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Capital Markets

EU approval prompts hopes and fears

Turks of all classes were jubilant about the European Commission's decision last month that their country was ready to negotiate for EU membership. But it soon became apparent that this implied further substantial reform. Sceptics point out reforms already written into law are barely being implemented.

Turkey zeroes in on the New Year

LAST MONTH'S RECOMMENDATION from the European Commission that Turkey is ready to begin formal negotiations to join the European Union, pending a final December endorsement, has boosted Turkish markets and triggered new signs of foreign direct investment.

The EC's final "progress report", published on October 6, has sparked a spirit of optimism at times bordering on euphoria, despite profound concerns about the long list of reforms that Turkey still has to make. It is a mood that has not been seen in at least a decade as the country continues with policies that have cut inflation and convinced many observers that this time economic stability is not a mirage.

"With the supportive news from the European Union, Turkey's prospects are the best since at least 1994 and, I would argue, the best in 30 years," says Faruk Turkoglu, a macro-economist who has written several books on the Turkish economy. "The next 10 years can be the years of the fastest growth in the country's history – if we don't somehow mess things up."

October 7 newspapers trumpeted the report with banner headlines, some businesses hung out the EU flag, and the report from Brussels was for a while the only topic of conversation everywhere from corporate suites to curbside shoe-shine stands.

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