Turkey and EU: Relations take a turn for the worse, economy could suffer

Turkey will respond with its own steps if the European Union imposes further sanctions on Ankara, Foreign Minister Mevlut Cavusoglu said on Monday after meeting the EU’s top diplomat.

France’s foreign minister said last week EU ministers would discuss Turkey on July 13 and said new sanctions on Ankara could be considered in addition to steps taken over Turkey’s drilling in the Cyprus economic zone.

As relations deteriorated between the bloc and Ankara, the European Union imposed a travel ban and asset freezes on two people in February for their role in Turkey’s drilling in Cyprus’ maritime economic zone off the divided island.

EU’s unswervingly legalist stance on Cyprus, where it insists on recognizing only the Greek Cypriot Administration as the sole sovereign of the island, ignoring the plight of the large Turkish minority is only one reason relations are deteriorating.  The other is Ankara’s suspicion that EU’s travel restrictions on tourist traveling to Turkey is politically motivated.

Over the past week, Ankara has received a string of bad news from the European Union and Germany, undercutting plans to boost the country’s ailing economy, which was tentatively recovering from a recession before the pandemic struck.

Turkey was still in shock from an announcement from the European Council, the EU’s highest political body, that it was not among the non-EU countries the bloc would open its doors to as of July 1, when it received news that German automotive giant Volkswagen had scrapped plans for a car plant in western Turkey.

Following months of foot-dragging, Volkswagen said it would not build the 1.3 billion-euro factory, citing a slump in demand caused by the COVID-19 pandemic, writes Mr Zulfikar Dogan at Ahval News.

President Erdogna has voiced these suspicions, when he spoke at the inauguration ceremony of a hydroelectric plant:  “The intention behind the EU’s double standard putting countries with transparency issues in front of Turkey is clearly evident.”

“In fact, making progress this way through struggle makes our country with its public institutions and private sector stronger, more resilient, more flexible in the face of crisis,” he said, adding that Turkey trusts itself in all areas, including health care, the economy, diplomacy and security.

“We saw who was weak in this regard, first in the refugee crisis and then during the pandemic,” Erdogan said.

Following Erdogan’s statement, it is not expected that an official visit from a top EU official on Monday will yield any results. Ahead of his arrival in Ankara, EU foreign affairs commissioner Josep Borrell had visited Greece and Cyprus last month, where he stated that Turkey’s recent drilling activities in the eastern Mediterranean around Cyprus were illegal.

Ankara reacted strongly to the statements of Borrell, who is expected to discuss the latest developments in the east Mediterranean, the war in Libya and the migrant crisis at the Turkey-Greece border, among other topics. Meanwhile, France is expected to call on the EU to increase its yet-to-be applied sanctions against Turkey for drilling off Cyprus at an EU leaders’ meeting this month.

In light of all these developments, the start of a positive period in Turkey-EU and Turkey-Germany relations, just days after Berlin has taken over the rotating presidency of the bloc, seems unlikely.

Even before the pandemic, Germany had warned its citizens about travelling to Turkey, saying they could be arrested over their social media posts or banned from leaving the country. Such warnings made by the German Foreign Ministry last year are still officially in place.

 Moreover, German Foreign Minister Haiko Maas’ statement to his Turkish counterpart Mevlüt Çavuşoğlu in their meeting last week that Berlin expects Turkey to take steps towards democratisation, proves that the travel warnings are not only due to the pandemic.

The day after Volkswagen announced it had thrown in the towel on the Turkey plant, the Turkish Competition Authority (TCA) launched an investigation into five German automotive giants for violating competition laws. The move has increased concerns that foreign investment in the country, already in a slump, will be affected further.

The probe into Audi, Porsche, Volkswagen, Mercedes-Benz and BMW follows claims that the companies cooperated in matters of security, the environment and shared competition-sensitive information.

The investigation has led to expectations in finance circles that the five German automotive companies will be slapped with heavy fines and sanctions.

Pro-government circles are denying that the investigation is linked to Germany’s travel restrictions or to Volkswagen’s move, saying that the TCK is an independent organisation. They also maintain that the timing of the probe, arriving on the heels of the announcement to scrap the plant in Turkey, is entirely a coincidence.

But the present picture and the latest developments over the last week show that tensions will escalate between Ankara and Berlin, which have turned into somewhat of a wrestling match.

While there are no expectations of tangible results from Borrell’s visit, there is talk that Ankara may resort, once again, to sending migrants to its northwestern frontier with Greece, souring relations with Europe further, concludes Mr Dogan.

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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and www.paraanaliz.com and has contributed to the financial daily Referans and the liberal daily Radikal.