Posts Tagged 'EU'

Britain Will Join The Euro

Trends are moving regarding Britain joining the Euro. British consumers already receive less than a euro per pound when they exchange money at airports and traveling agencies, which marks a tipping point in the long-held assumption of the pound’s superiority. This comes after a year when the pound lost 17% against the euro, following a dramatic lowering of interest rates by the Bank of England.

Assessment
The persistent devaluation of the pound is expected to prompt a shift in public opinion towards backing joining the euro. It is, however, very unlikely that will happen before the next government is well into its mandate. Admission of the UK to the Eurozone in the context of the discussion of the EU’s budget for the period 2014-2020 seems a likely scenario. Considering that London will host the Olympic Games in 2012, this comes like a probable date.

Guantanamo Will Close

Trends are moving regarding the situation in Guantanamo. President-elect Barack Obama had already signaled his intention to close the facility, but questions remained regarding the fate of the prisoners. Portugal’s offer to take in some of the detainees breaks European resistance to assisting the US deal with the problem, and can prelude a concerted European effort to help the incoming administration break the jam.

Assessment:
President-elect Barack Obama will announce Gitmo’s closure early on the mandate, capitalizing on the good-will generated by the measure to push diplomatic initiatives. The remaining detainees will likely be scattered across the globe.

Ireland Will Approve The Lisbon Treaty

Ireland will hold a second referendum on the Lisbon Treaty by the end of October 2009. The EU leaders gave further guarantees regarding the three main areas of concern for Irish voters: abortion, fiscal policy and neutrality. Moreover, Ireland will retain its commissioner, with the EU dropping plans to trim down the size of the Commission.

Assessment:
This concessions, combined with the grim economic outlook facing Ireland, are bound to push Irish voters into a significant shift towards a “Yes” vote, ending the institutional deadlock that has paralyzed the EU.

Carbon Price Will Fall

The EU approved an action plan on climate change that sets ambitious goals for the bloc. The EU now vows to cut CO2 emissions and energy consumption by 20% and achieve a renewable energies ratio of 20%, all by 2020. However, concessions made to secure approval of the deal, especially to Germany and Eastern European countries, put the stated objectives at risk.

Assessment:
Climate change trends are mixed in the Near Future. The way is open for concerted EU and American leadership on next year’s climate change conference in Copenhagen, but overly generous emissions caps for industries in the EU’s plan threaten to derail the fledgeling carbon market.

Markets Will Receive Boost

Financial trends seem brighter in the Near Future. After the Senate rejection of the $14 billion bailout plan, the White House is now considering allowing the automakers to share some of the $700 billion earmarked for the banking system. In Europe, and after initial strong resistance from Germany, the EU approved a package of €200 billion to stimulate the economy.

Assessment:
The converging effects of this two plans should build some confidence in the market, prompting gains across all main indexes on Monday.

Turkey “not in any rush to join the EU”

In an interview published Monday on Spiegel, the Turkish President, Abdullah Gül, appears cool regarding Turkey’s horizon of accessing the EU, saying the country isn’t “in any rush” to join the bloc.

Gül seems conformed that the latest progress report from the EU, due to come out next month, will again spotlight Turkey’s shortcomings, namely the slow pace at which the reforms, demanded by the Union as a pre-condition to membership, are being undertaken.

The Turkish president concedes the argument, and pinpoints “domestic policy issues” as the reason for lagging behind. He seems nonetheless confident that the country will recover the lost ground next year.

Turkey, in fact, has had a rough ride lately. In February, the parliament, where Gül’s AKP holds an absolute majority, approved a constitutional amendment revoking the Kemalist law that expressly forbade the use of the headscarf in public universities.

The amendment was later overruled by the Constitutional Court, but the move generated a huge backlash among the Kemalist elite, already distressed by the AKP’s hold on the nation’s top posts. The Kemalists took the headscarf law as proof that the AKP had a secret Islamist agenda, and the chief prosecutor moved to outlaw the party, on the grounds that it was seeking to undermine the secular foundations of the state.

The case was later dismissed by the Supreme Court, but it served to show, once again, the deep fractures that are running in Turkish society, with the country seemingly caught in the grips of an open war between the old Kemalist elite and the upcoming Islamist elite. This war, however, is not restricted to the elite, and it has spilled over to the society at large.

Last year, hundreds of thousands took to the streets for and against Gül’s nomination for the presidency. More troubling, the Army made a point of saying that it still regarded itself as the custodian of the state – a Kemalist state, that is -, in a thinly veiled reminder that it wouldn’t be shy of, once again, removing a government that went too far in questioning the foundations of that state.

Eventually, Gül was elected, and the Army stayed in its barracks. But the Ergenekon process, which started this week, is a timely reminder that the underlying fractures are far from resolved.

Amidst all the commotion, one stabilizing factor has clearly been the prospect of joining the EU. With a GDP per capita of approximately 28% of the EU’s value, Turkey can clearly see the advantages of joining the bloc, and both factions are wary of doing anything that would close the door to Europe.

But the fact is that Turkey has been waiting at the door for almost half a century, and it’s getting tired of it. In 2007, the Pew Research Center global survey found that only 27% of Turks had a favorable opinion of the EU. In 2004, that number was 58%. Another study, from the Center for Strategic and International Studies, found that only 26% of Turks believed the country would ever join the EU.

Gül still says that Turkey “expects the Europeans to honor their agreement” about allowing Turkey into the club. But, in a sign that the government is beginning to heed the growing wave of discontent regarding Europe’s misgivings about Turkish membership, he also says that, at the end of the negotiations process, Turkey “will have to make a political decision about whether it should join the EU.” The membership is no longer presented as a prize to be passively accepted by Turkey, but rather as a strategic decision that it may, or not, choose to take.

This is no mere bluff. With the economy growing solidly (although still far from European standards) and its diplomatic status raising  – it just got elected to one of the temporary seats in the UN Security Council, and it has been mediating talks between Israel and Syria that could pave the way to a peace treaty between the two countries -Turkey feels that it has choices. And it may well decide that it would do better to turn to places where it’s presence would actually be welcomed, and not merely tolerated.

The EU has been using the membership carrot to lure successive Turkish governments into modernizing the country. Which has proved to be an efficient tactic: reforms that would have been very hard to swallow for some sectors of the society were successfully pushed through because they advanced Turkey in its path towards Europe.

In fact, it can be said that the EU has been Erdogan’s insurance policy against more aggressive moves from the Kemalist elite. In the more critical times during the past year, the EU issued a series of blunt warnings that it regarded very negatively moves from the Kemalists to destabilize the government.

For instance, when the case to outlaw the AKP was moving to the Supreme Court, Olli Rehn, the EU Enlargement Commissioner, felt appropriate to issue a statement saying that “in EU member states the kind of political issues referred to in this case are debated in the parliament and decided through the ballot box, not in court rooms”.

The EU has held great leverage over Turkish policy, and it has used it fully. In 2004, it even got Turkey to persuade the Turkish Cypriots to vote favorably the UN plan to reunite the island. The only thing that prevented a unified Cyprus from joining the EU that year was the stubbornness of the Greek Cypriot president, Tassos Papadopoulos, who campaigned hard for rejection of the plan.

It would, however, be wrong to assume that it is Brussels who’s gaining everything it wants from Turkey. In fact, it’s becoming increasingly clear that the AKP is using the EU to outgun the Kemalist elite, enabling it to push through its reforms agenda without fear of a military coup, which would have been much more likely if Turkey were not on its eternal path to membership.

But once this structural reforms are sufficiently advanced, and the process of replacing the old kemalist elite for the emerging one reaches a point of no return, will the EU continue to hold much sway? Or will Turkey simply decide that, now that it is well on its way, it has no more use for an increasingly bitter carrot?

The EU strategy for the past decades appears to have been aimed at tiring Turkey on a seemingly endless road to membership, without actively alienating it. Now that it is about to succeed in the first account, it should start preparing for failure in the latter.

FT.com / World – EU frustrates Ukraine’s membership hopes

The European Union on Tuesday declined to offer Ukraine the long-term prospect of EU membership, frustrating Ukrainian officials who said the bloc had thrown away a golden opportunity to stabilise its eastern frontier and encourage political and economic reform in Kiev.

FT.com / World – EU frustrates Ukraine’s membership hopes.


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