Turkey Highlights EU Bid Again as Political Turmoil Hits Markets

Turkey is pointing to its determination to inject momentum into a languishing European Union membership bid to restore confidence amid political and economic turmoil sparked by a corruption probe last month.

Deputy Prime Minister Ali Babacan told CNBC-e and NTV television at the World Economic Forum in Davos, Switzerland, today that the “EU is a very important factor” in differentiating Turkey from other emerging markets. He said the government’s determination to join the EU is unchanged.

“Turkey’s most important alliance is the EU even as relations seem rough due to mutual criticism,” Yalcin Akdogan, an adviser to Prime Minister Recep Tayyip Erdogan, said in an op-ed in Star newspaper today. “Revitalizing the partnership is crucial.”

Akdogan said it would be impossible for a country seeking unification with the EU to show undemocratic inclinations, a day after the country’s leading business group, the Turkish Industrialists and Businessmen’s Association or Tusiad, criticized the government for seeking more control over police and the judiciary as it fights the corruption allegations.

Turkish assets have slumped since the corruption probe ensnared people including the sons of three ministers, the head of a state-run bank and businessmen with ties to the government on Dec. 17. The lira fell 13 percent to a record 2.3360 per dollar today, the main stock index declined the most worldwide and benchmark two-year bond yields surged to 10.99 percent as of today, compared with a record low 4.79 percent on May 22.

Waning Appetite

“The EU is very important for Turkey, democracy, human rights, freedoms and rule of law. These automatically contribute to the economy,” Turkish Exporters’ Assembly chief Mehmet Buyukeksi told a news conference late yesterday, according to the state-run Anatolia news agency today. “I think we have to refocus there.”

Erdogan, during a visit to Brussels on Jan. 22, faced calls to ease curbs on free speech and let judges operate independently in order to breathe fresh life into the country’s bid to join the bloc.

Long stalled by Europe’s economic troubles and waning appetite to take in new members, Turkey’s application is now hung up on the perception that Erdogan has strayed from the promotion of western-style liberties and pluralism after more than a decade in power.

To contact the reporter on this story: Selcan Hacaoglu in Ankara at shacaoglu@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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