GCC closes in on Turkey free trade agreement

“Although our main trading partner is still the EU there is a lot of unused potential here in the Arab world, and the Gulf states especially,” Korhan Kurdoglu, chairman of the ATA Finance Group, the first Turkish investment company in Dubai, told
Arabian Business

, at the ‘Bridging the Two Gateways: Turkey and the GCC’ conference. Kurdoglu added that a Turkey-GCC FTA was “making progress”. The GCC is Turkey’s sixth largest export partner with a trade volume of over US$5bn.

The chairman of ATA said that the energy sector in Turkey was “especially promising” for foreign investment. With around 70% of the world’s energy resources located to the east of Turkey in Russia and the Arab world and the petrol-hungry EU in the West — Turkey expects its home energy sector to benefit from approximately US$130bn worth of investment this year.

The financial services sector is also promising, he said. “30% of the banking sector is now held by foreign entities, and more and more other financial institutions such as insurers and brokerages are looking for international partners.” He also mentioned the agriculture and farming and the real estate sectors as potential targets for foreign investors. “The value of Turkey’s properties is shooting up. We will soon have a new mortgage law, so we expect value to keep going up even more,” he said.

Ali Babacan, Minister of State for the Economy and chief EU negotiator, said that Turkey has seen some major reforms due to its EU accession process. Since 2002 the single party government has tightened fiscal policies, reduced national debt and managed to control inflation. Direct foreign investment influx has also risen to a total of US$20bn in 2006.

“Turkey needed stability. Without political stability an economy cannot grow. By the end of 2003 all economic indicators were up, and Turkey is full of potential,” he said.

“As opposed to other fast-emerging markets such as South America or Asia, for example, Turkey’s future is stable because we are targeting to become an EU member state,” he added.

Turkey’s EU membership is however a highly controversial topic with several of the union’s member states rejecting the country’s full membership status due to issues regarding human rights violations or the existing divide with Cyprus. Babacan however, said he was confident that one day Turkey would become a fully-fledged EU member. “It might take longer than many other new applicants but it will happen,” he said. “It’s a long-term plan and a win-win situation for us, the EU and our neighbouring regions,” he said.

He also said that, once a member state, the “balance of power within the EU will shift” due to the economic and population size of Turkey. The 73 million people country has a birth rate of 1 million people a year.

“The growth potential of many other EU nations is limited, and Turkey will grow much faster than most other states. Turkey is, however, a growth engine for the EU and we are convinced that the doubts of some states will slowly dissolve,” Kurdoglu added.

Turkey faced another blow to its potential EU membership earlier this month when the union’s foreign ministers decided to suspend accession talks with Turkey on eight of the 35 areas that candidates are required to complete. The decision resulted from Turkey’s refusal to open its sea and airports to EU member Cyprus, under a customs union pact signed last year.

The Turkish Prime Minister Recep Tayyip Erdogan has since accused the EU of acting “unfairly” towards Turkey. In an interview he said that the EU-Turkey relations were facing a “serious test”.