Should Turkey join the European Union?

The European Council of Ministers took a momentous decision and opened accession negotiations with Turkey in October 2005, but progress since then has been painfully slow. Only 14 of the 33 chapters of the acquis that require negotiations have been opened in more than 10 years and just one (science and research) provisionally closed.

The country, which stands at the epicentre of the divide between an increasingly unstable Europe and an ever more conflictive Middle East, had been knocking at the EU’s door since 1963 when it became an associate member of the then European Economic Community. In 1996, Turkey became the first and so far the only non-EU member to form a Customs Union with the EU for industrial goods and processed agricultural products.

Turkey’s accession process is in a category of its own –very different to that of other applicants– because it is said to be ‘too big, too poor and too Muslim’. There is no reason why the country’s size, its predominantly Muslim religion and economic underdevelopment in the impoverished south-east, should be in themselves stumbling blocks on the road to accession. Turkey’s population of 76 million is slightly more than the combined populations of the 10 Eastern and Central European countries plus Cyprus that joined the European Union in 2004.

Turkey’s per capita income in 2014 (the latest year available) was 53% of the EU average compared to 109% for the UK. Ten years earlier it was only 39% as against the UK’s 125%, showing that over a decade Turkey has become in relative terms substantially richer, as a result of very strong growth, while the UK has become poorer.

Opposition to Turkey’s full EU membership, particularly in Germany and France, has intensified with the recent avalanche of migrants into the EU although significantly Turks are not among those seeking to enter the Union illegally. Indeed, Turks already in the EU have been returning to their country for several years, something not widely known, as Turkey has become richer.

The country’s special case was implicitly made clear in the negotiating framework when the green light was given to open the accession process. This enables the EU to determine opening and closing benchmarks for every chapter, in addition to long transition periods, derogations, permanent safeguard measures and grey areas like the EU’s ‘absorption capacity’. And there is no guarantee, unlike that which existed for all the other candidate countries, that completion of the accession process automatically brings with it full membership. Turkey’s accession process is not an irreversible one in which Turkey’s membership perspective becomes gradually clearer. Ankara, with some justification, accuses the EU of double standards.

Indeed, the framework and subsequent declarations by some EU leaders have strengthened the feeling that the EU wants a ‘special partnership’ for Turkey and not full membership.

Nevertheless, a new if ambiguous reality has been established for Turkey which was accepted by sceptics such as Wilfried Martens, the chairman and co-founder of the conservative European People’s Party, the largest party in the European Parliament. In 1997 Martens cast doubts on Turkey’s accession. After negotiations began in 2005 he saw in it ‘a unique opportunity, as great as making peace between France and Germany after the War, or as reunifying Europe after the fall of the Berlin Wall in November 1989. These talks begin a dialogue between Christians and Muslims which could signal an extraordinary new beginning for the world as a whole’.

The accession negotiations, however, have not laid to rest the issue of whether Turkey is really part of Europe, despite joining the Council of Europe in 1949, being a founding member of the Organisation for Economic Co-operation and Development (OECD) in 1961, the club of developed economies, and becoming a NATO ally in 1952 (with the second-largest standing military force after the US). Turkey also participates in the Eurovision song contest.

Three-quarters of foreign direct investment in Turkey comes from the EU, and the country is the EU’s sixth-largest trading partner. Some 55% of European economic legislation is reflected in corresponding Turkish law, and entrepreneurs employ 600,000 workers inside the EU. Were the many Turks employed in the German car industry to down tools and go on strike, production would ground to a halt.

When Turkey became an associate member of the European Economic Community in 1963, there was no doubt in the mind of Professor Walter Hallstein, the then President of the European Commission, on this issue. ‘Turkey is part of Europe’, he declared. ‘This is the ultimate meaning of what we are doing today. It confirms in incomparably topical form a truth that is more than the summary expression of a geographical concept or of a historical fact that has held good for several centuries’.

The EU itself seemed to rebuff the geographical argument with the accession of Cyprus in 2004 (most of which is east of Ankara). As school children we learned that throughout the 19th century the Ottoman Empire, with Turkey at its heart, was known as the ‘Sick Man of Europe’ not the ‘Sick Man of Asia.’

The problem is that Turkey is imperfectly European (Samuel Huntington, the Harvard professor author of the Clash of Civilisations, called it a “torn country”). Unlike Australia, America and Africa, Europe does not really have clear cut geographical boundaries and a good deal of uniformity. The Ural mountains, the Caucasus and the Caspian sea are generally regarded as the traditional boundaries, but Europe is also part of the Eurasian landmass. Europe’s southern border – Spain – would appear to be clear since the expulsion of the Moors from Spain in 1492, but the eastern and western frontiers are more problematic. History has seen continual changes in Europe’s eastern frontiers.

The Oxford historian Felipe Fernández-Armesto in an essay entitled A European Civilization: Is There Any Such Thing? said Europe is an elastic concept and a “club to which selection is by self-assignation”, and “if we are to give it a future, we must begin by admitting that it does not already exist”.

The acceptance of Turkey into the EU would probably open a Pandora’s Box of requests from other countries to join. With Turkey inside the Union, it would be difficult to reject Georgia and Armenia. Not only are they much smaller countries, but, unlike Turkey, they have a strong and specifically Christian identity. And if they applied, there is no doubt that Azerbaijan would also want to join. And why should the people of Belarus, Ukraine and Moldovia be less entitled to a European standard of living than those of Estonia, Romania and Bulgaria, which joined in 2004. And what about Russia?

It is one of the paradoxes that it was not the political heirs of Mustafa Kemal Atatürk, the enlightened founder of Turkey’s secular republic in 1923, on the ruins of the Ottoman Empire and for whom France was the maxim expression of civilization, who started EU accession negotiations but the Islamist-rooted Justice and Development Party (AKP) of the increasingly autocratic Recep Tayyip Erdoğan.

The AKP was founded in 2001 and won a landslide victory in the 2002 parliamentary election and has been in power ever since. Its victory followed seven coalition governments between 1991 and 1999.

Atatürk got rid of the sultanate (the sultan was the absolute ruler) and the caliphate, introduced civil, commercial and penal codes based on European models, as well as western dress for men and women, and gave the vote to women (in 1934, only six years after women in Britain over the age of 21 got the vote).

The AKP was initially reformist, particularly defanging the powerful military, the arbiter of political life, which intervened directly in politics three times between 1960 and 1980 and in 1997 shut down the ruling Islamist Welfare party (a precursor of the AKP) without seizing power. The military has long seen itself as the ‘guardian of Turkish democracy’ and the defender of the rigidly secular state created by Atatürk.

The National Security Council, which represented an institutionalisation of the military’s influence over politics and acted as a kind of shadow government, has been under civilian control since 2004 and the military is no longer represented on the Higher Education Board, which oversees the administration of universities, or on the Radio and Television Council. Officers have also been brought to trial in civilian courts for allegedly plotting to overthrow the AKP government.

Curbing the power and influence of the military was a key driver for Erdogan to push for Turkey to start EU accession. It was very much in the interests of the AKP’s Islamist agenda given the military’s anathema of anything that smacks of political Islam.

Erdoğan also did more in his first years in office for the Kurds, who constitute 15% to 20% of the 76 million population. They were gradually granted greater cultural rights. Kurdish-language private schools, television and radio broadcasts were legalised, and limited time on state TV. Not that long ago the mere act of speaking Kurdish could expose one to criminal charges of being a ‘separatist’: the National Security Court, for example, handed four musicians prison sentences for singing in Kurdish at a wedding reception.

Twelve acquis chapters for EU accession were opened between 2006 and 2009 but only two since then, underscoring the extent to which the pace of reform has decelerated. The blame for this lies on both sides.

By making Turkey a special case, albeit for understandable reasons, given the complexity of the issue and the lack of a unanimous stance among EU countries, reinforced by the absence of an unequivocal commitment that Turkey will be accepted as a member once the accession process is completed, the incentive for reform has been weakened and with it the EU’s transformative power.

EU conditionality (the use of ‘carrots’ and ‘sticks’) was effective in 1999-2005 as Turkey got itself into shape to become a candidate country and saw the incentive to do so, but the EU no longer has any leverage. As there is no certainty of a reward at the end of the accession process (ie, full EU membership), Erdoğan who became the first directly elected President in 2014 after serving as Prime Minister for 11 years, feels under no pressure to move decisively and so proceeds at its own pace, dictated by the domestic political climate and his own electoral interests. Unlike Spain, my country of adoption, which joined the EU in the 1986, Turkey’s government is not pursuing democratic reforms because they are good in themselves but as a means to an end.

The AKP began as a broad mosque party, attracting wide support from many different segments of society. It galvanised the disparate opposition to the so called the entrenched deep state and to the endless bickering coalition governments, particularly in the more pious Anatolian heartlands, but also among secular, liberal voters.

The social-democratic Republican People’s Party (CHP), the main opposition and founded by Atatürk, is stuck in the past, while the right-wing Nationalist Movement Party (MHP) rabidly waves the national flag, which Erdogan has also taken up.

The protracted EU accession process, however, has not dented support among Turks for EU membership, which has been on the rise since 2013 after falling. Expectations, however, that Turkey will eventually become a full member –as opposed to support for the EU– have decreased.

The increased support for EU membership comes at a time when the economy is flagging after a period of stellar growth and the quality of Turkey’s democracy leaves a lot to be desired. This suggests that Turks see Europe as the solution for their problems.

Early in his career Erdogan made a telling remark. Democracy is like a train, he said; you get off once you have reached your destination. Judging by events in recent months, Turkey’s president may be getting close to that goal.

The Cyprus issue
On the international front, the main stumbling block to progress in EU accession is Cyprus, as Turkey has still failed to implement the 2005 Additional Protocol to the Ankara Agreement and extend its Customs Union with the EU by opening its ports and airports to Greek-Cypriot traffic, and thus recognise the Republic of Cyprus which joined the EU in 2004.

As a result, the European Commission suspended at the end of 2006 the opening of eight chapters related to the Customs Union and announced that no more chapters would be provisionally closed until Turkey had fulfilled its commitment.

Ankara wants the EU to implement the decision of the Council of Ministers, taken in April 2004, to end the isolation of the internationally unrecognised Turkish Republic of Northern Cyprus (TRNC), created after Turkey’s invasion of Cyprus in 1974. The promise was made two days after Turkish Cypriots voted in favour of the Annan Plan to reunify the island (rejected by Greek Cypriots). Cyprus joined the EU on 1 May 2004 (the writ of EU law does not run in the Turkish part of Cyprus) and since then has blocked the direct trade regulation needed to lift tariffs on goods.

Cyprus and France have also unilaterally blocked the opening of certain chapters.

Although reunification of Cyprus is not in itself a sine qua non for EU membership, unlike Ankara’s obligation to fully implement its Customs Union, a deal would go a long way toward enhancing Turkey’s EU prospects and creating a more favourable climate.

The chances for reunification look better than they have for a good number of years, following the landslide victory last April of the more consensual Mustafa Akıncı as President of the TRNC. Both Akıncı, a former Mayor of the Turkish-Cypriot part of the capital Nicosia from 1976 to 1990, and Nicos Anastasiades, the (Greek-Cypriot) President of the Republic of Cyprus, voted in favour of reunification in the 2004 referendum.

Big challenges, however, remain, particularly the thorny issue of the property of Greek Cypriots in the TRNC and that of Turkish Cypriots in the south of the country.

A seriously flawed democracy

After taking office as president in August 2014, following 11 years as prime minister, Erdogan installed himself in a new $615 million presidential palace (with more than 1,000 rooms), which dwarfs Versailles. It has been ridiculed by the opposition as the needless extravagance of an increasingly authoritarian leader.

Erdoğan wants to replace parliamentary democracy with an executive presidency which would give him more powers, although it is already a de facto executive presidency given the way he conducts himself. As Erdogan said in a speech last year: “There is a president with de facto power, not a symbolic one. Whether one accepts it or not, Turkey’s administrative system has changed. Now what should be done is to update this de facto situation in the legal framework of the constitution.”

The AKP’s 317 seats in parliament out of a total of 550, however, fall short of the 330 needed to change the constitution.

The European Commission reports every year on the progress which Turkey has made and the areas where it needs to do better. The reports make it clear how far Turkey still has to go.

Take press freedom. Freedom House, the US-based democracy group, has rated the Turkish press as ‘not free’ since 2013, when the government suppressed mass protests. Turkey’s press freedom score dropped from 54 in 2010 to 65 in 2015 (0 = best; 100 = worst). Turkey ranks 149th among the 180 countries in the latest Reporters Without Borders’ World Press Freedom Index, just above the Democratic Republic of the Congo and Russia.

The state media is tightly controlled and pressure applied on private media owners with other business interests who are fearful that if they do not toe the line they will lose lucrative business deals and government advertising, or be subject to visits by tax inspectors.

The latest of many victims and the most serious is Zaman, the country’s biggest-selling newspaper, which was taken over by the authorities last month following an edict from the courts, and virtually at gunpoint. Police used tear gas as they rounded up staff. Zaman, which has an English edition, was closely linked to the influential Hizmet movement of the US-based cleric Fethullah Gülen, a kind of Islamic Opus Dei (a conservative Roman Catholic organisation), which Erdogan has classified as a terrorist group aiming to overthrow his government. Under the administration appointed to run the newspaper, there has been a sea change in the editorial policy. The first edition after the seizure showed Erdogan on the front page, smiling in an article announcing a presidential reception for Women’s Day.

It was probably no coincidence that the takeover of Zaman took place while the EU was courting Ankara over measures to deal with Europe’s migrant crisis, something which I will come to later.

Gülen was once an ally of Erdogan. The Gülen network, with adherents in the police, the judiciary and the security services, worked hand in glove with Erdogan’s AKP when it came to power, particularly in curtailing the military.

A court last year cleared 236 of the more than 300 officers convicted in 2012 in the Sledgehammer trial, as some of the evidence had been fabricated.

Erdogan and Gülen fell out in 2013 after differences emerged over policies toward the Kurds, Israel and Iran, and over the proposed closure of schools controlled by the Gülenists.

In an earlier crackdown, the editor in chief of the opposition newspaper Cumhuriyet and its Ankara bureau chief were charged with espionage after the paper printed a story suggesting that the government was conniving at the supply of arms to extremist rebels in Syria. Prosecutors are demanding life sentences for the pair. Erdoğan himself is a plaintiff in the case.
When the country’s highest court ordered their release in March after three months in jail pending trial, Erdogan characteristically announced: “I do not abide by the decision or respect it.”

The thin-skinned Erdoğan sued more people in his first 18 months as president over charges of insulting the President than the number of those who were tried over the past 64 years under a notorious law for criticising Mustafa Kemal Atatürk, the nation’s founder. There were 1,845 cases during that period brought against Turks for defaming Erdogan, mostly on Twitter.

Few cases led to serious punishment. In two of the more absurd incidents, a schoolteacher was sentenced to almost a year in prison for making a rude hand gesture at a political rally, and a former Miss Turkey was prosecuted for ‘insulting’ the leader by posting a satirical poem online.

Erdogan was so incensed last month by a two-minute song broadcast on a satirical show on a German TV channel which mocked him that Germany’s ambassador in Turkey was summoned to the foreign ministry and told to get it deleted from internet where it had gone viral. Accompanying footage of Angela Merkel being received by Erdoğan at his palace, are the lines: “Be nice to him since he’s holding all the cards”, in reference to the way she embraced Turkey despite deep misgivings about its human rights record in order to secure its support over the refugee crisis.

The Law on the Protection of Atatürk came into force in 1951 and is still on the statute books. The article in the constitution that criminalises insulting the President was hardly applied until Erdoğan took office. While Süleyman Demirel, President between 1993 and 2000, ignored virulent cartoons against him (he proudly collected them), Erdoğan’s lawyers have instructions to go after anyone who criticises him.

Corruption is also a big problem. Turkey’s score in the 2015 index of the Berlin-based Transparency International continued to fall (by three points to 42, where the nearer to 100 the cleaner the country). It is ranked 66th out of 167 countries; however, the country still does better than Bulgaria, an EU country which was ranked 69th with a score of 41.

The AKP has been rocked by several graft investigations. In 2013, police raided homes and confiscated some US$17.5 million in cash. Four ministers lost their posts following the probes. The sons of three of the four ministers, including Erdoğan’s son Bilal, were also allegedly implicated in the corruption investigations.

Erdoğan dismissed the graft investigation as a ‘judicial coup’ by the followers of Gülen. Prosecutors and police officers involved in the investigations were removed from their posts, and Twitter and YouTube were temporarily banned. Both corruption investigations against some 60 suspects were then dropped by the new prosecutors. The parliamentary Corruption Investigation Commission quashed the case into the ministers, as the AKP had an absolute majority in parliament.

Turkey’s elections are regarded as free and fair. There is, however, an abnormally high threshold of 10% of the national vote in order to enter the legislative body, the highest in Europe. This threshold, which hinders a more representative parliament, is a legacy of the 1980 military coup and aimed at only allowing ‘moderate’ parties into parliament. The threshold locked out a pro-Kurdish party until 2015 when the pro-Kurdish party won 13% of the vote and 80 seats in parliament.

The judiciary and the law enforcement agencies have become more politicised in recent years. The former Constitutional Court chairman Haşim Kılıç, accused politicians last year of turning the judiciary into an ‘instrument of revenge’. ‘Everybody knows the political views of judges and prosecutors, even in the remotest villages of the country, he said. ‘We cannot move forward with such a judiciary.’ Government-backed candidates last year won the majority of seats in elections for the country’s top judicial body, further tightening government control over the judiciary.

The 1982 Constitution, which came into force as a direct result of the 1980 military coup, needs to be changed. The approach so far has been piecemeal, with more than 100 amendments, but it is still too authoritarian with its emphasis on the state’s as opposed to the individual’s rights

The polarising President Erdoğan with his majoritarian concept of democracy and increasingly top-down rule has earned few friends abroad for the way his opponents are treated. Angela Merkel, the German Chancellor, was particularly appalled by the brutal handling of the Gezi Park protests in 2013.

Europe’s refugee crisis

Turkey and the EU are now in a new ball game as a result of the influx of migrants, mainly from war-torn Syria, into Europe via Turkey which has caused Europe’s biggest refugee crisis since World War Two. Last year, more than one million people entered the EU illegally by boat, mainly going from Turkey to Greece, compared to 59,000 in 2008. More than 150,000 have arrived so far this year and about 460 have died.

Most of you, I assume, remember the photo that went viral on social media last September of a little Syrian boy lying face down on a Turkish beach after he drowned, and then carried in the arms of a Turkish rescue worker.

Turkey, it has to be said, has been hugely generous to these migrants: some 2.7 million of them are living in camps in the country. In comparison, the number of migrants the UK has received is a drop in the ocean. Turkey spent some 9.5 billion euros of its own money on the migrant crisis before the agreement with the EU.

The EU has struck a Faustian pact with Erdogan under which Turkey, in return for reducing migrant flows, receives €6 billion in funding to look after migrants, a pledge to resettle in Europe some of the Syrian refugees, an acceleration of the EU accession process with the opening of another chapter and visa liberalization for Turkish citizens visiting the Schengen open borders area of the EU by the end of June if Turkey meets all the conditions. All new irregular migrants crossing from Turkey into Greek islands will be returned to Turkey (the first shipment was made this week); and for every Syrian returned to Turkey from Greek islands, one Syrian already in Turkey will be resettled in the EU. This temporary link between resettlement and return is capped at 72,000.

The agreement with Turkey could have an impact on the UK referendum debate. It would not be surprising if the Brexit camp used visa-free travel for 75 million Turks in its campaign

It might come as something of a surprise to you to learn that Boris Johnson, leader of the Brexit campaign, used to campaign for Turkey to join the EU. That was back in 2006 in a BBC documentary in which he said he could not wait for the “great moment” when the two halves of the Roman Empire “are at last reunited in an expanded European Union. The crowning irony is those who would keep the Turks out, on the grounds that they are un-European, would thereby disbar the city that for a thousand years was the heart of the Roman Empire and which preserved our European civilisation,” he said.

Boris’s great grandfather Ali Kemal was briefly a minister in the Ottoman empire, which makes him one eighth Turkish. He was lynched by a mob in 1922 and hanged from a tree for opposing the nationalist movement fighting the Turkish War of Independence that followed the Ottoman Empire’s defeat in World War I. Apart from the colour of Boris’s hair, he could be mistaken for a pasha.

Brussels no longer holds all the trump cards. The refugee crisis has turned the tables. Ankara is now calling the shots. Without Turkey’s help, the flow of people entering Europe cannot be reduced, and even with Turkey’s help the outcome is far from certain.

However hard Turkey may try to stem the flood of refugees, it is impossible for it to fully control the chaotic situation. Turkey has 7,200km of coastline, and unless it stations soldiers along every inch of it, it cannot prevent migrants taking to the sea and crossing into Greece, the main entry point. As one crossing point is closed down, for example that to the Greek island of Lesbos, which we have all seen on TV, another will be opened.

Turkey has the EU over a barrel, as it is Europe’s gatekeeper. Transcripts leaked to a Greek website in February before the EU summit with Turkey last month appeared to show Erdogan threatening Europe with an uncontrolled flood of refugees unless he was given money and rapid accession to the EU. Real or fabricated, and they have the ring of black propaganda, the transcripts served to expose what many Turkish democrats fear: European leaders’ criticism of Turkey’s eroded democracy is likely to be more muted in the future as they kowtow to Erdogan. EU leaders traded moral high-ground principles for realpolitik.

The Kurdish issue

The two and a half year ceasefire between the Turkish state and the insurgent Kurdistan Workers Party (known as the PKK), which followed a brutal dirty war for 28 years that killed at least 40,000 people and displaced more than 1 million, broke down last July, with a renewal of violence on both sides.

At the same time Turkey launched air strikes on PKK camps in northern Iraq following a series of attacks on its police officers and soldiers blamed on the militant group, which is classified as a terrorist organisation by the EU and the US.

The strikes were launched virtually in parallel with ones against the self-styled Islamic State of Iraq and the Levant (Isis), as Turkey reversed its policy and joined the US-led coalition in its fight against Isis after the group carried out a suicide bombing near the Syrian border. Turkey, however, is also targeting Syrian Kurds, although they are helping the coalition. Its army, the People’s Protection Units, controls territory along the border with Turkey. Ankara fears the creation of an autonomous Kurdish region in Syria — similar to the Kurdish region in northern Iraq — would spur the separatist ambitions of Turkey’s own Kurds. The very complex situation is a bloody mess.

Since the end of the ceasefire, more than 1,000 people, including at least 253 civilians and 376 members of the security forces, have lost their lives in southeastern Turkey alone. The climate now recalls that of the military-dominated 1990s at the height of the war with the PKK.

Conclusion

During the more than 10 years that Turkey has been negotiating its EU accession, Croatia leapfrogged over Ankara and joined the EU in 2013 after completing all the reforms needed to bring it into line with EU laws and standards. Tiny Croatia (population 4.2 million), however, cannot be put in the same category as the giant Turkey whose full membership would be a much more seismic event. Moreover, Turkey is still a very long way from meeting the conditions, particularly its seriously flawed democracy.

The European Commission promised to give a new impetus to the stalled EU accession process by opening more chapters. It agreed to open the insignificant chapter on financial and budgetary provisions.
The EU is in a bind: by any standards Turkey is in breach of the Copenhagen criteria that define whether a country is eligible to start the process to join the EU, and which it was regarded as having sufficiently fulfilled in October 2004, one year before the accession process began. And yet that process continues, albeit at a snail’s pace, for fear of alienating a country that has become crucial for Europe as a result of the migrant crisis.

Were Turkey not today such a vital country for the EU, would it be treated in the same way and less harshly criticised or would the accession process be halted until it put its house in order? I suspect the process would be suspended.

The Copenhagen criteria require that a state has the institutions to preserve democratic governance and human rights, has a functioning market economy, which Turkey does to a large extent, and accepts the obligations and intent of the EU. These criteria have nothing to do with Turkey being a Muslim country. They are the rules of the club.

The approval of all EU countries will be needed to open more chapters, which means that Cyprus, the most recalcitrant country toward Turkey, has to lift its veto otherwise there will be no progress. The president of Cyprus told Donald Tusk, the president of the European Council, last month that it would not give its consent to the opening of any EU chapters with Turkey until it fulfilled its obligations. Any move to open more chapters requires the agreement of all 28 EU member states.

That said, I find it ridiculous that the EU is beholden to one country, but that is how the process works, as unanimous decisions are required to open chapters. There is a good case to be made now for using qualified majority voting, which avoids the need to find a unanimous consensus on every issue and means that a decision can instead be taken if two conditions are met: when 55% of EU member states vote in favour of a measure, and when it is supported by member states representing at least 65% of the total EU population.

Turkey’s EU membership can be seen as a rose or a thorn. Whether the country will ever fulfil all the conditions, whether once fulfilled other EU countries will unanimously accept its membership – some would hold referendums on the issue – whether, indeed, Turkey at the end of the day will want to join a Union that is in danger of crumbling is impossible to say. Let us assume in a leap of imagination and optimism that Turkey one day, far off, does join, although, given all the considerations, this is most unlikely.

For the EU, the home of secularism, letting in Turkey would prove that the Union is not a Christian club and that it is open to other cultures and religions. A Union with Turkey would be more cosmopolitan and more open-ended; as a EU member Turkey could be a beacon for the troubled Muslim world.

Turkish workers would rejuvenate the ageing European work force and thus help to maintain creaking social security systems where too few workers are supporting too many people who are retired or not working.

The rise of Islamic State in Iraq and Syria has put Turkey at the centre of a conflict that has global consequences. Assuming the worst that this is a problem that is not going to go away, allowing Turkey to become a member would create a strong ally in the fight against Islamic terrorism in the region. As a Nato member since 1952, Turkey is already making a significant contribution to Europe’s defence and security. As a EU member, Turkey would become more of a middle eastern power.

Economically, Turkey is a vast and increasingly rich market. EU membership, added to the current customs union, would make it more attractive for EU exporters.

For Turkey, EU membership would anchor the economy into the free market system and democracy, and over the long term bring much greater prosperity. This prosperity, in turn, would reduce the country’s potential for migration to the EU, though, as I stated earlier on, the flow of Turks to Europe was reversed some years ago.

Given Turkey’s flawed democracy, the best way for the EU to engage with the country, move the EU accession along and in the process put the autocratic Erdoğan’s flagging democratic credentials to the test would be to open chapter 23 of the acquis on judicial and fundamental rights and chapter 24 on justice, security and freedoms.

It is somewhat hypocritical of the EU to criticise and rightly so Turkey’s major deficiencies in the areas of the rule of law and respect for fundamental freedoms –the core of the negotiation process– and not give it the chance to make improvements by opening these chapters.

Turkey’s EU accession bid is a long and winding road, and there is no end in sight. If I had to stick my neck out, I would say it will not reach the end of the road, and if it does it is far from certain that the EU countries which will hold national referendums on the issue will accept it as a member of the club.

Spain’s failure yet again to meet budget deficit target strains relations with Brussels

The conservative Popular Party (PP) government widely failed to meet the 2015 budget deficit target agreed with the European Commission (EC), leaving a daunting legacy for the next administration, whenever there is one, further eroding Spain’s credibility and straining relations with Brussels which will be asked for more time to get the deficit back below the EU’s ceiling of 3% of GDP.
http://www.blog.rielcano.org/en/spains-failure-yet-again-to-meet-budget-deficit-target-strains-relations-with-brussels/

Inside Spain (22 February-28 March)

Spain to join International Syria Support Group.
Socialist Sánchez fails in PM bid, Popular Party and Podemos still refusing support.
Close to half of Spaniards say corruption is the country’s second largest problem.
European Commission urges Spain to reduce budget deficit.
Ferrovial wins £300 million contract to maintain 370kms of highways in UK.

http://www.realinstitutoelcano.org/wps/wcm/connect/be1ef7004c36199cb1c9f559c239cfeb/126_InsideSpain_ElcanoNewsletter.pdf?MOD=AJPERES&CACHEID=be1ef7004c36199cb1c9f559c239cfeb

Spain moves towards fresh elections to break deadlock

Spain took a step towards fresh elections when Pedro Sánchez, the Socialist leader, twice failed to secure sufficient backing in parliament to become prime minister. If no political leader obtains the required support by 2 May King Felipe will dissolve parliament and call a new ballot, probably to be held on 26 June, that could produce another stalemate.
http://www.realinstitutoelcano.org/wps/portal/web/rielcano_en/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/commentary-chislett-spain-moves-towards-fresh-elections-break-deadlock

Inside Spain (20 January-22 February)

Spain to contribute €153 million to migration fund for Turkey.
Countdown to the investiture of a Socialist Prime Minister.
Spain records its worst score in corruption index, Popular Party hit by more scandals.
New government, whenever there is one, faces big budget hole.
CAF wins £490 million rolling-stock contract in UK.

http://www.realinstitutoelcano.org/wps/wcm/connect/80e590004bc9c0feb6c2bee712ffc684/125_InsideSpain_ElcanoNewsletter.pdf?MOD=AJPERES&CACHEID=80e590004bc9c0feb6c2bee712ffc684

Spain and Portugal: From Distant Neighbours to Associates

I first went to Portugal on holiday in the summer of 1974 shortly after the April revolution, and when I started to work for The Times of London in 1975, covering Spain’s transition to democracy, I used to go to Portugal from time to time. On one of those visits in 1977 I interviewed Don Juan, the grandfather of King Felipe, at his home in exile in Estoril. I was back in Estoril last year for the first time in many years, staying not far from where Don Juan lived in Villa Giralda in the for me appropriately named street Rua de Inglaterra. That visit gave me a dizzying sense of history, as I also know King Juan Carlos and Felipe.

I will now give you a broad brush summary of the relationship between Spain and Portugal.

A little history

Portugal lay under Spanish dominance between 1580 and 1640 and after the restoration of independence the two countries lived like ‘Siamese twins joined at the back’ for more than 300 years until they joined the European Union (EU) at the same time in 1986 and came face to face. The Spanish film director Luis Buñuel recounts in his memoirs that Portugal seemed further away for Spaniards than India, and for the Portuguese poet Rui Bello Madrid was one of the most ‘distant’ cities from Lisbon.

Portugal managed to remain free from permanent Spanish domination by belonging to different international alliances. The country could easily have gone the way of Catalonia, Andalusia and other regions absorbed by Castile into a united Spain. Portugal is often described as Britain’s ‘oldest ally’ –this goes back to 1386 when England allied itself permanently with Portugal after English archers helped to secure the Portuguese throne from the Castilians. This alliance was solidified when Catherine of Braganza married Charles II of England, and Charles then played a part in achieving Spanish recognition of Portugal’s independence.

There is a more than 200-year old dormant claim by Portugal to territories ceded to Spain around the town of Olivenza near the border with Elvas. Portugal does not recognize Spanish sovereignty over Olivenza and as a result the border between the two countries in the Olivenza area has never been clearly defined.

Even under the right-wing dictatorships of General Franco (1939-75) in Spain and António de Oliveira Salazar (1932-68) in Portugal the two countries ignored one another. Nevertheless, in March 1939, six months before the outbreak of the Second World War, and as the Spanish Civil War was ending, they signed a treaty of friendship to mutually protect their interests and independence.

Franco played a double game: he harboured ambitions of taking over Portugal with Axis help, but was happy to allay suspicions of his designs and also to provide a channel to the British in the event that the war went their way.

‘We were taught to hate Spain’, declared Major Vitor Alves, born in 1931 and one of the prime movers in the 1974 revolution that ended Portugal’s dictatorship (under Salazar’s successor Marcelo Caetano).

Spain and Portugal followed similar political and economic paths during the 20th century: Portugal deposed the monarchy in 1910 and declared a Republic (Spain followed the Republican route in 1931, which was cut short by its 1936-39 civil war); both countries had long dictatorships (1932-74 for Portugal and 1939-75 for Spain); both countries liberalised their heavily protected economies to varying degrees (Spain began in the 1950s and Portugal not really until the 1970s), both joined the then European Economic Community in 1986 and both were founder members in 1999 of European Monetary Union (the euro).

Spain and Portugal are part of the same military and economic alliances (Nato and the EU) and Portugal no longer feels threatened, at least militarily. Nevertheless, the Portuguese still mistrust Spain, epitomised in their still popular saying: ‘Neither good winds nor good marriages come from Spain’. This is because of Spain’s economic invasion of the country as a result of EU membership. All the more reason then why Portugal was jubilant when its football team knocked Spain out of the 2004 Eurocup.

On the international front, Spain and Portugal, once former rivals in Latin America (Brazil, the most populous country, was under Portuguese rule for three centuries), work together in the Iberoamerican Community of Nations, founded in 1991, which holds annual summit meetings of heads of state and government.

Economy

Comparative Indicators, Spain and Portugal (2015)
Spain Portugal
Population (millions) 46.4 10.6
Nominal GDP (US trillion) 1.47 230bn
Per capita GDP ($) 33,000 22,000
Per capita GDP (EU-28 = 100), 2014 91 78
Unemployment rate (%) 20.9 12.0
(*) Production workers in the manufacturing sector.
Source: Eurostat, Economist Intelligence Unit and Confederation of Swedish Enterprise.

Spain is the main supplier of goods to Portugal (around one-third of Portugal’s total imports). Spain’s exports more to its tiny neighbour (7.2% in 2015) than to the whole of Latin America (5.9% of the total in the same period) and to the United States (4.6%). Portugal, a natural extension of Spain’s domestic market, is Spain’s fifth largest client after France, Germany, Italy and the UK.

Portugal, in turn, supplies Spain with 4% of its imports, the sixth largest amount.

Spain runs a large trade surplus with Portugal: more than €6.5 bn in 2015.

Spain’s Main Exports to Portugal

Motor industry components and accessories
Cars
Steel
Fuel and lubricants
Plastic raw materials and semi manufactures
Computer hardware
Source: ICEX.

Portugal’s Main Exports to Spain

Chemical products
Clothing
Motor industry components and accessories
Steel
Bottles and packaging
Wood and paper semi-manufactures
Source: ICEX.

Around 3,000 Spanish companies operate in Portugal. Several companies have strong positions in the Portuguese economy, most notably Santander, Spain’s largest bank, which acquired the Totta Group (market share of 11%) in 2000 and last month acquired from the state the failed Banco Internacional do Funchal (Banif) for €150 million. The purchase of Banif increases Santander’s market share in loans and deposits in the country from 12% to 14.5% and makes it the second-largest privately-held bank after BCP-Milenium. Banif is the main bank in Madeira and the Azores.

Adding in Bankinter (which acquired Barclays’ Portuguese unit last year), Popular and BBVA, all of which own banks in Portugal, and the total market share of Spanish banks in Portugal is around 20%. According to some analysts, the European Central Bank regards Portugal, for banking purposes, as a Spanish region and was happy for Santander, the euro zone’s second largest bank and one of the global systemically important banks (meaning it is too big to fail), to acquire the failed Banif.

BBVA, Spain’s second largest bank, bought Lloyds Bank in Portugal in 1991. Lloyds had been in Portugal for 128 years and was known simply as o banco inglês, the English bank. For a bank from Portugal’s oldest ally to decide to pull out was a bad enough blow for the government. Selling it to Portugal’s historical enemy was tantamount to being stabbed in the back by your best friend.

While Santander has been strengthening its presence in Portugal, BBVA has been scaling it back.

Other big Spanish companies in Portugal include El Corte Inglés, the giant department store chain which chose Lisbon as its first venture outside Spain; Prosegur (security) and Sacyr which owns Somague, the largest construction company;. Cepsa and Repsol have petrol stations. Spanish fashion stores like Zara, Massimo Dutti and Pull & Bear, all owned by the Inditex group, have clustered around the landmark Corte Inglés store creating an ‘Avenida de Espanha’ in the heart of Lisbon, a symbol of Spanish business prowess. Inditex has 339 stores in Portugal at the latest count.

Spanish direct investment in Portugal averaged €1.15 billion a year between 1993 and 2003 compared to €415 million of Portuguese investment in Spain during the same period. Between 1994 and 2004 Spanish investment in Portugal was just over €1 billion a year and Portuguese in Spain €375 million per annum. In the first nine months of 2015, Portugal’s direct investment in Spain was down to €41.4 million compared to Spanish investment of €222 million in the same period.

The strong Spanish presence in the context of the single European market is a sensitive issue as it plays on Portuguese fears that they are being swallowed up by their neighbour. Furthermore, most of the investment is in highly visible sectors such as banking and construction. Spanish net direct investment in Portugal between 1992 and 2002, in the first wave, amounted to €6.4bn, compared with €5.1bn for the UK, €4.2bn for the Netherlands and €2.4bn for Germany.

The fears may be exaggerated, but they are the logical consequence of a small country sharing a border with a much larger and more powerful one. Fifty four per cent of Portugal’s territory borders Spain.

In what was known as the ‘patriots’ manifesto’, 40 top economists and businessmen warned in 2003 of the danger of Portugal’s ‘decision-making centres’ –a euphemism for its biggest companies– being moved abroad. Jorge Sampaio, the then president of Portugal, commented that ‘without centres of decision-making, there is no nation’. Newspapers at that time abounded with headlines like ‘Spanish Armada’, whenever there is a major Spanish acquisition, and magazine covers d the border with Spain and mad Madrid the capital of Portugal. One Portuguese magazine summed up the situation by putting the following on its cover: ‘We go shopping in El Corte Inglés, buy our clothes in Zara, book our holidays at Viajes Halcón and get our glasses at Multiópticas. Even our savings are in Spanish banks’. The weekly newspaper Expresso ran a section called ‘The Spanish Question’ during February 2004 with all manner of opinions for and against (mainly the latter) the hypothetical idea of Portugal losing its independence and becoming part of Spain. I believe these fears no longer exist. Perhaps our Portuguese guests can enlighten me.

The flow of trade and investment, however, is not all one way. Just as Portugal is Spain’s largest market for its exports, so Spain is also Portugal’s main export market . More than 300 Portuguese companies operate in Spain. The main ones include Sonae, which owns Tafisa, the leading wood-based board company (with companies in Germany, the UK, France and Africa), Galp, which has more than 240 petrol stations, the transport company Luís Simões and Electricidade de Portugal (EDP), which has acquired Hidrocantábrico, Spain’s fourth largest power company.

Portugal’s main banking presence in Spain is through Caixa Geral de Depósitos, which acquired Banco Extremadura from BBVA in 1991, Banco Luso Espanhol from Chase Manhattan in 1991 and Banco Simeón from Argentaria in 1995. The combined market share of the three banks is small. The failed Banco Espírito Santo, which was split into two banks in 2014, is or was also present in Spain. I am not sure of the current situation.

The pace of integration of the two economies was stepped up when the two countries began to operate in July 2007 the much-delayed Single Iberian Electricity Market (known as MIBEL). The original start up date was January 2003. Spain is western Europe’s fifth largest power market and Portugal the eleventh largest. Together, they form a market slightly larger than Italy’s. Both markets are reasonably similar as regards generation. The Spanish market is more diversified as it has nuclear energy.

Development of an Iberian gas hub has been slow. The Iberian natural gas and Liquid Natural Gas market has around 7.5 million consumers. Neither the Spanish nor the Portuguese gas system has significant gas production of their own, which means that virtually all Natural Gas consumed in Iberia is imported, either via pipeline or via Liquid Natural Gas tankers.

The Spanish system is interconnected with France, with Algeria (via the Medgaz pipeline) and with Morocco (via the Maghreb pipeline), while the Spanish and the Portuguese systems are interconnected via the Badajoz and Tuy pipelines.

The project with the greatest potential impact on the integration of Spain and Portugal is the building of high-speed rail links between the two countries if it ever happens. This is something that has been talked about for years. As someone who loves Lisbon, I hope it is built during my life time. I first went to Lisbon in 1974 on the overnight train and I remember how long it took. A high speed train between the two capitals would cut the travel time from 10 to three hours. Madrid and Lisbon are already linked by a dual carriageway that goes virtually all the way between the two capitals.

The economic progress made by both countries, as measured by per capita income, has been strong over the past 50 or so years. Spain’s per capita income rose from 60% of the EU-15 average in 1960 to a peak of 103% of the EU 28 average in 2007 and Portugal’s from 40% of the EU-15 average to a high of 81% of the EU 28 average in 2009. Both countries’ living standards have declined in recent years as they have been hard hit by varying degree of recession. Booth are now slowly recovering.

As well as a much larger economy, Spain also has the advantage of a more dynamic private sector than Portugal’s. This is not to belittle the efforts that Portugal has made in some quarters to create stronger private companies. The sheer size of the Spanish economy makes it easier for Spanish companies to become bigger through mergers and acquisitions and so attain critical mass and economies of scale. Spanish companies have been much bolder in venturing abroad, most clearly exemplified by the massive direct investment abroad.

The Spanish economy is six times larger than Portugal’s, but Spanish direct investment abroad is 11 times higher at $674 billion, according to the latest UNCTAD figures.

Galicia and Northern Portugal

Nowhere are the ties between Spain and Portugal stronger than between Galicia and Northern Portugal. The two regions, on either side of the border, with a shared history, culture, language (to some extent) and economy, particularly in fisheries, form what is called a Euro-region. Their combined population is more than 6 million. They work closely together on various projects which have helped to boost the development of two of the poorest regions of the EU-15 and overcome their peripherality on the edge of Europe.

Both regions benefited a lot from EU structural fund as their per capita GDP was less than 75% of the EU average (known as Objective 1 regions).

The relationship between Galicia and North Portugal was strengthened in 1991 with the creation of a Working Community between the two regions. The so-called Territorial Co-operation Communities combine all the Galician town councils and Portuguese municipal councils along the border. There is also official co-operation between trade unions, consumer institutes and employers’ associations. As an autonomous region Galicia is able to negotiate some matters directly with the Portuguese government in Lisbon without having to refer them to Spain’s central government in Madrid.

Both regions have dynamic private sectors (Galicia, for example, is the home of the world-renowned fashion group Inditex and Porto is the bastion city of Portuguese entrepreneurs).

Lastly, there are some similarities in the political situation. The centre right Portugal Ahead coalition won the most seats in last October’s parliamentary election, but lost its absolute majority, as did Spain’s Popular Party in last December’s election. This led to the formation in Portugal of a minority Socialist government backed by Communist, Green and Left Bloc parties. The Left Bloc is the sister party of Greece’s anti-austerity Syriza and thus an ally of Spain’s Podemos. Pedro Sánchez, the Spanish Socialist leader, went to Lisbon last month to meet his political counterpart, Prime Minister Antonio Costa, and learn for himself how the coalition was formed. Whether Sánchez, who has been entrusted with forming a government, is successful in emulating Costa and forming a so called progressive coalition remains to be seen. It is a question we would all like answered soon.