Central Bank independence to be a closing benchmark in EU talks

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The independence of Turkey’s Central Bank, an important prerequisite in the harmonization process with European norms, will be the closing benchmark in EU accession talks when Chapter 17 is opened on Dec. 15.

The independence of the Central Bank, a controversial issue in Turkey, is one of the most important factors in aligning Turkey’s norms with that of the EU. 

EU rules require the independence of central banks and prohibit them from directly financing the public sector. Member states coordinate their economic policies and are subject to fiscal, economic and financial surveillance. 

Progress is expected on Turkey’s stalled bid to join the EU, with Chapter 17 of the accession process dealing with the economy and monetary policy due to be opened on Dec. 14-15, Turkish EU Minister Volkan Bozkır said on Nov. 26. 

Turkey would not be content with the opening of only one chapter, Bozkır said, adding they will launch a joint effort to open a further five to six chapters in 2016.

EU leaders and Ankara agreed to hold a special summit with Turkey on Nov. 29 in order to finalize an accord to curb refugees flowing from the Middle East to Europe.

Setting a date for an intergovernmental conference, at which Chapter 17 will be opened, was one of Turkey demands for holding the conference.

The bloc and Turkey are set to agree and publicly announce an agreement on a road map that will feature the details of cooperation on the refugee issue. 

Turkish President Recep Tayyip Erdoğan has frequently put pressure on the Central Bank to lower interest rates. Erdoğan has been vocal in his criticism of the Central Bank and argued that lower interest rates were needed to “lure” more investment to the country.

“Turkey is moderately prepared in the area of economic and monetary policy, though no progress was made in the past year,” read the European Commission’s 2015 Progress Report on Turkey, which was made public Nov. 10. 

“Turkey generally has a good capacity for economic analysis and planning. Increased political pressure on the Central Bank undermined its independence and credibility,” said the report.

While emphasis is given to the Central Bank, securing its independence will remain a closing benchmark for Chapter 17. 

Although the commission said in its report that Turkey in the coming year should “avoid any political interference in the independence of the Central Bank,” the fact that the issue has been set as a closing benchmark will remove immediate pressure from Turkish political leaders in their approach to the lender. 

“One cannot say that the Central Bank is not at all independent in Turkey,” a European official familiar with the issue told the Daily News.