Turkey's economy is growing, and the government is working to bring the economy up to European Union standards, analysts say. But experts attending a conference in Washington on Turkey's economic performance say much remains to be done, including curbing corruption, which one analyst says is deterring foreign investment.
Turkey's economy is growing at a 5.3 percent rate this year, and is expected to do nearly as well in 2004. The country's chronically high inflation rate is coming down, and should decline to 13 percent next year.
Reza Moghadam, an International Monetary Fund expert on Turkey, says the Ankara government is pursuing prudent economic policies, in part to meet the economic qualifications for joining the European Union.
"In terms of macro-economic policy-making, I think it is a huge impetus and a very important one at that," he said. "And there's another side to it, and that is institution building. We've seen over the last three or four years that there has been a move to put in place independent institutions."
Speakers at the conference agreed that, despite progress, Turkey has a long way to go to meet EU criteria for participation in monetary union. Turkey's debt level, interest rates, and inflation are far in excess of EU norms. Turkey's reformist government has put a high priority on EU accession, even though European governments have given no indication that its membership application will be treated favorably.
Consultant and Turkey specialist Charles Johnston says Turkey must overcome endemic corruption, in order to attract foreign investment.
"This has become corruption on a magnitude that makes the Mexicans look like pikers [small-scale operators]. And that is the problem," he said. "No one would go to Turkey and not expect to have some bakshish [bribe] involved in virtually anything you're doing. And yes, there is recognition there is traditional corruption. But it has become so profound, and the magnitudes are so mind-boggling that it has totally scared off Western business investment, unless you're from France and you're used to it."
Public disgust at corruption was a major reason that voters last November turned away from traditional political parties, and gave a landslide victory to an Islamist-based party, headed by Prime Minister Recep Tayip Erdogan. Since taking office, Mr. Erdogan has surprised some analysts by pursuing a moderate economic program, in line with the recommendations of the International Monetary Fund.