On his recent trip to Turkey, the British Prime Minister David Cameron has aggressively campaigned for the country's membership into the European Union (EU), attacking the opposition as misguided and/or prejudicial.

Cameron has vowed he would “fight” for Turkey's membership and that he is "angry" at the stalled progress. The British head of state declared that with its unique geographical and cultural position, Turkey could become an invaluable link between Europe and the Middle East, including Iran.

In a speech before the Turkish Parliament in Ankara, Cameron praised Turkey as “vital for our economy, vital for our security and vital for our diplomacy.”

As Cameron has also alluded to, Turkey has the second largest army in NATO, and has served as an important ally in the war in Afghanistan.
Turkey is also a crucial conduit for oil and gas pipelines heading towards Europe.

Cameron is also seeking to establish better trade links between Britain and Turkey, with the strategy of doubling their value over the next five years.

While Mr. Cameron may indeed genuinely want Turkey in the EU club – Britain, after all, has long advocated for its inclusion – his words may mean little to the 27-member bloc, many of whom, particularly France and Germany, actively oppose Turkey's entry.

Both Angela Merkel, the German chancellor, and Nicolas Sarkozy, the French president, have espoused that Turkey be given a “privileged partnership” with the EU, but nothing more.

Turkey has officially been a candidate for EU membership since December 1999 and accession negotiations commenced in October 2005.

But, like a jilted bride, Turkey remains on the outside looking in – and for a whole host of reasons.

“There are still considerable obstacles to Turkey’s accession,” said Neil Shearing, senior emerging markets economist at Capital Economics Ltd. in London. “While Mr. Cameron’s intervention will obviously be welcomed by Ankara, entry remains years, more likely decades, away.”

For one thing, Turkey is a historic enemy of EU member Greece and has refused to fully recognize the government of another EU member, Cyprus.

Turkey also has a long and poor record on human rights – its treatment of women, of political prisoners, and of the restive Kurdish minority in the Southeastern part of the country, the state's prosecution of certain human rights defenders, writers and journalists, among other things, all violate EU values.

While Turkey has indeed instituted some reforms – for example, abolishing the death penalty, imprisoning senior military and police officers for committing acts of torture, and the allowance of Kurdish language in radio and television broadcasts – changes have been too few and too slow for most EU observers.

Another particularly contentious point that seems to have no hope of resolution lies with Turkey's activities during World War I when up to two million Armenians are believed to have been murdered in a state-sponsored mass extermination program. Turkish governments ever since has refused to even acknowledge the killings, much less apologize for them.

Robert C. Holderith, president & chief executive officer of Emerging Global Shares, said another important reason for blocking Turkey is because they have refused to support the EU's sanctions against their neighbor and trading partner, Iran.

“It really has more to do with politics than economics,” Holderith said. “Bulgaria and Romania are both EU members, but they are emerging markets and they are, by many measures, poorer than Turkey.”

Holderith believes that while Cameron may indeed want to expand the U.K.'s trading relationship with Turkey, the British leader might actually be acting on behalf of the United States, which wants to stay out of this affair, but clearly wants Turkey to remain a strategic military partner in NATO in Iran's backyard.

Perhaps the least-openly discussed grievance against Turkey is that it is a large and overwhelmingly Muslim nation.

Turkey is a nation of more than 72-million, with two-thirds of the population under 35. As such, some European critics fear that Turkey's entry into the EU might prompt an influx of more immigrants into European nations which are already struggling with high unemployment and budget crises.

To partially offset the fears of Britons and Europeans who oppose further immigration, Cameron suggested that the UK would impose provisional restrictions on the right of Turks to live and work in the UK after it joined the EU -- as Britain currently does with Bulgarians and Romanians.

But with its high birth rate, Turkey is projected to overtake Germany's as the most populous state in Europe by 2020.

Given their large population, a Turkish presence in the EU would vastly change the make-up of the European Parliament.

“Turkey would automatically have great influence in the [European] Parliament, second only to Germany, by strength of numbers alone,” Holdedrith said. “That Parliament has the power to make trade laws and agreements. It's a big strategic problem for those who oppose Turkey.”

The Turkish economy – which would be the sixth largest in Europe if it were formally included – has actually performed quite well this year,

Turkish GDP surged 11.7 percent year-on-year in the first quarter of 2010 -- the best pace since the second quarter of 2004 -- after posting a 6 percent advance in the fourth quarter of 2009.

Apparently, Turkey has so far been unhurt by growing economic woes in Western Europe, its biggest export market. (The Turkish economy, however, shrank 4.7 percent in 2009 – including a huge a 14-plus percent drop in the first quarter of that year – another victim of the global recession).

Trade Minister Nihat Ergun has forecast that Turkey's economy could grow as much as 8 percent in 2010, according to Turkey's Ihlas News Agency. (The International Monetary Fund expects Turkey to expand by a more modest 6.3 percent in 2010.)

Turkey boasts a tightly regulated banking system which has avoided the viral excesses of the global financial crisis. Unemployment is rather high, at 13.7 percent, but the Ankara government expects it to fall.

Holderith also notes that the Turkish Lira currently trades at about half the value of the Euro.

“If you want to buy a Mercedes Benz, it'll cost you twice as much, all things being equal, if you're in Turkey,” he said.

“The equalization of these two currencies – however, that would work -- could create an opportunity for the Germans, French and British to be able to sell to the Turks at a lesser price.”
Although this would benefit European manufacturers, Germany and France probably feel the trade-off is not worth the risk.

While the Turkish economy is accelerating, Shearing cautions that Turkey remains a relatively poor county and, if it were allowed to join the EU, would likely need substantial EU structural funds – which would not be politically popular.

To illustrate the status of the Turkish economy, Holderith explains that his company defines 'emerging market' as an economy with a GDP per capita of between $2,000 and $20,000. Turkey is currently at about $13,000. (By comparison, the U.S. is at $46,000, France and Germany are each in the low $40,000s, while China is at $8,000).

However, Holderith believes Turkey will eventually join the EU – though it may take up to the years.

“These Western European countries will eventually realize that they need to be closely tied with the faster-growing economies in their region,” he said.