

ISTANBUL — There was a time when joining the European Union was Turkey’s most-prized goal. Now, Turks don’t want to go anywhere near the bloc.

Support for joining the EU has dropped to a record low of 17% from 34% last year, according to a survey published Tuesday by the Turkish European Foundation for Education and Scientific Studies, or Tavak. What’s more, almost 80% of the 1,110 people polled in eight cities across Turkey in June said they didn’t believe Turkey would join the 27-nation bloc.

European Pressphoto Agency

German Chancellor Angela Merkel and Turkish Premier Recep Tayyip Erdogan on Nov. 2, 2011. Before that meeting, in a newspaper interview Mr. Erdogan accused Germany of blocking Turkey’s entry to the EU.

At the heart of it is Turkey’s strong economic growth, contrasting with the EU, which has seesawed in and out of recession amid a financial crisis during the past three years, said Faruk Sen, chairman of Tavak. Also fueling sentiment against joining the EU are repeated snubs from EU leaders against Turkish entry to the bloc and a feeling that the union is anti-Islam, he said in an interview on Wednesday.

“From now on, the EU will have to coddle Turkey, be more hands-on. Turkey is developing alternatives,” Mr. Sen said. “Think of it this way, a man doesn’t think of an alternative to a wife he very much loves, but if the woman withdraws, then the husband looks for alternatives.”

Analogies of failed marriages aside, Turkey has indeed been deepening trade ties with the Middle East and North Africa in the past five years. While the EU is still Turkey’s biggest export market, its share of the pie is falling fast.

As Turkey’s sales abroad have been growing at a healthy clip — reaching a record $135 billion in 2011 — the EU’s share shrunk to 46% in 2011 from 56% in 2007, according to the state statistics agency. As of June, Turkish businessmen had cut their sales to the EU to 39% while boosting exports to the Middle East and North Africa to 36%, up from 28% in 2011.

Turkish Prime Minister Recep Tayyip Erdogan had made EU membership a priority after his party came to power in 2002 and clinched accession talks with the bloc in 2005. At the time, support for joining the union had peaked at 78%, Tavak’s Mr. Sen said, citing another survey.

However, the thrust behind membership negotiations cooled as Mr. Erdogan grew more confident on the back of an average annual economic growth rate of 5.5% in the past decade, increased Turkey’s clout in the Middle East after spats with Israel, and used EU reforms to remove the military’s iron grip on politics.

Indeed, of the 35 chapters that must be negotiated to complete Turkey’s accession only 13 have so far been opened. And, for the past two years, there has been no progress, according to the EU’s enlargement website. Turkey’s EU Affairs Ministry wasn’t immediately available for comment.

However, despite waning enthusiasm in Turkey to join the EU, lack of progress in negotiations and the bloc’s shrinking importance as an export market, trade and investment ties will remain large, said Robert O’Daly, a senior analyst at the Economist Intelligence Unit in London.

“Things have definitely changed since the negotiations started. While Turkish support to join the EU is extremely low, it’s not surprising given the problems in Europe and Turkey’s greater self confidence, both economically and politically,” Mr. O’Daly said Wednesday.

Still, after years of work toward a union, the EU and Turkey are unlikely to pull the plug on the negotiations, regardless of low public support, according to Mr. O’Daly. “I don’t think it is the end of the road … the talks will officially remain in place, and on-and-off there are going to be stronger contacts, but I don’t see any real progress being made.”

via Turks to European Union: No, Thanks – Emerging Europe Real Time – WSJ.

August 30, 2012
Turkey to EU: say goodbye to democracy and start printing money

By Andrew Rettman

BRUSSELS – Eurozone countries will have to give up on normal democracy and the European Central Bank (ECB) will have to print money if the euro is to survive, Turkey’s ambassador to the EU has said on the eve of the EU summit.

Noting that EU leaders are going in “the right direction” by proposing central control over national budgets in return for help from the ECB, Selim Kuneralp told EUobserver in an interview on Wednesday (7 December) that traditional democratic structures have no future in post-crisis Europe.

“In an election campaign, you have one party that says ‘I’m going to reduce taxes and invest in this or that, to build nuclear power plants or spend money on renewable energy, build more schools and better hospitals.’ And the other party says ‘I’m going to do everything this guy is promising, but more.’ So you have a race on who is going to spend more. But if you have this kind of mechanism [of central control] they won’t be able to do it.”

“That means you would have such a loss of sovereignty as to make election campaigns meaningless,” he added.

“I don’t see any other option – either you have a single currency with fiscal union or you don’t have a single currency at all.”

With Germany in the driving seat on EU reforms, Kuneralp said German society has set a good example over the past 10 years by keeping wages low and making sure banks lend responsibly: “They’ve been good boys. They’ve been Germans … They are responsible people. In Greece, you can go to the bank and borrow money to go on holiday. In Germany you can only borrow money for some productive purpose.”

He noted that if EU institutions are in future to police national spending, they will have to do a better job than in the past, however.

Looking back to the Greek statistics fiasco in 2010, when Athens admitted to lying for years about debt and GDP, Kuneralp said EU officials must share the blame: “When I talk to people in the commission, they say ‘Well, you know, the Greeks lied and that was it.’ Well, they may have lied, but your job was to find them out. The commission were not doing their job properly and you need a mechanism that makes sure they do their job properly and expose liars and fiddlers.”

He added that Germany will have to drop its opposition to letting the ECB create money to prop up eurozone debt.

Kuneralp pointed out that the US and the UK have done better than euro countries in the crisis by adding zeros to central bank reserves – $1.4 trillion in the case of the US, the equivalent of Turkey’s GNP for two years.

“The Americans have added zeros to their ledgers and it has had no visible impact on inflation … The lesson is that you can do it,” he said. “In the end, the Germans will have to move in the direction of more flexibilty and allow some buyback or some other instrument that is a euphemism for printing money … You have to reduce your debt by having a little bit more inflation – you print your way out of this conundrum.”

The ambassador noted that while Turkish banks have almost no exposure to bad eurozone debt, the Turkish economy is at grave risk if the euro goes down – 50 percent of Turkish trade is with the Union, 80 percent of foreign investment and 70 percent of its tourist income also come from the bloc.

“We are not rejoicing. There’s no schadenfreude. We’re not saying: ‘Oh well. You deserve this for not taking us into the EU’,” he told this website.

On a note of optimism, the veteran 60-year-old diplomat, who was Ankara’s sherpa for three G20 summits in 2008 and 2009, said the climate of panic in the media is over the top.

“I read one comment which said ‘This is the most historic, the most crucial summit since … the summit of 26 October.’ So, all this hype, I don’t know how far to take it seriously,” Kuneralp said. “They [EU leaders] can’t allow this whole structure to collapse. I can’t believe this is going to happen, so they will take the right decisions in the end.”

via EUobserver.com / Economic Affairs / Turkey to EU: say goodbye to democracy and start printing money.

December 9, 2011
Turkey’s Babacan: euro crisis not dampened desire to join EU

TOKYO | Tue Dec 6, 2011 4:59am EST

Dec 6 (Reuters) – The debt crisis in the euro zone has not dampened Turkey’s desire to join the European Union, Deputy Prime Minister Ali Babacan said on Tuesday, as it seeks to carry out political reforms to meet conditions of membership.

Speaking at a news conference after meeting with Japanese cabinet ministers, Babacan also urged European countries to act decisively to deal with the sovereign debt crisis there, warning of global consequences if they fail to get their act together.

“We hope that EU member states who have problems do their homework, and everybody keeps their houses tidy and clean,” he said.

“They should be careful about their budgets and they should do reforms … When there are holes in budgets, no matter how much the European Central Bank prints money it’s not going to be enough. They have to close the holes first and then put money in.”

The ECB is likely to cut interest rates on Thursday and offer ultra-long liquidity operations to support banks, while leaving the door open to further measures to fight Europe’s debt crisis if governments agree fiscal reforms.

Babacan said that it was important for Turkey to improve in areas such as the rule of law and the quality of democracy in order to meet the political criteria of EU membership.

However, the minister, who is responsible for overseeing the economy, said that the EU was no model for Turkey in terms of economics.

The world’s 16th largest economy is expected to grow 7-8 percent this year after expanding 9 percent last year. Turkey is also aiming to reduce its debt-to-GDP ration to 32 percent by the end of 2014 from the current 39.8 percent, Babacan said.

Last month he said that Turkey’s 2012 growth forecast of 4 percent might be negatively affected if the debt crisis in Europe worsens.

A rising Muslim democracy, Turkey began accession talks with Brussels in 2005, but progress has been hobbled by tensions between Ankara and EU member Cyprus as well as opposition within France and Germany.

President Abdullah Gul said last month that delays in Turkey’s negotiations to join the EU were becoming “insulting”, warning that support for EU membership among the Turkish people could be lost.

But Babacan said the timing is “not very important as of now.

“For us what’s important is keeping the membership target … We applied in 1959. We are very patient.”

via Turkey’s Babacan: euro crisis not dampened desire to join EU | Reuters.

December 7, 2011
Fear stalks the markets as euro crisis worsens

By James Moore, Deputy Business Editor

Saturday, 15 May 2010

Markets suffered another day of wild swings yesterday amid continued concerns over the Greek debt crisis and its effect on the euro.

The latest round of selling was sparked by reports that the French President, Nicholas Sarkozy, had threatened to pull France out of the euro if Germany failed to get onside with a bailout of the heavily indebted Greek economy. The uncertainty was exacerbated when Josef Ackermann, the chief executive of Deutsche Bank, suggested in an interview that Greece might not ever pay back its debts.

The turmoil saw the FTSE 100 ending down 170.8 points at 5262. Across the Atlantic the Dow opened sharply down, while other major European markets finished deeply in the red.

The euro also fell steeply on global currency markets. Against the dollar it dropped under $1.24, to its lowest level since October 2008. The weakness in the euro also meant that the pound gained ground against the single currency, rising nearly 1 per cent, or just over a cent. Since the beginning of 2010, as the debt crisis has worsened, the euro has lost about 13.5 per cent against the dollar.

Yesterday G7 finance ministers held a conference call to discuss the global economic situation and the ongoing crisis. George Osborne, the Chancellor, is understood to have told his counterparts that the Government’s priority is an accelerated outline reduction of Britain’s fiscal deficit. Mr Osborne has promised an emergency budget within 50 days of the new Government taking office.

It came amid speculation that the UK could be the next country to face a speculative attack if the eurozone does stabilise as a result of the Greek bailout. Some commentators have even suggested that France might not be immune from the contagion.

George Buckley, economist at Deutsche Bank, said: “There is still a lot of uncertainty out there and you can’t solve everything with a single package. The coalition looks stable at the moment but there will be disagreements and that has even been recognised by both parties.” He said there was a wider concern throughout Europe: that governments might not act to cut deficits soon enough. “And if they don’t, where do we go next?”

Philip Shaw, economist at Investec, said: “Markets are still concerned that Europe is stalling, and that’s an issue for them, because they are always unsure until some time after governments actually take action to introduce austerity measures and that there is evidence that the measures are actually working.”

Mr Shaw added: “As far as Greece is concerned it is far from clear that it is actually out of the woods. The package covers its financing needs until 2011 but if it fails to implement the [austerity] measures or its economy takes a sharper downturn than was expected, then by next year the country may find it difficult to borrow money at an interest rate that it is prepared to pay.”

Economists say Britain does have several advantages over Greece and other eurozone countries with debt problems such as Spain, Portugal and even Italy, which collectively with Ireland have been given the unflattering acronym of Piigs by economists.

The UK has a floating exchange rate and its debt is much longer-term than Greece. It also has a flexible economy and a stable tax base, which is collected. However, David Buik, partner at BGC Partners, said: “I doubt there is a single person on the planet who can seriously put his hand on his heart and say that he is certain that Greece at the bottom and even the UK can service or repay its debt over the timetables that have been set out. Politicians have simply not been willing to talk about the pain that doing this will inflict.”

The Independent

May 15, 2010