Friday, April 25, 2008

Some thoughts regarding Turkish EU membership (2008)

Divergent opinions regarding Turkish EU membership are not so much due to disagreement over its likely consequences but rather to the desirability of these consequences. In economic terms, preference hierarchies diverge, whether for ideological or (material) interest reasons. (We would not however that the Turkey debate strikes as incongruously fiercer than the debate over Estonian or Croatian membership.) We recognise that what one would like the EU to be (or become) will drive one’s attitude towards Turkish EU membership.

If one believes that Europe should be an exclusively European-Christian project (Giscard), then Turkey does indeed have no place in the EU. If one believes that the EU should emerge as a fairly coherent, perhaps centralised entity under the leadership of “core” European states (Paris), then Turkish EU membership may appear “unhelpful”. If one opposes the emergence of a “strong”, centralised EU and instead favours a loosely organized free trade zone with limited economic co-ordination (London), then Turkish EU membership is welcome indeed (as it might would further add to the diversity and size of EU membership). If one wants to unambiguously integrate Turkey in the Euro-Atlantic economic and political alliance system (Washington), then one will tend to support Turkish EU membership is welcome. In many cases, this one overriding normative commitment determines the position towards EU membership. I am aware that Turkish EU membership will have a bunch of consequences, but let me say a few words about the most important macro-consequences.

Demographically Turkish EU membership would seem to benefit the EU economically. The EU will be stagnating demographically, if not decline over the coming decades. The EU projects the total EU population to rise from 457m in 2005 to 469m by 2030 and then decline to 450m by 2050. While the share of the working age population will decline from 54 to 47%, old-age dependency will shoot up massively from 25% today to 53% by 2050. Turkey’s demographic situation is far better. The population aged 15-64 will see net increase of 15 m until 2050, much of which will sooner or later be absorbed by the domestic economy. Given that the total working age population will be > 200 m, Turkish demographic development will not help reversing the EU’s demographic fortunes. The EU independently will have to reform in social security, health and labour markets to cope with the demographic challenge. Sooner or later the Turkish economy will absorb the surplus labour itself. Nonetheless, at the margin adding Turkey will go some way towards stabilizing the absolute size of the working age population. By fully integrating Turkey. economically, a more efficient allocation of capital and labour will be possible, benefiting economic well-being in Turkey and the EU.

Geo-strategically, Turkish EU membership would enhance the EU’s position. (Again, whether this is deemed relevant or desirable will depend on what the EU is supposed to be.) Turkey has been a key strategic and military partner at least since it joined NATO in 1952. Turkish EU membership would arguably provide the EU with a greater influence, economically and politically, in the regions bordering Turkey. The EU has been keen to diversify its sources of energy imports and Turkey’s location is key whether it concerns accessing energy supplies in Central Asia or the Gulf region. Turkey borders on Iraq and Iran, countries with third- and fourth-largest oil reserves. (Iran also has the world’s second-largest gas reserves after Russia.) An important petroleum pipeline already runs from the Caspian to the Mediterranean. If the EU wants to reduce its dependence on Russian gas supplies (as seems to be the case), then Turkish EU membership would certainly enhance its bargaining position.  This is not to say that Turkish EU membership is pre-requisite if the EU is to tap Central Asia’s and the Gulf region’s energy supplies. But it would certainly deal the EU a stronger hand and Turkey’s relative position vis-à-vis Central Asia and the Gulf region would also be enhanced.

Economically, the case for membership is clear-cut. In 2007, Turkey was the EU’s 7th largest trading partner (ahead of India and Brazil), although Turkey’s share of the EU-25 outward FDI stock amounts to only 1-2% of the total (ahead of India, but not Brazil). The Turkish economy would add about 4% of the current EU-25 GDP. Although given “catch-up” economic growth, this share will increase over time, it will not have a transformative effect on the EU economy (although increasing FDI outflows would certainly benefit Turkey). From the EU perspective, benefits will be more visible at the micro- and sector level. Labour markets in the new member-states will tighten over the coming decades and EU companies will want to diversify its outsourcing location where labour is relatively abundant and where political and institutional stability is a long-term prospect.  In addition, EU companies would benefit from making Turkey a regional centre to serve the fast-growing Middle Eastern region. It would seem that the economic benefits would not be overwhelming magnitude-wise from the EU perspective (it would be from a Turkish perspective in terms of investment inflows and development), but again at the margin it would benefit the EU. It is obvious that in relative terms economically Turkey will benefit more from full E(M)U membership than the EU. But benefit it will both sides.

I won’t be touching upon the institutional consequences, as these are intimately linked to precisely what the EU is meant to be (or become). Few people that greater general economic well-being, more influence and a more gradual demographic transition are not desirable. Perhaps the most normative, but perhaps also the most powerful argument in favour of Turkish EU membership is that if the EU aspires to be a political and economic project, it should not exclude countries that aspire to submit themselves to the rule. The EU as a post-modern, quasi-structure spreading, democracy, liberalism, the rule of law and domestic political stability is something to be celebrated (whatever the current and future shortcomings of the EU). Denying a country who aspires to the same values membership would strike my sense of fairness. But then again, this happens to reflect my personal hierarchy of preferences.