Turkey and the European Union: Problems and Prospects Daedalos Institute of Geopolitics & University of Cyprus Conference Nicosia, 11 June 2009 *********** Credible Commitments: An Elusive Quality in EU-Turkey Accession Negotiations Mehmet Ugur Jean Monnet Reader European Political Economy

Plan Open-ended accession negotiations: the new beast Modeling open-ended accession negotiations: credibility matters! Open-ended accession negotiations deliver sub-optimal outcomes Evidence from EU-Turkey negotiations What is the way out?

1. Open-ended accession negotiations: the new beast Open-ended accession negotiations framework: a new commitment mechanism Aims: –Ensure convergence between candidate country and the EU before integration; –Reduce risks of enlargement – mainly for the EU Instruments: –Economic and political reforms in candidate countries in return for a membership prospect Novelty: –Target time for accession is not specified –Accession may be granted with significant exemptions that restrict membership entitlements of acceding countries Rationale: –Avoid the end-game problem associated with pre-2004 accessions – i.e., reduce the risk of reform performance failures by candidate countries

2. Modeling open-ended accession negotiations: credibility matters Ingredients of the model: 3 choice variables for EU and Turkey 1.Turkey’s choice variable: level of compliance with EU’s reform conditionality (R) 2.EU’s choice variable: membership prospect offered (M = 1/t where t is number of years until possible accession) 3.Choice variables for both parties: –Turkey’s probability of commitment to reforms (π) –EU’s probability of commitment to membership prospect (z)

2. Modeling open-ended accession negotiations: credibility matters The model: A stochastic (probabilistic) utility maximisation model

2. Modeling open-ended accession negotiations: credibility matters The model: A stochastic (probabilistic) utility maximisation model

2. Modeling open-ended accession negotiations: credibility matters The model: A stochastic (probabilistic) utility maximisation model

3. Open-ended accession negotiations deliver sub- optimal outcomes Why sub-optimal outcomes? Because open-ended accession negotiations generate perverse incentives such that:  Turkey sets its probability of commitment (π) at less than ½ And  EU sets its probability of commitment (z) at less than ½ Perverse incentives spelled out: 1.Perverse incentive I: an increase in own probability of commitment has uncertain effect on own utility; but positive effect on the opposite party’s utility (the positive externality problem) 2.Perverse incentive II: an increase in own probability of commitment reduces the incentive for the opposite party to perform (i.e., R or M falls) (the free-riding problem)

3. Open-ended accession negotiations deliver sub- optimal outcomes Sub-optimal outcomes: a diagrammatical demonstration EU and Turkey settles on Mc and Rc instead of M* and R* π = Turkey’s probability of commitment z = EU’s probability of commitment

4. Evidence from EU-Turkey accession negotiations  During the pre-accession period ( ):  Turkish governments have undertaken 8 reforms packages, including sensitive issues such as minority rights  Turkish public opinion support for EU membership has peaked at 71-74% in 2004  A new coalition of ownership for the integration project has replaced the old coalition  Turkey-sceptic members (such as France, Germany, Austria) failed to prevent the start of accession negotiations  After the start of open-ended accession negotiations in 2005: Developments in Turkey  The level and quality of reform has fallen dramatically  AKP has taken a definite turn away from policy entrepreneurship towards policy opportunism  New anti-democratic legislation has been introduced  Anti-democratic and corrupt government practices have increased

4. Evidence from EU-Turkey accession negotiations  After the start of open-ended accession negotiations in 2005: Developments in Turkey (continued …)  AKP government failed to extend the Additional Protocol to Cyprus  Public opinion support for EU membership fell to 44% in 2006 and 42% in 2008  Turkish public opinion trust in EU institutions is the lowest among EU-27 + other candidates  Governance quality in Turkey has deteriorated or remained stagnant (and below income group average)

4. Evidence from EU-Turkey accession negotiations  After the start of open-ended accession negotiations in 2005: Developments in the EU  Turkey’s membership prospect has deteriorated dramatically  So far, only 9 chapters have been opened – but none of these can be closed  In contrast, 13 chapters have been frozen (8 related to the non- implementation of the additional protocol and 5 related to membership)  France, Germany and Austria have become more vocal and influential vis-a-vis the majority view in the EU  European public opinion support for Turkish membership is very low – only 39% of respondents to a 2006 Eurobarometer survey think Turkey should become a member even if it complies with all EU conditions  Pro-Turkish membership members have become less vocal in their support

5. Is there a way out? Open-ended accession negotiations create such an environment that:  Turkey’s reform performance becomes a function of EU’s commitment probability  Membership prospect offered by the EU becomes a function of Turkey’s commitment probability  Unilateral action by either party (unilateral increase in Reform or in Membership Prospect) does not lead to movement towards optimal equilibrium – hence it is neither feasible nor sustainable.  Therefore both parties must coordinate their commitment probabilities (π and z).  This can be done through periodic summits  Then, any deviation from optimal reform (R*) and membership prospect (M*) can be rectified by adjustment of commitment probabilities.