Not A Great Week For Turkey and Western Institutions
May 3, 2012 § 2 Comments
For reasons of both history and geography, Turkey is a member of various institutions associated with the West, but its relationship with these bodies is sometimes acrimonious. This week demonstrated this dynamic perfectly on a number of fronts. First there was the continuing dispute between Turkey and other NATO states over who is going to get to participate in the NATO summit in Chicago later this month. I wrote last week about the fight over Israel, but it turns out that the arguing goes beyond that. Turkey says that it will also block EU participation in the summit unless the Organization of the Islamic Conference is invited as well. The logic is that the EU was extended an invitation because its preparation to take over peacekeeping duties in Afghanistan once the NATO mission there is terminated, and Turkey says that the OIC is in the same position and has actually contributed more so far than the EU has. This is particularly embarrassing because Herman Van Rompuy and Jose Manuel Barroso, the European Council and European Commission presidents, have already received their invitations to the summit, and to rescind them would be a major diplomatic faux pas. Undoubtedly the other NATO members do not appreciate the headache that Turkey is now causing for them.
The NATO disagreement is actually one that has spilled over from a larger fight with the European Union. One of the reasons that Turkey is blocking the EU from the NATO conference is that Cyprus is slated to take over the EU presidency on July 1, and Turkey is preparing freeze its relations with the EU once this happens and has even made noise about annexing Northern Cyprus. Turkey has continually objected to NATO sharing information with the EU since Cyprus became a member in 2004, and Cyprus in turn has blocked the EU from allowing Turkey to participate in the European Defense Agency. The back and forth between the two will no doubt step up come July with Turkish-EU relations suffering collateral damage, and blocking the EU from attending the NATO summit over Cyprus is Turkey’s opening salvo.
This was not the only negative development regarding Turkey and the EU this week. A report commissioned by the European Parliament threw some cold water on Turkey’s EU bid and said that it could not predict whether Turkey will have become an EU member by 2030. This is a disheartening signal given that Turkey will have been shooting for EU accession for decades by then, and with its application currently being held up over disagreements in five key areas, the ambiguous stance presented in the report cannot be seen as a positive development. Furthermore, the report explicitly tied Turkish power and influence to its potential EU membership, which is bound to make some in Ankara quite unhappy.
In addition, the S&P downgraded its outlook on Turkey this week from positive to stable, citing its high debt ratio and trade deficit and over-reliance on domestic demand, which immediately caused the Turkish lira to fall against the dollar. There is some disagreement among economists over whether this was a fair move on S&P’s part given the trading price of credit default swaps on Turkey that suggest a higher credit rating and the fact that Turkey’s trade deficit looks a lot worse when examined month by month rather than year by year (the trade deficit has fallen by $2.45 billion over the past year), but it is nevertheless not a positive development. Rather than taking it in stride, Erdoğan predictably went ballistic at S&P and other credit rating agencies, accusing them of targeting Turkey for ideological reasons and threatening to withhold Turkish recognition of S&P as a legitimate ratings body. This came on top of more measured denouncements of S&P by Turkey’s finance minister and deputy PM, both of whom said that the data was either inaccurate or outdated but did not accompany their complaints with threats.
The S&P was not the only institution that Turkey fell afoul of this week, as the intergovernmental Financial Action Task Force has made plans to visit Turkey and meet with its justice and finance ministers over Turkish foot dragging on anti-terrorism financing legislation. The justice minister warned Parliament that Turkey is about to land on the FATF black list, which is humiliating since Turkey is one of the task force’s 34 member countries, but it is still unclear whether Turkey will pass the legislation despite pressure from the U.S., the UN, and the task force itself.
It is a hallmark of lazy analysis to talk about Turkey generally turning away from the West, as if this is something that can so easily be done or that is even true. Turkey embraces its status as having one foot in Europe and one foot in the Middle East, and the current government has pushed this theme more than any previous Turkish government since it realizes the value that this unique position confers on Turkey. Let’s also not forget that it is the AKP that has pushed for Turkish EU membership, and that Turkey can no more unilaterally disengage from the West than can any other European country. It is also true, however, that Turkey’s relations with the rest of Europe have plenty of room to become needlessly antagonistic and Turkey sometimes appears to be hurtling down that path. It does not benefit Turkey to be arguing with its NATO partners by bringing feuds with non-NATO states into NATO forums, or to further jeopardize its EU bid. It is also silly to prod the credit ratings agencies with a stick and increase the likelihood of being further mistreated, as if Turkish “recognition” of S&P will affect its business or reputation one iota. Turkey has chosen for decades to pursue integration with Western institutions, so treating those institutions with contempt or displaying antagonistic behavior is entirely self-defeating. Turkey has legitimate issues with Cyprus, and its sense that the credit agencies punish it unwarrantedly is not without merit, but it needs to grow up and act like an adult. Continuous tantrums, threats, and tit-for-tat fistfights only guarantee that when the next set of Western institutions is formed, Turkey will be left out.
Tagged: credit rating agencies, Cyprus, Erdogan, EU, EU Commission, EU Council, EU presidency, European Union, FATF, Financial Action Task Force, NATO, NATO summit, S&P, Turkey credit rating, Turkey terrorism financing legislation