The solving of the EU issue was important from the economic point of view

A crisis that erupted in Turkey’s EU full membership negotiation process was prevented at the last minute. Foreign Affairs Minister Ahmet Davutoğlu yesterday welcomed the decision that European Union General Affairs Council (GAC) had unanimously agreed to the opening of Chapter 22 on regional policies.

The opening of this chapter, which had been decided upon long ago was jeopardized because of the environment that was created by the Gezi incidents, which was contradictory to the standards regarding Europe’s human rights and freedom of expression. The prevention of this crisis at the last moment was very important for Turkey’s domestic politics and diplomatic relations.

We should also say that the prevention of this crisis is also a very big step for the state of affairs in economy. Because at a time when the global economy has entered into a new trend, when capital movements have accelerated, it was seriously damaging for the economy of Turkey, when the country was faced with huge domestic political turmoil like the Gezi incidents. Right at that moment, a serious crisis erupting with the EU scared the players in the economy. If it were in a normal period, the EU issue would not at all affect the economy but in the existing environment it had a critical importance.

A market player we talked to the other day said that they would monitor the EU process from now on, the one that they did not follow up before: “In case the chapter was not opened, it would have had serious negative effects for the economy.”

I am assuming that in this fragile environment, the fact that there has been a consensus in the opening of a new chapter in the EU will ease the markets. The decision to open the chapter but postponing the negotiations to October can be discussed from several aspects diplomatically. When viewed from the point of view of the markets, it is said, “The important aspect is that opening of a chapter is not cancelled. It is of secondary importance when it will be opened, thus it is important that the EU process is continuing.”

Consequently, we can say that this decision is one that has eased the economy.

Difficult economic process

Even though the trouble regarding the EU has been overcome, it is apparent that a difficult period is already waiting for us in the Turkish economy. The capital exit from developing countries that started after the FED’s decision to restrict liquidation, has already affected Turkey very much. The Turkish economy, because of the expectation of the investible country rating and because of obtaining it, was enjoying a more positive development than other developing countries. Because of that, it has been worse affected in the last wave when compared to similar countries.

The reason for that is the Gezi incidents. The drop that was already expected was experienced much more heavily because of political developments and clashes.

Developments in the global economy are expected to continue in such a way that developing countries like us will be affected negatively. Even though there might be recoveries in the markets from time to time, the fluctuating course will continue. It is apparent that the general trend will be that capital will now exit developing countries, thus will be toward the developed countries where the interest rates have increased.

Besides, the government’s continuation of the tough stance in domestic politics will pose an already important political risk for the economy.

I think the government has entered an unprecedentedly difficult economic process.