Turkey-EU relations suffer death by a million cuts

By bne IntelliNews February 14, 2012

Justin Vela in Istanbul -

Turkey's relations with the EU have suffered a rocky start to the year, and things promise to get even worse when Cyprus assumes the EU's rotating presidency in July.

The latest hit to relations came in early February when it emerged that Swiss officials have launched a probe into comments by Turkey's European Union Affairs Minister Egemen Bagis at the Davos Economic Forum in late January in which he denied that Ottoman Turks committed genocide against Armenians in the early 20th century. The minister reportedly told journalists that the Swiss authorities could come and arrest him if they wanted.

The topic is a hot one, having been the headlines just in January when the French senate voted through a bill to make it a crime in France to deny that the killing of 1.5m ethnic Armenians in southeast Turkey in 1915-1917 was genocide. The Turkish view of history contends that the Ottomans were under attack by Armenians supported by foreign powers and the killings were events of war. A French panel is now looking into whether the law is unconstitutional; Nicolas Sarkozy, France's president, is expected to sign the bill into law.

Ankara, which briefly withdrew its ambassador to France when the bill was initially passed by the French parliament, threatened a raft of diplomatic and economic reprisals. "This is a racist and discriminatory approach, and if you cannot see this, then you are deaf to the footsteps of fascism in Europe," Turkish Prime Minister Recep Tayyip Erdogan thundered.

Following the bill's initial approval in the French lower house, the Turkish government warned of possible effects on bilateral trade between the two countries. French firms could find themselves unable to procure government contracts, and diplomatic ties could be downgraded, the Turks said. Already, a joint economic and trade committee scheduled for February has been cancelled. One naval procurement officer in Ankara said, "even I" will cancel some contracts with French firms. When the French parliament in 2006 approved a bill calling the massacres genocide, the country was blocked from being part of the Nabucco gas pipeline project and military ties were suspended.

Turkey is France's 11th largest export market. In 2010, the volume of trade between the two countries was €11.6bn, according to the Turkish Foreign Ministry. Turkish imports of French products have been relatively low, however, about 2.5% of France's total exports. Last year, the two countries set a target to grow their bilateral trade to $15bn in 2012, and nearly 1,000 French companies have invested in Turkey. French companies in Turkey include Renault, Carrefour, Credit Agricole, Groupama and AXA. French banks have about $20bn in assets in Turkey and about a fifth of the car market, according to Bloomberg. Renault, in particular, has a large plant in the city of Bursa that employs thousands of locals.

Of course, Turkey and France have never exactly been the best of friends. Turkey feels betrayed by French opposition to it joining the EU, particularly by Sarkozy's hard-line stance on the matter, which has in large part helped stall the process. Erdogan has accused Sarkozy of using the genocide bill, which was proposed by a legislator from his party, to play politics ahead of the French presidential election later this year. It is already a crime in France to deny the Holocaust.

The Turks moan about double standards. The typical line goes: It was war. We are being judged unfairly. If the French want to say the massacres by Ottoman forces were genocide, then killings during the French occupation of Algeria from 1945 to 1962 are the same.

Erdogan has mentioned the possibility of imposing sanctions on France, but analysts roll their eyes. One diplomat described the Turkish response as "puffing up" like a cobra that already knows it won't strike.

Even following the 2010 Mavi Marmara incident between Turkey and Israel, when a number of peace activists were killed when Israeli commandos boarded the flotilla, Turkish threats to cut business relations had more bark than bite. The trade volume between Turkey and Israel reached $3.5bn in 2010, nearly triple what it was in 2001, according to data from Turkey's Undersecretariat of Foreign Trade. Turkey's exports to Israel exceeded $2bn in 2010.

There might be a few high-profile incidents of French business being stifled or French politicians snubbed, however it is unlikely that French business will be out for long, predict experts.

No man is an island

More problematic than Turkey's bluster over the French genocide bill is the never-ending Cyprus issue. With Turkey threatening to freeze relations with the EU if Cyprus takes over the rotating presidency in July, quick action is needed.

The Mediterranean island split in 1974 following an attempted coup by Greek Cypriot nationalists backed by Greece and the subsequent Turkish invasion of the northeast of the island. The Republic of Cyprus joined the EU in 2004; Turkey is the only country to recognise the northern part of the island as an independent republic.

Last year, Turkey began exploring for oil and gas in the Mediterranean, a response to exploratory drilling being carried out by Greek Cyprus and Texas-based Noble Energy.

On the same day that the French senate was debating the Armenian genocide bill, UN Secretary General Ban Ki-moon opened two days of talks with Greek Cypriot leaders in an effort to break the deadlock in peace talks with Ankara-supported northern Cyprus. "I think the best way to describe the talks today is that they have been intensive right from the very beginning," Alexander Downer, the UN special envoy to Cyprus, told reporters.

The UN talks aim to establish the framework for a future federal Cyprus, how to settle property claims from the thousands of internally displaced people, and future citizenship on the divided island.

Though the EU is one of Turkey's closest allies and about 50% of its trade is with the bloc, Ankara can be expected to take a tough stance as July approaches. Turkey likes to consider itself the preeminent force in the Mediterranean, but most analysts agree it is overextending itself there.

It is hoped that a face-saving political agreement will be offered at the 11th hour to keep Turkey from cutting itself off from its closest economic ally. But for how much longer can close trade relations continue to stare down injured Turkish pride?

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