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Turkey Country Brief

Bilateral Relations

Overview

Australia and Turkey have a productive and steadily developing relationship, with substantial dialogue across a wide range of issues, frequent high-level visits and expanding bilateral trade and investment.

Formal bilateral relations between Australia and Turkey commenced with the signing of a bilateral agreement on assisted migration in 1967 and exchange of Ambassadors in 1968. Since the 1990s, a mutual desire to boost trade and investment ties has led to the strengthening of the relationship.

The relationship with Turkey has grown rapidly since 2005 when the former Prime Minister, Mr Howard, and his Turkish counterpart, Mr Erdoğan, visited each other’s country.  These visits were followed by many ministerial visits in both directions. Over the past two years Australia and Turkey have also signed a number of bilateral agreements. In March 2006, Australia opened a new consulate in Çanakkale (the province in which Gallipoli is located) to provide consular assistance to the growing number of Australians who visit the Anzac battle sites each year.

Community Links

In 1967, Turkey and Australia signed a bilateral agreement on assisted migration. In contrast to the Turkish guest-worker schemes in Europe, Australia offered migration to whole families, as permanent migrants. The program resulted in an increase of the Turkey-born population in Australia from 1,544 at the 1961 Census to 11,589 in 1971. Most members of the Turkey-born community in Australia are Muslims, mainly of the Sunni and Alevi sects. The 2006 Census showed that 59,393 Australian residents claimed Turkish descent, with 30,495 of those having been born in Turkey.

Both Australia and Turkey regard the 1915 Gallipoli landings as an event of particular significance in their modern histories. Every year a large number of Australian and Turkish citizens attend commemorative services at Gallipoli. Approximately 10,000 Australians attended the 92nd Anniversary Commemorative Services in 2008.

Bilateral Agreements

An agreement on the residence and employment of Turkish citizens in Australia was signed in 1967. An Agreement on Economic Co-operation was signed in 1988. An Extradition Treaty entered into force in 2003. An Investment Promotion and Protection Agreement was signed in June 2005. A Work and Holiday Visa Arrangement and an MOU on agricultural cooperation were signed in December 2005. A Defence Framework Agreement was signed in August 2006 during the visit of the former Turkish Chief of the General Staff, General Hilmi Özkök.  In February 2007, during the former Foreign Minister Alexander Downer’s visit to Ankara, Australia and Turkey signed a Memorandum of Understanding (MOU) on counter-terrorism cooperation and organised crime. In September 2008, Australia and Turkey signed an arrangement on cooperation in the fields of animal health and biosecurity.

High-Level Visits

(Note: Positions indicated in the list below were held at the time of the visits)

To Turkey

2008

2007

2006

2005

To Australia

2007

2006

2005

Political Overview

System of Government

Turkey’s political system is based on a separation of powers. The current President is Abdullah Gül, who was elected by parliament on 28 August 2007.

The Republic of Turkey has a unicameral parliament, the Turkish Grand National Assembly (TGNA), with 550 deputies (parliamentarians). Legislative power is vested in the Head of Government and a Council of Ministers (Cabinet) which usually numbers around 35. The Deputies are elected on a first-past-the-post system for a five-year term. Political parties must achieve a national threshold of 10 per cent of the vote to gain representation in the TGNA.

Political Developments

Mr Erdoğan's ‘Justice and Development Party’ (AKP), established in 2001 and first elected in 2002, was returned to power in the general election on 22 July 2007. With almost 47 per cent of the vote, AKP won 340 of the 550 seats in parliament, a majority which allows it to govern in its own right. Voter turnout for the election was high (around 80 per cent).

The only two other parties in the election to exceed the 10 per cent threshold of votes required for parliamentary representation were the Republican People's Party (CHP - 112 seats) and the Nationalist People’s Party (MHP - 71 seats). Also, 23 independent MPs associated with the pro-Kurdish Democrat Society Party (DTP) and four other independents were elected.

The separatist Kurdish Workers’s Party (PKK) called a truce to its 15 year insurgency after its leader, Abdullah Ocalan, was captured in February 1999. However, there was a resurgence in PKK terror attacks, including on tourists, when the PKK called off the cease-fire in mid-2004. The PKK has carried out a number of terrorist attacks within Turkey in the last three years and sporadic clashes between the PKK and the Turkish military in the east of the country continue.

Foreign Policy

Traditionally, Turkey's foreign relations have been structured around pro-Western alliances, its geo-strategic position and cultural and historical ties. The United States is a key foreign policy and security partner for Turkey. Turkey’s links with NATO are similarly important. Turkey has seen a particular role for itself in promoting East-West links supporting an “Alliance of Civilisations” initiative in the UN with Spain. Turkey maintains close relations with a number of European countries, including the UK and Germany, where a significant expatriate Turkish population resides.

Turkey is committed to play a role in decreasing tensions in the region including working for a solution in the Middle East peace process and restoring stability in Lebanon.

Turkey has a close historical relationship with Afghanistan and has twice led NATO’s International Security Assistance Force (ISAF) in Afghanistan. It has around 1200 troops in Afghanistan and operates a Provincial Reconstruction Team (PRT) in Vardak province. Turkey is committed to encouraging the governments of Afghanistan and Pakistan to cooperate more closely. The Turkish Government also deployed maritime and ground forces to the UNIFIL deployment in southern Lebanon in 2006, and contributed police to UN missions in East Timor.

Turkey regards Cyprus as an important national security issue and maintains a military presence in northern Cyprus. Turkey was supportive of the efforts of the UN Secretary-General to bring about a negotiated and peaceful settlement to the dispute in Cyprus and was disappointed with the results of the April 2004 referenda in which Turkish Cypriots supported the plan while Greek Cypriots rejected it.

Further foreign policy focus for Turkey is its complex relationship with neighbouring Greece. Issues include the divided island of Cyprus, disputed territorial claims in the Aegean, the extent of the continental shelf (Turkey has declined to sign the Law of the Sea Convention), the treatment of ethnic Turks in Greece, and issues relating to Turkish laws governing religious minorities.

Turkey maintains strong relations with Russia, Georgia, Bulgaria and other Black Sea countries and is a leader in the Black Sea Economic Cooperation (BSEC) forum. Turkey acts as an important link in the East-West Energy Corridor bringing the Caspian energy to Europe and world markets.

EU Accession

Turkey has long sought full entry into the European Union (EU) and achieved a Customs Union with it at the beginning of 1996. In October 2005, six years after declaring it a candidate for membership, the EU opened accession negotiations with Turkey. Four chapters have been opened for negotiation so far, and one of them has been provisionally closed. In December 2006 the EU decided to suspend 8 of the 35 chapters on the agenda for Turkey’s accession negotiations due to Turkey’s failure to open its ports and airports to the Republic of Cyprus, a necessary requirement to extend Turkey’s customs union with the EU to the member states who joined in 2004.

Economic Overview

Turkey is currently the 17th biggest economy in terms of its total GDP. A major economic reform program was started within the scope of an IMF stand-by arrangement, following the economic crisis in 2001. Successful implementation of the stand-by program accompanied by structural reforms saw the vulnerabilities in the economy decrease and have made the economy more attractive for foreign investment.

Unemployment and underemployment are still major problems. Income disparities and regional disparities are also large, which remain as major problems to be addressed. The unemployment rate is currently around 10 per cent.

Although manufacturing overtook agriculture in the 1980s as the major contributor to GDP, agriculture continues to play a major role in the Turkish economy, especially in employment. Agriculture accounts for around 9 per cent of GDP and 27 per cent of employment. There is a substantial unregistered economy, with estimates of its value ranging from 20 per cent to 50 per cent of economic activity.

Turkey is the EU’s 7th biggest trading partner and its 13th source of imports. EU countries take over 50 per cent of Turkey’s exports and provide almost 50 per cent of imports.

Economic Developments

Following a major economic crisis in 2001, when the economy contracted by 9.5 per cent, the Turkish economy grew on average by around 7.5 per cent per annum between 2003-2006. In 2007 GDP growth was 4.5 per cent.

The current account deficit in 2007 stood at around 5.7 per cent.

The reduction in inflation in Turkey has been a major achievement in the past few years, with annual average rate of inflation declining from around 80 per cent in the 1990s to around 8.7 per cent in 2007, the lowest for the last 35 years.

Banking, social security and taxation reforms continue. Social security reform aims to reduce the pension deficit to less than 1 per cent of GDP over the long term. Tax reforms, including personal income tax, VAT, corporate tax and financial intermediation tax, aim to improve efficiency, reduce incentives to remain in the informal economy, and offset expected structural decline in revenues as interest rates and revenues from financial intermediation taxes decline. Financial sector reforms include adoption of a new banking law, strengthening of banking regulatory and supervisory authority, and restructuring and privatisation of state banks.

Bilateral Economic and Trade Relationship

In 2007 two-way trade was around A$970 million, which was an increase by around 16 per cent in comparison to the previous financial year. Australian exports to Turkey were just below A$576 million and imports were A$394 million.

Australia’s exports to Turkey are largely commodity-based, and include sales of coal, aluminium, non-monetary gold and lead. In recent times, there have been some successes in diversifying exports, including with the sale of a number of fast ferries to the Istanbul municipality.

The conclusion of a health protocol for breeding cattle between Australia and Turkey permits the export of live breeding cattle to Turkey. The first shipment of live cattle exports from Australia since 1996 arrived in Turkey in May 2007.

Australia’s imports from Turkey are dominated by dried fruits and nuts, goods and passenger vehicles.

The level of two-way investment between Australia and Turkey is relatively small. Australian companies are pursuing opportunities brought about by a growing Turkish market and privatisation programs.

There is potential for greater services trade, particularly Australian participation in the education and training sector in Turkey.

Last reviewed date: 09/09/2008