Turkish Delight?

Just one more European country Geographically and politically, Turkey has been sitting on Europe's doorstep for ever. Long a member of the NATO defence club, Turkey’s ultimate prize of EU membership remains elusive —and, while inching closer, its possible accession arouses such passions that it pits EU governments against their citizens, countries against countries and parties against parties.

In 1963, Turkey signed an association agreement with the then European Economic Community. Thirty-six years later, it was granted the status of a candidate country, a step that unleashed sweeping reforms in Turkey aimed at setting the stage for speedy acceptance as a member. Much has changed for the better in Turkey since then.

This week, EU leaders got together to discuss whether to open membership negotiations with Turkey. History shows that such an invitation equates a sure ticket to eventual admission. Among the biggish EU members, citizens of France and Austria are staunchly against it, those of the Netherlands marginally less so, and the UK and Italy are in favour, Germany is deeply divided, with the governing coalition saying yes and the opposition a resounding no, while most of the smaller countries are roughly for admitting Turkey —even, surprisingly, its old enemy Greece.

While the nod was given to opening talks in October 2005, a pitched battle is nonetheless certain to follow. On the one side, you have those who argue that admitting a large Muslim country such as Turkey into an essentially Western Christian club represents a unique chance to avoid a "clash of civilisations" between Islam and the West. On the other, you hear voices like that of Valéry Giscard d'Estaign, chairman of the European Convention that drafted the EU constitution, predicting darkly that accepting Turkey would spell the end of Europe. Frits Bolkestein, the Dutch commissioner, argues that unhindered Muslim immigration into Europe would mean that 1683 —the year the Ottomans were defeated at the gates of Vienna— was for naught.

But that reflects only political or cultural misgivings. What about the largely unexplored economic angle? Of all countries, it had to be the Netherlands, one of the more inimical to Turkish accession, that produced two cool-headed researchers to shed light on this: Arjan Lejour and Ruud de Mooij, both of the CPB Netherlands Bureau for Economic Policy Analysis, who released a CESifo Working Paper called Turkish Delight - Does Turkey's Accession to the EU Bring Economic Benefits? They follow on the steps of Harry Flam, a CESifo Network researcher in Sweden who earlier explored the subject in his paper Turkey and the EU: Politics and Economics of Accession.

The authors go about it by measuring the effects of three fundamental changes full membership will exert upon Turkey: complete access to the EU internal market; institutional reforms in Turkey to bring it up to EU standards, and unhindered movement of labour within the EU.

Full access to the internal market would boost Turkey's foreign trade with the remaining EU countries by 34%, according to their findings. This effect would be further reinforced with the combined effect of pushing through big institutional reforms to improve transparency and slash corruption, while also adapting the legal and regulatory framework to EU standards: that would translate into an additional 57% boost in trade.

The freedom of movement would send a significant flow of Turks towards the rest of the EU. The authors estimate a total of around 2.7 million migrants over the long term. The majority of them —some 2 million— would end up in Germany, given that this country already has a large Turkish community. The economic effects of this migration are difficult to assess and depend heavily upon the skill level of the migrants. Still, effects are expected to be quite small in any case.

There is one sticking point: as Harry Flam points out, under present rules Turkey would receive the largest budget transfer, resulting from its large population, low income level and a large agricultural sector. Flam puts the figure at 12 billion euros, which corresponds to about 14% of the EU budget.

Nevertheless, the authors’ overall conclusion is that Turkish admission into the EU club brings clear economic benefits to Turkey, without posing undue strains on the rest of the membership. And the resulting economic improvement for Turkey will, in the end, translate into economic benefits for the EU as a whole.

A. Lejour und R. de Mooij: Turkish Delight - Does Turkey's Accession to the EU bring Economic Benefits?, CESifo Working Paper No. 1183.

Harry Flam: Turkey and the EU: Politics and Economics of Accession, CESifo Working Paper No. 893.


Note: This text is the responsibility of the writer and does not necessarily reflect the opinion of either the CESifo Working Paper author(s) cited or of the CESifo Group Munich.

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