Examination of Witnesses (Quesitons 60-79)
UKTI, BERR, FCO
26 FEBRUARY 2008
Q60 Mr Hoyle: It is interesting,
is it not, that support for accession by the people of Turkey
was about 80% but that is now dropping, is it not?
Ms Melrose: Dramatically.
Q61 Mr Hoyle: It has dropped completely
down because they do not believe there is a will, whether it is
France, Germany or whether it will be somebody like the Netherlands
who will begin to object. It is a strange scenario where we are
actually seeing the possibility of Cyprus actually supporting
Turkey and yet it is the other nations that are going to object.
I think we have this crossroads for Turkey that keeps going through
the chapters very speedily, with a government that wishes to see
this as the main agenda, yet the people do not have the will that
they once previously had. What do you think can be done to try
and reinforce that support to the Turkish Government? It is not
a carrot but it is in some way trying to hold it up and say, "Your
objective can actually be achieved," whereas the truth of
the matter is it can never be achieved.
Ms Melrose: There are two dimensions
to that. Obviously there is what is actually happening in the
progress towards accession and the other is some of the messaging
coming out of the EU, because you are quite right that public
support in Turkey has declined dramatically. In terms of progress,
this is why it is so critical that we see visible progress: that
there are good news stories to tell and that Turkey itself is
better at actually articulating the vast amount of change and
reform that is taking place to show both the benefits to the Turkish
people but also in terms of influencing attitudes within the European
Union. Then, as you say, if you keep hearing leaders within the
EU questioning Turkey's membership obviously that has a very negative
impact. That is why more and more you need a countervailing voice,
and certainly the Prime Minister, the Foreign Secretary and their
counterparts in, in particular Spain, Italy, Sweden and many other
Member States, are more and more articulating the importance of
Turkey's membership. Because you can look across the board at
our foreign policy priorities like stability in the Middle East,
Iraq, Afghanistan, look at one after another and you find that
Turkey is playing a very helpful role. Turkey is one of the few
countries that can talk to both the Israeli Government and the
Palestinian leadership. It is, for example, investing in secure
economic zones in Gaza; it may well do the same in Basra. So there
is a huge contribution that Turkey can make across the board—not
just economic but on the foreign policy side.
Q62 Miss Kirkbride: Just as a list,
if we say the top three, what are the top three hurdles at present
to Turkey's position?
Ms Melrose: I think that the top
three hurdles are basically diminution of the political will and
popular support within Turkey to drive forward reforms and if
they do not you will not see progress. For example, eight of the
chapters of the Acquis, which are very relevant to the interests
of promoting trade and investment, are suspended because Turkey
has not implemented the Ankara Agreement Protocol. So that means
that the chapters which cannot be opened are free movement of
goods, right of establishment and freedom to provide services—financial
services, agricultural and rural development, fisheries, transport
policy, customs union, external relations. So you can see what
a significant chunk of the Acquis that is. So Turkey will have
to open its ports, and this relates directly to the second factor,
Cyprus. Turkey will have to take the bold political moves on Cyprus
that have proved difficult this year. The other block is, of course,
as we have said, the attitude as currently expressed of the French
President. At the moment and in the future there are potential
French political reserves on the five chapters that he deems to
imply eventual full membership of the European Union. So that
is agriculture and rural development, which links to CAP payments;
economic and monetary policy; regional policy and coordination
of structural instruments; financial and budgetary provisions;
and then institutions, which is dealt with right at the end. So
those are really the three key areas—Turkey's reform, Cyprus
and attitudes in Europe. I think it links to the point that Mr
Hoyle was making, that Greece is always saying to us that they
want Turkey in the EU more than the rest of us put together. Cyprus
is always saying that they want the accession process to continue—obviously
it gives leverage to them. And this is where the worry is, that
if Cyprus digs in too much the Cyprus issue becomes a political
football with other Member States that object to or do not want
to see Turkish membership progress. So that is why we must take
action on Cyprus.
Chairman: I am very conscious of the
fact that everything is related to everything else, inevitably
in these matters. Mike Weir was going to ask one of the questions
there but I think they have all been comprehensively dealt with.
Q63 Mr Weir: I notice that after
the elections in Turkey that one of the first persons to congratulate
the new President was the President of Northern Cyprus, which
must be seen as a good sign and perhaps some room for negotiation
between the two parts of Cyprus. Is that the way forward to dealing
with this problem, whether it is through the UN or just bilateral?
Ms Melrose: It certainly has to
involve the UN and I agree with you that Mr Talat, the Leader
in Northern Cyprus, is well disposed to a UN settlement process,
but to do that he needs strong support from Ankara—obviously
there are issues that he alone cannot resolve, like the presence
of the Turkish troops within Northern Cyprus and other issues;
so political buy-in in Ankara is critical. But we are keen to
see more and more confidence building measures between the two
communities in parallel with movement in the UN. And what we heard
from the Turkish Permanent Secretary of the Ministry of Foreign
Affairs when he was here in London recently was encouraging, and
we are also very hopeful with the change of government in Cyprus
that we can move forward now with some momentum. But it is very
much what we can do with the other Guarantor Powers to support,
also the permanent five members of the UN Security Council—but
it is supporting and not trying to dictate the process.
Q64 Miss Kirkbride: So what is the
likely impact on Turkey's accession on the UK? What work has been
done on that?
Mr Dodd: Fundamentally quite limited
to begin with. The existence of the customs union is the opportunity
for trading relations to develop before the accession process
is complete. We would expect that if there is good progress on
the accession process the Turkish economy will be succeeding in
growing much more strongly than would otherwise be the case and
as a result we would hope to see quite a lot more bilateral trade.
However, having said that it is quite a long way away and, without
any negative impact, globalisation has changed the role of Turkey
somewhat with the European economy. It is not a natural source
of low cost labour to the European Union as a place to produce
things; it is a competitor with lots of other countries now rather
than having a particularly natural role. So whilst we see that
there is a good upside in terms of a bigger market that market
will continue to be one with relatively low incomes per head for
a long time, and it will take many, many years of growth for Turkey—although
it has a very large population—to be a big market.
Q65 Miss Kirkbride: So there is nothing
specific that you would pick out as any one big impact. It is
nicer to have more people to sell things to but better when they
are richer?
Mr Dodd: It sounds very general
but that fundamentally, I think, is the story. One issue which
further down the track is a very important one is the movement
of people. If the accession process occurs then that will be a
very big issue.
Ms Melrose: I think that could
be the single biggest economic benefit with an ageing population
in the existing European Union to have better access to the large
and youthful labour force within Turkey. There is also the dimension
of energy security. Turkey is an absolutely critical crossroads,
a transit for gas and oil from the trans-Caucasus and Central
Asia, so clearly there are benefits there for the EU and the UK.
Also in terms of the justice and home affairs reforms, those will
all promote greater security for EU citizens. Hopefully those
will lead to more action together to tackle people smuggling,
drugs traffic, some of the key concerns of UK citizens. And I
have already mentioned some of the very positive contributions
that Turkey can make to regional stability.
Q66 Miss Kirkbride: But I think we
would be fooling ourselves, would we not, if we did not accept
that here in the UK probably the biggest downside is the prospect
of considerable migration from Turkey, because there have been
issues about the migration that is taking place already with the
existing EU accession countries. Have we learnt any lessons from
that in the way that we might approach what will probably be the
most vexing issue of Turkey's accession on the UK?
Mr Dodd: Clearly that would be
a very big policy choice for the government of the day at that
stage. There have been many lessons learnt, I think, from the
far larger than expected movement of people from Accession 10.
Also, looking at the conditions and the reactions of other Member
States the strength or weakness of economic activity in other
Member States and the restrictions which they place on movement
of workers has an impact on what happens to the UK. So I think
the calculation which needs to be made in terms of deciding is
actually how many people to allow and the form precisely that
it takes will perhaps be not an easy one. But also there are very
considerable differences between Turkey's historic links with
other parts of Europe, particularly Germany, and their links with
the UK. So it certainly will not be a straightforward issue, and
you are quite right I sense it will be a very big issue.
Q67 Chairman: I know we cannot push
you very much on migration as it is not your specialist subject—in
Mastermind terms!—but just to help us form a view, the date
of accession is the one thing we have not yet discussed in detail
yet. We have a figure of the earliest possible date, if everything
went exactly according to plan, of 2014. Does that accord with
your understanding because it is very important when we are discussing
migration questions?
Ms Melrose: It is very, very hard
to predict. Hopefully within a decade but again so much depends
on the speed of process and the negotiations and all those factors.
Q68 Chairman: But six years away
is the earliest possible date, is it not?
Ms Melrose: Then you still have
to have each Member State ratifying membership, so it is likely
to take longer. If you finish the negotiations, let us say, in
2014, it would be very, very good progress.
Q69 Chairman: To take a view about
migration flow now is a bit premature because the economic situation
in Member States could be very different in six or seven years'
time?
Ms Melrose: Exactly, the German
Government is keen to see the European Commission update its impact
study on Turkish accession, which the one they produced was 2004,
but the Commission is quite rightly saying, as you suggest, that
it is far too early to produce an Impact Assessment as an awful
lot can change—Turkey will get richer—and it is difficult
to predict that. However, one thing I think we can be absolutely
clear on is that Member States will want to see a derogation for
free movement of workers in the same way that we had for the Accession
10, that you just would not have everybody opening up their labour
markets to Turkey. There would be a period—unclear how long,
that would be up to Member States to agree—for phasing in
of opening.
Q70 Miss Kirkbride: And Turkey understands
that?
Ms Melrose: Yes. It just has to
observe what has happened with other Member States that are very
much smaller. As my colleague said, Germany is a particular issue
with the Turkish population of some two million—German population
of Turkish origin—and it is likely to attract the most Turks.
Q71 Miss Kirkbride: Just on the demographics
of Turkey, which will not change considerably in the next ten
years, how big is the population and how much unemployment is
there? What is the profile of young people who are more likely
to move than older people?
Mr Dodd: The population I believe
is 72 million.
Q72 Miss Kirkbride: Smaller than Germany.
Ms Melrose: It will be.
Mr Dodd: A significantly younger
population than the European average and a higher population growth
rate than the European average. As a result the critical factor
which my colleague mentioned is how rich Turkey gets before it
joins the EU.
Q73 Miss Kirkbride: Because unemployment
now is?
Mr Dodd: The problem with Turkish
unemployment figures is that they are not very meaningful; there
is a very high proportion of the population in the informal economy.
So under-employment I think is a more accurate thing to think
about, which is a very substantial issue—very high.
Ms Melrose: On the population
the projection is that Turkey's population would reach 82 million
in 2015, which is almost as big as Germany's, and that by 2025
it may have a population of 87 million, which would definitely
be the largest in the European Union.
Q74 Miss Kirkbride: Was any progress
seen at the December 2007 Turkey Inter-governmental Accession
Conference, and are there any new chapters in the accession negotiations
going to be opened this year?
Ms Melrose: Yes, definitely. We
hope that at least four will open, and in the best case scenario
considerably more. I mentioned the economics-related chapters,
which are the most likely to open. There are others, for example
the judiciary and fundamental rights, but progress on that is
very tied up with making progress on information and media (so
that is freedom of expression) but also education and culture.
So there are some areas that are delaying progress on others and
if some issues could be resolved you would see faster progress.
But we are also clear that planning for the Association Council,
which happens in parallel to accession, is going well and that
there is unanimity from Member States about some of the preparatory
work going into that.
Miss Kirkbride: The issues of the legal
system and corruption, is this still a major block to progress
or is the reform process generally helping in that regard as well?
Q75 Chairman: Particularly in the
context of what we learnt from A2, Romania and Bulgaria, the issues
that we learnt from accession there.
Mr McInnes: If I may make a brief
comment on both the judicial system and corruption? As we have
highlighted before the judicial system is one of the main barriers
with transparency of the judicial system, the overlapping jurisdictions
of different courts, and obviously the length of time that it
takes for decisions to be taken; so that is obviously a major
issue for UK companies. In terms of corruption, corruption is
an issue and it is something that is raised with us by UK companies.
In some senses it is difficult to get a handle on, gauge exactly
what the level of corruption is. Certainly the sense is that the
situation in Turkey has been improving and that has certainly
been suggested by the Transparency International Report in 2006,
which saw Turkey move up the table quite significantly, but it
is still an issue.
Miss Kirkbride: Turkey is a Muslim state;
are there any areas of EU law in which Sharia law would also apply
in Turkey and does that cause any issues?
Q76 Chairman: In that context, today
there is red-hot news from Turkey, is there not, about them attempting
to re-interpret Sharia law and the rewriting of Hadith, which
is quite a big development politically. It affects the whole Islamic
world potentially, not just Turkey.
Ms Melrose: It is a positive development
in terms of what is very much a moderate, outward looking approach
to Islam. You also saw in the last couple of weeks the Turkish
Parliament agreeing to lift the ban on wearing headscarves in
universities, so that takes Turkey to the EU norm of, for example,
this country where of course you have the freedom to wear a headscarf—it
is only in France that that is not the case. So certainly we see
it as a progressive government. We are not aware of any areas
in which there would be a contradiction with the Acquis, provided
that these basic freedoms of minorities are met.
Q77 Chairman: Just pushing on the
Hadith a bit because I think the BBC described it this morning
as comparable to the Christian Reformation in terms of the potential
importance to Islam. It is probably early days to react too much
on that but it is obviously a very positive development.
Ms Melrose: Yes, indeed. I am
looking forward to hearing reports from the Ambassador in Ankara
to see, burrowing into the detail below the press reporting, as
to what exactly is involved in it, but it does sound a positive
and extremely interesting development.
Q78 Miss Kirkbride: In terms of financial
services we hear that the City of London has Sharia-compliant
products and all of that, and is there no problem area in terms
of what would be an acceptable way of doing business in Turkey
versus the rest of the EU, or is this all something with which
we can quite happily co-exist?
Mr McInnes: Again, it is certainly
an area of opportunity for us, as you say, because of the strengths
of the City in terms of Islamic banking. Indeed, one of the areas
of activity that is planned for this coming year is a workshop
in Turkey specifically on Islamic banking and obviously the links
with the City in this area.
Q79 Chairman: This has been a very
difficult evidence session for me in the Chair because you have
been such good witnesses and you have anticipated half the things
we wanted to ask you about later, so you have partly addressed
questions and fully addressed others and raised ones we have not
thought of. I think there are only two things left on my list
which I want to talk to you about before we close, and you may
think when answering these questions whether there are things
you would like to say to us. I would like to delve a little more
into the energy questions—that is a big one for me. We were
obviously being briefed to an extent in Brussels last week about
the sensitivity and importance of a pipeline, for example, and
also there is the whole question—and I do not pretend to
understand the details of this—about potential Turkish involvement
in the European Energy Community Treaty, which is important too.
And what are the prospects specifically for the energy chapter
of negotiations? I would invite you to say something about energy,
which seems to me to be one of the most important questions for
you at present and also for Turkey in its position as a gateway
to the stars, and also involvement with Russia. It is a very complex
and important area for Britain, Europe and Turkey. That is a very
general question which opens up a myriad of possible answers.
Mr Dodd: Your question has identified
so many different issues that overlap in this. Turkey's position
as, as it were, the gateway to Central Asia is an absolutely fascinating
issue, not least in that it provides the opportunity for competition
of gas supply into the European market from the east and reduces
the pipeline dependency on Russia. It is certainly a very large
issue. In terms of whether that needs to be part of the accession
process and how much can be done outside of that, I think there
is a strong feeling that a very considerable amount can be done
outside of that, but the commercial interests for Turkey as well
as security interests are very strong in ensuring that pipeline
routes run through Turkey. Turkey as a place for oil processing
and oil products manufacture has become a natural one, so clearly
from that perspective there is a very clear win-win. In terms
of a point which had been made in the past, but which you did
not raise, that Turkey is a kind of gateway to the Middle East,
I think it is rather less convincing from that perspective than
it is in its link with Central Asia. It has a very strong interaction
with the economies of Central Asia but its links into the Middle
East really are not as strong, and the simple process of taking
oil around the outside is more economic in terms of energy flow
from the Middle East. In terms of progress on the energy chapter
the issue of Cyprus is very important, particularly offshore drilling,
and there is a real block there and that needs to be addressed
and the Turks need to be in a position to arrive at an agreement
on that. On the EU's approach to having a more competitive energy
market, which involves quite fundamental changes within the Turkish
economy, I think there are issues of competition, state aid subsidies,
plus transparency, which will all need to be addressed. They do
all fit in very much with the overall themes we have been talking
about today, but they are issues of very considerable international
sensitivity, so there is real energy needed to be put into ensuring
that progress is made in those areas and a lot of interaction
to address them. The actual progress in terms of legal definition,
there has been a framework law adopted in Turkey and a degree
of legislative progress is getting there but fundamentally there
is a long way still to go in terms of Turkish domestic progress
on arriving at both a legal system and practical implementation
of the kind of energy market that we would be looking for, which
has implications for both the domestic opportunities in Turkey
for UK firms and also the flow of energy from Turkey through to
the European market.
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