Thursday, November 30, 2006

Take Cyprus issue out of our talks on joining the EU, insists Turkey

By Martin Wolf

"We oppose the linkage between the negotiations and Cyprus," insisted Ali Babacan, Turkey's minister of the economy and chief neg-otiator with the European Union, in an interview with the Financial Times.

Mr Babacan said Cyprus was a separate issue from Turkey's accession. "Our proposal on the Cyprus issue is to put it to one side in the accession negotiations and deal with it by lifting sanctions on both sides simultaneously.

"But it is impossible for Turkey to open its ports to Cyprus unilaterally. The prime minister has committed himself publicly on this." Moreover, added the minister, "the whole of Turkey is behind the government's stance".

"In 2004," he stressed, "we tried very hard for a settlement of the Cyprus question. We worked out a detailed plan and then, unfortunately, the Greek Cypriots rejected it in a referendum at the instigation of [the Cypriot president] Mr Papadopoulos." Mr Babacan said the EU was not impartial on the issue because Cyprus had joined the Union shortly after the referendum.

"The EU initially decided to end the isolation of Turkish Cyprus, to balance the accession of Cyprus. But the EU has not carried through on its promise. It is unfair to ask Turkey to make a unilateral concession to take goods from Cyprus within the customs union when the EU is not open to northern Cyprus.

"Turkey is a big and relatively poor country and perceived by some to have a different culture. But this is wrong. Turkey shares Eur-ope's fundamental values of democracy and the rule of law."

Mr Babacan said Turkey's macroeconomic performance was also converging with the EU's.

"The ratio of public sector net debt to gross domestic product has fallen from over 90 per cent at its peak to a forecast of just under 50 per cent at the end of this year.

"Next year, Turkey should hit the Maastricht limit of 60 per cent of GDP for the ratio of gross debt to GDP. Turkey should easily hit all the Maastricht treaty criteria for debt, deficits and inflation within a couple of years."

Growth this year was likely to end up at about6 per cent and inflation was likely to be just under 10 per cent, despite the impact of higher energy prices, he said. Next year's inflation target would remain at 4 per cent. Employment growth was also buoyant.

Inward foreign direct investment is forecast at $15bn (€11.4bn, £7.7bn) this year. Inward FDI and long-term credit will cover the current account deficit of about 8 per cent of GDP.

Most Turks still believed EU accession was a good thing, insis-ted Mr Babacan. But they had been shaken by the German discussion of a privileged partnership and the proposed French law banning denial of the massacres of Armenians during the first world war, quite apart from the Cyprus issue.

"The political reaction in Turkey to such European statements and actions ex-p-lains the decline in support for accession," he said.

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