Ankara, Asharq Al-Awsat—The relationship between Turkey and the European Union has been fiercely contested for 60 years, with some members arguing that Turkey is too poor and not “European” enough to fit in. While once Turkey was seen as the junior partner, the party that was obliged to make all the concessions and changes required by the existing members in order to join the club, the Eurozone crisis and Turkey’s robust economic performance has leveled the playing field in many respects.
Indeed, with high levels of economic growth recorded in recent years, and soon to become debt-free for the first time in over 50 years with its last repayment to the IMF scheduled for this month, Turkish confidence in its economic policy is at an all-time high, despite the ongoing crisis in neighboring Syria.
Accordingly, when Asharq Al-Awsat spoke to Turkey’s minister of economy Zafer Çağlayan this week, he was in an optimistic mood about the performance of the Turkish economy, both now and in the future, and the effect this will have on Turkey’s relations with the EU and the Arab world as both groups grapple with economic and political crises.
The following interview has been edited for length:
Asharq Al-Awsat: Over the past few years, Turkey has seen impressive economic growth, and it seems that Turkey emerged largely unscathed from the economic crisis that struck Europe. What are the reasons for this economic success? How does Turkey view its relationship with the EU?
Zafer Çağlayan: Turkey has made incredible progress over the past ten years, as the economy saw substantial changes during this period. The year 2001 witnessed an enormous crisis after which our government [the Justice and Development Party] came to power. At that time, I was the president of the Chamber of Commerce and Industry in Ankara. Although I’ve long been an industrialist and have held several positions in many different governments, if you told me that Turkey would achieve such growth I would not have believed it. I wouldn’t have dreamed it possible.
There are many factors that helped this growth, though I think they can be boiled down to three things: political stability, the role played by Prime Minister Recep Tayyip Erdoğan, and the economic reforms taken by the government to establish a free economy in Turkey.
Turkey emerged unscathed from the current economic crisis facing Europe because of economic growth, increased exports, and rising employment opportunities. Further, we adopted policies different from those of the EU. Over the last four years, over 4 million people in the EU have lost their jobs and the region has witnessed an economic crisis as its economy shrank considerably. On the other hand, Turkey saw 5 million new jobs created. Our unemployment rate remains lower than that of Europe. In 2011, European economic growth reached 1.5% while Turkish economic growth reached 8.5%. Had Turkey been admitted to the EU as the 28th member state, European economic growth would have reached an average of 1.8% and the unemployment rate would have been lower than its present rate.
It is well known that there are standards that essentially amount to an economic constitution for the European Union which can be condensed to four important factors. The first of these factors is the GDP of the EU states. Turkey’s GDP was better than 23 European nations. Second, the average age of the European population at present ranges between 43–45, while Turkey’s average age is 30, meaning that roughly a fourth of Turkey’s population is under the age of 40. Thirdly, the work week is very regulated in Europe—no more than 37 hours per week and 35 hours per week in France. The average work week in Turkey is currently reaches 45 hours, therefore Turkey possesses a workforce unrivaled in Europe.
Turkey weathered the economic storm that struck Europe and has a number promising opportunities. Our market share has increased. Turkey has become the second-fastest growing in terms of exports worldwide. In the EU, we are the second fastest-growing economy after Estonia. Two years ago, 48% of our exports went to Europe; now, that number has shrunk to 38%. Despite that reduced percentage, Turkish exports continue to increase because of our export growth in Europe, Asia and the Middle East. Despite the effects of the Arab Spring, our exports grew at a rate of 13.5% last year thanks to expansionist export policies we have adopted that have allowed us to open new markets in Asia and the Pacific. Currently, Turkish goods are exported to 241 regions around the world. There are two nations we do not export products to: Micronesia and Norway, though we still hope to expand into those markets, which will hopefully occur next year.
Returning to the European Union, we’ve wanted to join for 50 years, but the EU has not been straightforward with us. They have dealt with us hypocritically. They have made visas and transport difficult and do not want to enter into any free trade agreements with Turkey. They do not want to accept Turkey as a third party in any economic agreements with other nations. We have improved in all the economic and democratic criteria. If the EU wants to call itself a Christian club, well, that is another matter altogether.
Q: Today, Turkey is 16th globally in terms of GDP and 15th in terms of purchasing power. Despite this, many European nations classify it as a “growing power.” Despite its elevated economic status, Turkey still does not enjoy the economic rating that many analysts believe it deserves.
We know our strength and what we’re capable of. As I said before, we never dreamed of this ten years ago. As you know, in ten years’ time we will celebrate the centennial of the Turkish Republic. Compared to ten years ago, our GDP has tripled, our exports have quadrupled, and per capita income has tripled. In ten years, we want to maintain and increase this level of growth and development. I can say that international rating agencies have not treated Turkey fairly and have been hypocritical. We are no longer interested in what these agencies have to say. We have been tested, especially through the current economic crisis, and we have passed. The whole world knows this.
The best example of this is the fact that our republic was established in 1923, during which foreign investment in our country amounted to 14.6 billion dollars, until our party took over. Since 2003, that number has grown 8.5 times to 123.7 billion dollars, 75% of which comes from Europe. Why do European investors come to Turkey? They know that there is no place for emotion in investment, only interests. They come looking for secure places for their investments, an effective banking system, and economic and political stability. I have personally worked in exports for 27 years, and I’ve seen examples of that. Turkey is improving its standards and is certainly not the Turkey of ten years ago, nor will it be the same Turkey it is today in ten years’ time. We want economic planning to ensure that our economy is one of the ten largest in the next ten years and can accomplish that. The past decade has proven as much.
Q: It has been said that the reforms that former president Turgut Özal enacted have been the basis for Turkey’s progress, but that he did not have the necessary tools for success during his own time in office. Is this correct?
Turkey has had two different historical periods. In 1923, the great Mustafa Kemal founded the republic. Today, we have a greater understanding of that period, as it was defined by extremely difficult circumstances. After that came the era of former prime minister Adnan Menderes in the 1950s and 1960s who, unfortunately, was the first prime minister to be executed by military coup. At that time, my uncle was a member of parliament and spent a long time in prison as well. Menderes gave a lot to his country.
He was followed by Prime Minister Süleyman Demirel, who also did a lot for the nation. Then came Özal. During his tenure, Turkey was opened to the world for the first time. In 1980, exports totaled USD 3 billion. When we took power in 2002, exports were valued at USD 36 billion, while they are currently at USD 152.6 billion. The Özal era saw the first contact with the outside world. I wish he were still alive to see the progress we’ve made. But Özal’s major problems were internal party issues. He did not have an effective team to work with. After him came Abdullah Gül and Recep Tayyip Erdoğan, who brought the [AKP] to power.
Turkey is now a different nation entirely. Really, Özal lit the first spark for the change that we’re building upon. Ten years ago, when I spoke to foreigners about Turkey, very few knew where it was or anything about it. Now, everyone knows Turkey.
Q: Has Turkey been negatively affected by the events in the Middle East that began in 2011?
Turkey exported roughly 50% of its exports to Europe, with 25% heading to the Middle East. These are very important nations for us. We have shared interests economically, commercially, ethnically and religiously. We share amazing opportunities. We are economically close to Libya and Tunisia. As for Syria, were it not for all their current problems, our exports to them would total USD 3 billion. Syria is important to us, not only as a market for exports but also as an access point to the Arab world. We exported to nine other countries through Syria. Given the current situation, Syria is unfortunately no longer a viable passageway for these goods.
Yes, the Arab Spring had some negative effects on the Turkish economy, but the people in these nations are fighting for freedom and democracy. Egypt was an important commercial partner, and our relations are currently recovering, as they are in Libya. Were it not for all these problems, Turkish exports would have been higher last year. Regarding Syria, we hope that the Syrian people get the freedom and democracy they yearn for. Turkey will support any measures in this regard. As for Saudi Arabia, we have exceptional relations with them. They are an important commercial partner and we hope to continue our positive relationship.
Q: In Tunisia, Libya and Egypt, there is currently a debate regarding the economic system that should be built, and if it is possible or desirable to ‘Islamicize’ it. What is your advice for these countries?
As part of the Islamic world, we know our true strength. The 57 Islamic countries make up a third of the world’s population and cover a third of its area, although the combined GDP of these nations make up only 6–7% of the world economy and their share of international trade reaches only 5–6%. Commercial trade between these nations is only at 16–15%, while trade within EU nations reaches 75%. The US has important economic ties with Mexico and Canada which total more than USD 500 billion.
As Islamic nations, we lack unity and coordination. We need a system for economic exchange and to establish a free market between us to allow for more shared trade. Turkey has worked hard towards this goal and the president and prime minister have begun talks to move things in this direction. Unfortunately, the Islamic nations fail to realize the importance of the situation. I hope that Turkish efforts will lead to some progress and the Islamic nations can take their rightful place in the world.