Europe Needs Turkey as Much as Turkey Needs Europe Says Wulff

Europe "needs Turkey as much as Turkey needs Europe."

Not a statement you'd expect from the President of Germany, given the country's staunch and long standing objection to Turkey's accession into the European Union, but that is exactly what he said.

"We can complement each other in many ways and collaborate for the solution of problems in the Middle East Caucasus and the Balkans," said Wulff, Speaking at a dinner hosted by Turkish President Abdullah Gul in his honour at the Dolmabahce Palace in Istanbul.

He also said:

"Turkey is an important partner for Germany, one with self confidence. However there is yet much we can and must do to enhance the mutual understanding. Building the bridges and promoting the dialogue we aspire, through projects within the scope of the Ernst Reuter Initiative, is my personal desire and our common goal."

"Turkey, with its growing weight in the world, is a very important partner for us in climate change policies, in counter-terrorism, and finance market regulation. Therefore, I shall work within my full capacity to enhance German-Turkish partnership and brotherhood," said Wulff.

The statements came just a few days after a partial visa-free deal between Turkey and Portugal was announced. The deal will cover only citizens that hold a special passport, and will only allow travel for up to 90 days every six months. It still has to be ratified by parliaments on both sides.

These can only be called significant steps in Turkey's process of joining the EU. We have written many times on this blog that EU accession has become less necessary for Turkey in recent times, but we also agree with an article in The economist saying that while EU entry may be a long, long way off, aspiring and reforming towards it are good for Turkey and should continue.

EU Accession No Longer Vital to Turkey’s Interests

This week David Cameron called Turkey the BRIC of Europe, but still we expect no progress on the EU issue. This week French foreign minister Bernard Koucher pledged France’s support for Turkey, but still we should expect no progress on the EU issue. The EU will publish a review of Turkey’s progess towards joining the EU, we expect it to show little progress on the EU issue. Until France, Germany and others remove their block, which won’t happen until Turkey opens its ports to Greece, which won’t happen until and so on and so forth – suffice to say we are firmly in the land of deadlock.

But the fact is the Turkish economy grew by more than 10% in the first half of this year, and is predicted to grow 7.5% for the year as a whole, that is growth that Europe’s developed economies like France and Germany can only dream of.

According to a report by HSBC this week emerging markets will be on top of the world table of purchasing power parity within three years; three years during which they will drive the global economic recovery. Turkey was mentioned in the report as one of the biggest drivers of growth. Investment in Turkey is increasing at a rapid rate, including property investment.

EU accession is no longer vital to Turkey’s interests.

This is a common sentiment, in a Hurriyet Daily News article this week titled Forget the EU, RICHARD REID wrote:

In any case, Europe’s closed door may be irrelevant to Turkey’s general prospects. At the moment the country’s global image is one of rude health. Admiring eyebrows are being raised in the capitals that count. Turkey is no longer a minor player. Its momentum should before long carry it to a point where Europeans will be the suitors. And then Turkey can ask them to wait.

EU membership is “no longer such a big deal” for Turkey says Tolga OZCAN, director of Antalya real estate agent New Home in Turkey.

“The Turkish economy enjoyed double-digit growth in both the first and second quarters, with 11.7% growth in the first quarter and 10.3% in the second quarter, compared to growth of 0.7% and 2% respectively for the EU27,” he said. “During this time the biggest growth was recorded in Slovakia with 4.6% in Q1 and 5% in Q2.”

He continued: “On top of that the European banking infrastructure is in disarray, with severe doubts over exactly what levels of bad loans still exist in Spanish, German, Irish and other banks. Compare this to Turkey’s banking system, which, heavily reformed in 2001 is in incredibly good shape.”

The Fading Importance of EU Membership Boosts Turkish Property

The international financial crisis was a mortgage and housing market crash so spectacular that it crippled economies in most countries around the world. The boom that preceded was equally spectacular; so spectacular that it made people forget the cyclical nature of economies and house prices.

The boom was fuelled by a massive increase in overseas property investment, so-called fly to let, which in turn was fuelled by the advent and growth of budget airlines. New cheap flights opened up new destinations and made them accessible to the masses.

Turkey was popular with holiday home buyers and holiday home investors, but for the pure investors fuelling the real boom something was missing. That was EU membership.

Turkey has been an official EU applicant since 2005, but France and Germany have been staunchly opposed to Turkey's entry.

Now though, Turkey is booming while the EU is withering, and this is making investors readdress their position.

In the year to end the second quarter of this year Turkish GDP grew 10.3%. The EU grew 1%.

Turkish GDP grew 11.7% in the year to end the first quarter. EU GDP grew 0.4%

Turkey's budget deficit is under 5% and many EU countries are in real trouble bringing deficits of up to and over 10% under control.

This has made Turkish property a more attractive investment than that of Greece, Italy, Portugal or Spain, take Dubai out of the equation as well and you can see why Turkish property is currently getting so much press coverage.