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February 15, 2013, Friday

France courts better ties with Turkey

It is interesting to see that France, under the leadership of socialist François Hollande, has started courting better ties with one of fastest growing economies in the world, Turkey, by offering incentives to smooth out the existing problems between the two countries. This overture, long overdue between Paris and Ankara, coincides with the repeated rebuffs by German Chancellor Angela Merkel, who successfully lobbied against the French proposal to bring down the value of the euro to stimulate the struggling French economy and sputtering exports. Merkel, joined by Britain's David Cameron, also blocked Hollande's effort to make the EU budget focus on infrastructure spending as opposed to budget cuts.

Sandwiched between the two major economies, France is now understandably looking for a way out to relieve the pressure of the crisis that brought French economic growth to a grinding halt at 0 percent last year. France, the second-largest economy in Europe after Germany, is not expected to recover from flat-lining this year, either, missing the government-announced budget deficit targets as well as the EU ceiling of 3 percent economic output. The unemployment rate is around 10 percent in France, and the country's debt is likely to remain over 90 percent of gross domestic product (GDP). French exporters are struggling to maintain the level of market share they have abroad as well.

All of sudden, Turkey has started to look like a promising prospect for French businesses that want to stay in the game of trade among European economic powerhouses. French knows how to do business in Turkey and has deep-rooted, historic connections with the Muslim-majority country. French companies are not only interested in the huge consumer market of 76 million in Turkey in itself, but are also motivated by the idea of penetrating third markets using Turkey as a launch pad. That is why we have been seeing increasing mergers, takeovers and joint mergers between French and Turkish companies in recent years. Posting losses on the home front, French automakers Peugeot-Citroen and Renault are shifting their manufacturing options abroad, including in Turkey, where Renault kept its lead in sales in 2012.

Hollande is very much aware of the value that Turkey can bring to the French economy and is maneuvering to accumulate enough political capital to spend in Ankara when it is needed. Lifting the French veto on one negotiation chapter in Turkey's EU membership talks, to be possibly followed by more, was in fact an indication of that policy. The French authorities' recent crackdown on the financial network of the outlawed Kurdistan Workers' Party (PKK) and others groups -- listed as terrorist organizations by Turkey, the US and the EU -- from operating in French territory is another sign of its revamped policy towards Turkey.

As Turkish Economy Minister Zafer Çağlayan tried to explain to his counterpart, Nicole Bricq, and a group of French CEOs over a breakfast in İstanbul last month, Turkey has plans to invest some $250 billion in the coming decade in the fields of energy and transportation, hinting that French companies can tap into these mostly government-financed mega projects. The fact that both countries set up working groups in the fields of energy, agriculture, the environment and urban development in joint economic meetings shows that cooperation schemes are well under way. The trade volume between the two countries, at some $15 billion as of last year, is far below the potential between the countries considering the size of their economies. It was a lost opportunity as cooperation was hindered by political disputes between the two, most of them not directly tied to bilateral issues.

For example, the French business community is still recovering from a stupid mistake committed by a few French politicians led by former president Nicolas Sarkozy, who pushed for the criminalization of the denial of the so-called Armenian genocide to score few points in the presidential election. When the bill was approved in the French National Assembly in December 2011, Turkey had to react by freezing its political, military and economic cooperation schemes at the intergovernmental level. A Prime Ministry decree on Jan. 4, 2012 instructed all government agencies to stop working with French companies and institutions until further notice. The bill was passed in the French Senate on Jan. 23, 2012, but France's Constitutional Council struck it down on Feb. 28, ruling that the law was contradictory to the principles of freedom of expression as written in France's founding documents.

Hollande's overtures with Turkey during his meeting with the Turkish president on the sidelines of the Chicago NATO summit on May 2012, followed by his talks with the Turkish prime minister in the Rio+20 Earth Summit in June, has paid off in restoring ties between the two countries. When the details for rapprochement were hammered out in a meeting held by French Foreign Minister Laurent Fabius and his Turkish counterpart, Ahmet Davutoğlu, in Paris in July, the Turkish government decree imposing restrictions on France was lifted. But in the meantime, some 1,000 French companies doing business in Turkey had felt the brunt of the chill in ties.

Paris also closely monitors Ankara's aggressive and ambitious trade diversification policy, especially in Africa where French interests are at stake in francophone countries. It seems that Hollande is opting to cooperate with Turkey in Africa instead of risking a confrontation in order to maintain the French position in these markets. As was seen in Tunisia and in other places, anti-French sentiment is on the rise in the African continent. The operation in Mali is not expected to soothe tensions for France and in fact may have complicated matters even more by fueling a new debate over French colonial and imperial ambitions. Hollande believes that it can limit damages to French interests by enlisting the help of Muslim-majority Turkey, which has no bitter historic baggage in Africa.

If there is clear political willingness in Paris to boost ties with Turkey, it is hard to imagine any major challenges standing in the way of a more fruitful cooperation. Both Ankara and Paris can work constructively on the improvement of bilateral ties. Most problems like the genocide, the EU, Cyprus and others have strong third-party dimensions, anyway. Maybe it is time to push these distractions aside and start working on the real problems so that the two countries can reach their full potential in trade and economic cooperation. For one, both countries need to make better use of the Joint Economic Committee to deliver results in boosting trade. The committee can start tackling problems like quota certificates applied by France to Turkish truckers for transit permits that have not been increased for a long time or other technical barriers that are holding up growth in terms of Ro-Ro ferries carrying containers between French and Turkish ports.

Following the icebreaking initiatives by the French government in recent months, Hollande's much-anticipated official visit to Turkey, the first by any French president since 1992, can serve as an important landmark in relations. Parliament needs to restore the Turkey-France friendship group which was hastily -- and frankly unnecessarily -- disbanded by the parliament speaker in the aftermath of the December 2011 crisis. Both sides should also work on issues that have poisoned the climate on ties. All the investment in political goodwill may be in vain if we allow the centennial of the Armenian tragedy in 2015 to deal another yet more powerful blow to ties. This will trigger another blowback from Ankara, spilling over to other areas of cooperation including economic ones. Understanding this risk, France is now discussing the case with the Turkish government to find a solution that will satisfy Turkish concerns. That is quite understandable. After all, Hollande's priority is to deliver tangible results for the economy, which matters more to all French citizens rather than dwelling on historic issues that should be left to academic studies.

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