The great Turkish rip-off

28 October 2012

New Europe 28 October 2012
By Robert Ellis

When he was in Ankara two years ago, the British Prime Minister David Cameron came with a fulsome declaration of support for Turkish EU membership. and at the same time declared Britain’s intention to double its mutual trade with Turkey over the next five years. A recent visit by a British trade delegation led by Deputy Prime Minister Nick Clegg underlines this intention.

However, as Naz Masraff from Eurasia Group has pointed out in a guest post in Financial Times, the Sledgehammer case has raised questions regarding the rule of law that could undermine Turkey’s appeal to investors. Among other barriers to foreign direct investment she mentions the country’s inefficient dispute resolution mechanisms and the slow pace of judicial review.

Hürriyet Daily News’ Barçin Yinanç touched on the same issue when she in an interview with the Turkish economist Kemal Dervis asked whether Turkey could have an international finance center without a fair justice system.

The European Council’s decision in Helsinki in 1999 to recognize Turkey as a candidate country paved the way for a flurry of reforms, which in October 2004 led to the EU Commission’s decision that Turkey had sufficiently fulfilled the political criteria for the start of accession talks. The so-called Copenhagen criteria for membership includes a guarantee for the rule of law and human rights, but Turkey’s track record has since demonstrated that this is a convenient fiction for the benefit of gullible European politicians.

But not all European politicians have been fooled. At least, not all the time. Liberal Democrat MEP, Andrew Duff, who has been a prominent cheerleader for Turkish EU membership, has now revised his opinion and advocates a strategic partnership rather than full membership. In Duff’s view the sentences in the Sledgehammer case were not justified and innocent people with non-Islamic backgrounds were being punished.

When it comes to the number of judgments against it, Turkey is still the front runner at the European Court of Human Rights, although Turkey has been overtaken by Russia when it comes to the number of applications. Nevetheless, last October there were 19,988 cases against Turkey pending review.

The EU Commission noted in its 2004 recommendation that the business climate in Turkey would be improved by strengthening the rule of law, but when an investment in Turkey goes wrong, there are few mechanisms in place to protect the foreign investor, who in most cases can only find redress in Turkish law.

The UK-Turkey IPPA (Agreement for the Promotion and Protection of Investments), which entered into force in 1996, stipulates in Article 2 (2) that "Admitted investments …. shall at all times be accorded fair and equitable treatment and shall enjoy full protection and security in the territory of the other Contracting Party.” However, as any British investor who has fallen foul of the Turkish legal system knows, this provision is non-operative.

Robert Ellis is a regular commentator on Turkish affairs in the Danish and international press.