If Turkey and the EU break up...

The EU may decide to halt the accession talks with Turkey – or the Turkish government may walk away from them. But has either seriously thought through the consequences? Some German and Austrian leaders hope for a ‘privileged partnership’: Turkey would align many of its rules and policies with the EU, but have no vote on decisions. However, that is a fantasy, at least in the short and medium term. An angry and disappointed Turkey would spurn any partnership that fell short of full membership. Many Turks would prefer to combine the existing customs union with an arms-length political relationship.

The most immediate impact of a breakdown in the accession talks would be on Turkish politics. The goal of EU membership has helped to ensure that two camps which do not trust each other – the secular ‘Kemalists’ in the army, judiciary and bureaucracy, and the Islamists in the ruling AKP government – work together on a reform agenda. But the removal of that goal and the consequent recriminations could destabilise the political system. Nationalists and hardline Islamists would crow that the West could not be trusted. Islamists might make a renewed push for priorities such as new rules on wearing the veil in public places. That would fuel Kemalist suspicions that Islamists were intent on undermining Turkey’s secular and democratic traditions. The Turkish army, always on watch against such threats, might feel it had less to lose in attacking Kurdish guerrillas based in Northern Iraq – or in Turkey itself. Turkey’s Kurds would see their hopes of winning more rights, thanks to EU pressure, dashed.

Political instability would not bode well for economic policy and investor confidence. In less than five years, Turkey has graduated from an economic basket case to a European growth story. Since the economic crisis of 2001, real GDP has expanded by more than 7 per cent a year on average, inflation has plummeted to 8 per cent from more than 50, and foreign direct investment (FDI) has risen from next to nothing to €10 billion a year. Jitters in the currency markets no longer lead to crises, as in the past. Responsible policy-making and the prospect of convergence with the EU appear to have put a floor under the lira. The IMF has constrained Turkey’s traditionally spendthrift policies, while the EU has nudged Turkey to adopt its liberal and transparent rules in areas such as competition, telecoms and banking.

The IMF will hold Turkey’s hand until 2008, when the current standby agreement runs out. Then the risk of macro-economic slippage will increase. And without EU tutelage, microeconomic reform is likely to slow. The Turkish government would see fewer reasons to bring its business environment in line with EU norms. Companies from EU countries would feel less at home in Turkey. The spectre of declining FDI must be hugely uncomfortable for a country with an annual current account deficit of €20 billion.

A breakdown of the accession talks would hurt the EU, too. The sluggish EU economy would miss out on the prospect of gaining from the integration of Turkey’s dynamic economy. And the ability of Europe’s ageing societies to benefit from Turkey’s young and growing labour force would be limited.

The EU’s foreign policy would also suffer. Its ability to influence the Islamic world would diminish. Turkey’s accession process has provided the EU with credibility in the Islamic world. An EU that rejected Turkey would be seen as a Christian club, and its potential to play a significant role in the Middle East peace process could be impaired.

Rejected by the EU, Turkey might turn its attention to alternative allies. Trading and political ties between Russia and Turkey have burgeoned in recent years. Some senior figures in the Kremlin argue that both countries are outcasts from the European mainstream and should therefore stick closely together. And they worry that a more European Turkey could undermine Russia’s hold over European energy markets. At present, most of the EU’s gas imports come through pipelines that run over Russian territory. The EU wants to diversify for the sake of energy security. Almost all the alternative routes for Caspian or Middle Eastern gas to enter Europe pass through Anatolia. Turkey is proud of its growing importance as a European energy hub. But if it turned away from the EU, towards Russia, the EU could find it much harder to decrease reliance on Russian energy and pipelines.

Russia has been protecting Cyprus at the United Nations, preventing the UN Security Council from passing resolutions that are critical of Greek Cypriot obduracy. However, even if Russia shifted its stance on Cyprus – as the price for a new alliance with Turkey – there would not be much impact on that island. For a breakdown in EU-Turkey relations would almost certainly end any hopes of reuniting Cyprus. Without the goal of EU accession, Turkey would have few incentives to make the concessions required to encourage the Greek Cypriots to compromise and accept a revised version of the Annan plan. Northern Cyprus would in the long term head towards gradual integration with Turkey.

Turkey could also look to Central Asia. At various times since the break-up of the Soviet Union, Turkish politicians have talked of reviving their country’s ancient cultural ties with the Central Asian states (all of which speak Turkic languages, bar Tajikistan). But little has come of it, and these states do not provide a serious alternative to Europe, given their small economies. Russia and China will remain the dominant countries in the region.

The AKP government has already taken a closer interest in the Islamic world than earlier secular governments, becoming an active participant in meetings of the Organisation of Islamic States. If talks with the EU collapsed, and AKP stayed in power, these ties would probably deepen. Nevertheless, Turkey’s overall orientation – both economically and politically – would remain westward. Turkey may continue to modernise and open its economy, and consolidate its democracy. However, progress would be much slower and patchier than it would be if Turkey stayed on the path to EU accession.