Turkey markets hit by EU entry uncertainty
Recent trends in Europe have made the success of Turkey’s efforts to gain membership in the European Union look increasingly uncertain.
Talks toward that goal between Turkey and the EU are scheduled to begin on October 3 and could last 10 years or more.
One factor that might make Turkey’s bid to join the EU more difficult is the defeat of German chancellor Gerhard Schröder’s party in last weekend’s elections there. Mr. Schröder is a supporter of Turkey’s bid, but the leader of the Christian Democratic Union, which is likely to return to power, is not in favor of Turkey’s membership in the EU.
Since every EU government will eventually have to approve Turkey’s application for membership, a change in Germany’s government could hurt Turkey.
Elsewhere, polls are predicting that France will not approve the European constitution when the country votes on the issue on Sunday. A rejection of the constitution by France could hurt efforts to add more members to the EU.
All of this has hurt Turkey’s economy, sending the stock market there down and lowering bond prices.
After Germany’s announcement of an early election, Turkey’s stock index fell 4.5 percent on Monday and a further .77 percent on Tuesday. Prices on the benchmark bond, to mature in 2006, fell while yields rose from 17.67 percent to 17.88 percent.
In a new auction on Tuesday an issue of 20-month bonds were sold to yield 17.71 percent, while similar bonds sold last month had a yield of 17.26 percent.