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Economy - overview

Turkey's economy is increasingly driven by its industry and service sectors, although its traditional agriculture sector still accounts for about 30% of employment. An aggressive privatization program has reduced state involvement in basic industry, banking, transport, and communication, and an emerging cadre of middle-class entrepreneurs is adding dynamism to the economy. Turkey's traditional textiles and clothing sectors still account for one-third of industrial employment, despite stiff competition in international markets that resulted from the end of the global quota system. Other sectors, notably the automotive, construction, and electronics industries, are rising in importance and have surpassed textiles within Turkey's export mix. Oil began to flow through the BakuTbilisi-Ceyhan pipeline in May 2006, marking a major milestone that will bring up to 1 million barrels per day from the Caspian to market. Several gas pipelines also are being planned to help move Central Asian gas to Europe via Turkey, which will help address Turkey's dependence on energy imports over the long term. After Turkey experienced a severe financial crisis in 2001, Ankara adopted financial and fiscal reforms as part of an IMF program. The reforms strengthened the country's economic fundamentals and ushered in an era of strong growth - averaging more than 6% annually until 2008, when global economic conditions and tighter fiscal policy caused GDP to contract in 2009, reduced inflation to 6.3% - a 34-year low - and cut the public sector debt-to-GPD ratio below 50%. Turkey's well-regulated financial markets and banking system weathered the global financial crisis and GDP rebounded strongly to 7.3% in 2010, as exports returned to normal levels following the recession. The economy, however, continues to be burdened by a high current account deficit and remains dependent on often volatile, short-term investment to finance its trade deficit. The stock value of FDI stood at $174 billion at year-end 2010, but inflows have slowed considerably in light of continuing economic turmoil in Europe, the source of much of Turkey's FDI. Further economic and judicial reforms and prospective EU membership are expected to boost Turkey's attractiveness to foreign investors. However, Turkey's relatively high current account deficit, uncertainty related to policy-making, and fiscal imbalances leave the economy vulnerable to destabilizing shifts in investor confidence.

GDP (purchasing power parity)

$960.5 billion (2010 est.) $887.7 billion (2009 est.) $931.4 billion (2008 est.) note: data are in 2010 US dollars

GDP (official exchange rate)

$741.9 billion (2010 est.)

GDP - real growth rate

8.2% (2010 est.) -4.7% (2009 est.) 0.7% (2008 est.)

GDP - per capita (PPP)

$12,300 (2010 est.) $11,600 (2009 est.) $12,300 (2008 est.) note: data are in 2010 US dollars

GDP - composition by sector

agriculture: 9.6% industry: 26.7% services: 63.8% (2010 est.)

Population below poverty line

17.11% (2008)

Labor force
25.64 million

Turkey - Economic forecast summary

Very strong growth in early 2011, driven by private consumption and investment, has been curbed by credit containment policies and deteriorating global conditions. As a result, real GDP growth is projected to slow to 3% in 2012. It is set to recover in 2013 as the external environment improves. The sharp exchange rate depreciation in 2011 should gradually help rebalance domestic and external demand and narrow the large current account deficit, which by mid-2011 approached 10% of GDP. On the other hand, it may also put upward pressure on already high inflation.

For decades, Turkey has been told it was not ready to join the European Union that it was too backward economically to qualify for membership in the now 27-nation club.
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That argument may no longer hold. Today, Turkey is a fast-rising economic power, with a core of internationally competitive companies turning the youthful nation into an entrepreneurial hub, tapping cash-rich export markets in Russia and the Middle East while attracting billions of investment dollars in return. For many in aging and debt-weary Europe, which will be lucky to eke out a little more than 1 percent growth this year, Turkeys economic renaissance last week it reported a stunning 11.4 percent expansion for the first quarter, second only to China poses a completely new question: who needs the other one more Europe or Turkey? The old powers are losing power, both economically and intellectually, said Vural Ak, 42, the founder and chief executive of Intercity, the largest car leasing company in Turkey. And Turkey is now strong enough to stand by itself. It is an astonishing transformation for an economy that just 10 years ago had a budget deficit of 16 percent of gross domestic product and inflation of 72 percent. It is one that lies at the root of the rise to power of Prime Minister Recep Tayyip Erdogan, who has combined social conservatism with fiscally cautious economic policies to make his Justice and Development Party, or A.K.P., the most dominant political movement in Turkey since the early days of the republic. So complete has this evolution been that Turkey is now closer to fulfilling the criteria for adopting the euro if it ever does get into the European Union than most of the troubled economies already in the euro zone. It is well under the 60 percent ceiling on government debt (49 percent of G.D.P.) and could well get its annual budget deficit below the 3 percent benchmark next year. That leaves the reduction of inflation, now running at 8 percent, as the only remaining major policy goal. This is a dream world, said Husnu M. Ozyegin, who became the richest man in Turkey when he sold his bank, Finansbank, to the National Bank of Greece in 2006. Sitting on the rooftop of his five-star Swiss Hotel, he was looking at his BlackBerry, scrolling down the most recent credit-default spreads for euro zone countries. He still could not quite believe what he was seeing. Greece, 980. Italy, 194 and here is Turkey at 192, he said with a grunt of satisfaction. If you had told me 10 years ago that Turkeys financial risk would equal that of Italy I would have said you were crazy.

Having sold at the top to Greece, Mr. Ozyegin is now putting his money to work in the east. His new bank, Eurocredit, gets 35 percent of its profit from its Russian operations. Mr. Ozyegin represents the old guard of Turkeys business elite that has embraced the Erdogan government for its economic successes. Less well known but just as important to Turkeys future development has been the rapid rise of socially conservative business leaders who, under the A.K.P., have seen their businesses thrive by tapping Turkeys flourishing consumer and export markets. Mr. Ak, the car leasing executive, exemplifies this new business elite of entrepreneurs. He drives a Ferrari to work, but he is also a practicing Muslim who does not drink and has no qualms in talking about his faith. He is not bound to the 20th-century secular consensus among the business, military and judicial elite that fought long and hard to keep Islam removed from public life. On the wall behind his desk is a framed passage in Arabic from the Koran, and he recently financed an Islamic studies program just outside Washington at George Mason University in Fairfax, Va., where Mr. Erdogan recently spoke. Whether he is embracing Islam as a set of principles to govern his life or Israeli irrigation technology for his sideline almond and walnut growing business, Mr. Ak represents the flexible dynamism both social and economic that has allowed Turkey to expand the commercial ties with Israel, Russia, Saudi Arabia, Iran and Syria that now underpin its ambition to become the dominant political actor in the region. Other prominent members of this newer group of business executives are Mustafa Latif Topbas, the chairman and a founder of the discount-shopping chain BIM, the countrys fastest-growing retail chain, and Murat Ulker, who runs the chocolate and cookie manufacturer Yildiz Holding. With around $11 billion in sales, Yildiz Holding supplies its branded food products not just to the Turkish market but to 110 markets globally. It has set up factories in Kazakhstan, Pakistan, Saudi Arabia and Ukraine and now owns the Godiva brand. The two billionaires have deep ties to the prime minister Mr. Erdogan once owned a company that distributed Ulker-branded products, and Mr. Topbas is a close adviser but the trade opportunities in this part of the world are plentiful enough that a boost from the government is now no longer needed.

In June, Turkish exports grew by 13 percent compared with the previous year, with much of the demand coming from countries on Turkeys border or close to it, like Iraq, Iran and Russia. With their immature manufacturing bases, they are eager buyers of Turkish cookies, automobiles and flat-screen televisions. This year, for example, the countrys flagship carrier, Turkish Airlines, will fly to as many cities in Iraq (three) as it does to France. Some of its fastest growing routes are to Libya, Syria and Russia, Turkeys largest trading partner, where it flies to seven cities. That is second only to Germany, which has a large population of immigrant Turks. In Iran, Turkish companies are building fertilizer plants, making diapers and female sanitary products. In Iraq, the Acarsan Group, based in the southeastern town of Gaziantep, just won a bid to build five hospitals. And Turkish construction companies have a collective order book of over $30 billion, second only to China. On the flip side, the Azerbaijani government owns Turkeys major petrochemicals company and Saudi Arabia has been a big investor in the countrys growing Islamic finance sector. No one here disputes that these trends give Mr. Erdogan the legitimacy both at home and abroad to lash out at Israel and to cut deals with Iran over its nuclear energy, moves that have strained ties with its chief ally and longtime supporter, the United States. (Turkey has exported $1.6 billion worth of goods to Iran and Syria this year, $200 million more than to the United States.) But some worry that the muscle flexing may have gone too far perhaps the result of tightening election polls at home and that the aggressive tone with Israel may jeopardize the defining tenet of Turkeys founder, Mustafa Kemal Ataturk: peace at home, peace in the world. The foreign policy of Turkey is good if it brings self-pride, said Ferda Yildiz, the chairman of Basari Holding, a conglomerate that itself is in negotiations with the Syrian government to set up a factory in Syria that would make electricity meters. Even so, he warns that it would be a mistake to become too caught up in an eastward expansion if it comes at the expense of the countrys longstanding inclination to look to the West for innovation and inspiration. It takes centuries to make relations and minutes to destroy them, he said.

Turkey is a traditional partner, and even more traditional rival at Russia's southern borders. This 70,000,000-strong country is part of NATO, and the Turkic and Muslim people in Russia are the subject of Turkish "courtship." Russia should be concerned about the strengthened power of the Turkish army that is already one of the top ten in the world. Today, the Turkish army is the most organized, numerous and powerful state institution. Turkish army of half a million soldiers is the largest in size after the United States in the NATO military bloc. The Ministry of Defense of Turkey has five divisions: Air Force, Navy, The Army, Gendarmerie, and the Coast Guard. Particular attention is paid to the creation of the modern Turkish arms. The efforts of the Turkish defense industry are aimed at developing and building their own aircraft, armored vehicles, tanks, and various electronics and missile weapons. Turkish Aerospace Industries Company is engaged in the development and manufacture of aircraft under license. The objective of this venture is the creation of unmanned aerial vehicles. It is important to note that most of the products produced by Turkish military companies are purchased by the national armed forces, and purchase volumes are constantly increasing. The Turkish fleet is larger than the fleet of any other country in the Black Sea due to the presence of new submarines and ships. The foundation of the current Army was laid in 1920 by the founder of the Turkish Republic, Mustafa Kemal Ataturk. The armed forces are the guardians of the republican regime and secular values, separation of Islam from the state. The formation of the army took place in the country's harsh defeat in World War I, when a major contribution to the emergence of the modern Turkish army was made by Soviet Russia. The Republic of Turkey at the end of the World War I has experienced the devastation and foreign intervention, and was not recognized by the world. Vladimir Lenin decided to help the young breakaway republic with gold and weapons. The far-sighted policy of Ataturk, who argued that Turkey shares the sympathies of Soviet Russia to socialism and intends to conduct an uncompromising struggle against the Entente, played its role. As a result, the new Turkey in 1923 gained international recognition, and Atatrk was very

grateful to Soviet Russia for military assistance. He often visited the Soviet Embassy, and the members of the Soviet delegation were sitting next to him in the military parades as honored guests. The beginning of history of Turkish aviation refers specifically to the 1920s, when many Turkish pilots were sent to the Soviet Union where they were taught by the best pilots and trained in the Soviet parachute centers. After the death of Ataturk in 1938, the army, as his brainchild, became the bearer of the ideas of secular government and democracy. Today, even the political opponents of Atatrk ideas do not dare to openly criticize him, the army, or the republic, because these three concepts have merged together for the Turks, and, touching one of them you automatically touch the others. Ataturk bequeathed to his country under no circumstances to engage in European military power. The Turkish leadership must be commended for not tempting fate and not sending the Turkish army to the fronts of World War II. The country has kept the army, and in 1945, while the rest of Europe was in ruins, it was relatively prosperous. However, later Ataturk's will was violated when, yielding to the pressure of various political circles, Prime Minister Adnan Menderes decided to "test the strength of the army", sending it to Korea in 1950 as a member of national contingents in the UN. After providing the "assistance" to the Western countries, Turkey was accepted in NATO. It was justified by the fact that the USSR posed a greater threat to the sovereignty of the republic, and that the goal was to strengthen the army and repel possible aggression from the Soviet Union. In 1974 the Turkish army has demonstrated its preparedness when on early morning of July 20 the naval and air forces of the trained airborne units landed in Cyprus. The army of the "Greek" Cyprus was defeated in a day. Turkish aircraft bombed the airport in Nicosia, Cyprus National Guard barracks and armored units. Marines landed in Kyrenia and blocked the ports of Larnaca and Limassol. The official reason for the invasion of Cyprus was the overthrow of President Makarios by coup and the massacre of his supporters. Fearing ethnic cleansing of Turkish Cypriots, the Turkish Chief of General Staff Sanjar ordered the operation "to establish peace in Cyprus." Despite the fact that the status of Northern Cyprus (TRNC) remains open, the Turkish Army

that brilliantly conducted the operation must be commended. In the 21st century, the Turkish military were involved in peacekeeping operations under the auspices of the UN and NATO. They are stationed in Kosovo and Bosnia - provinces that once belonged to the Ottoman Empire. The Turks are fighting mainly on their territory with detachments of separatists from the Kurdistan Workers' Party. Today, there are increasingly more assumptions that Turkey is seeking domination in the Islamic world and creation of "Ottoman Empire-2." These assumptions are in fact are not unfounded. In Istanbul, in particular, public institutions adorn the coat of arms of the Ottoman Empire, along with a portrait of Ataturk. President Abdullah Gul and Prime Minister Recep Tayyip Erdogan are doing everything to diminish the army's political role in the country. According to the amended constitution, the ruling Justice and Development Party need not fear a military coup. At the same time the Turkish army is very strong. Due to the geographical position of Turkey, its role is enormous. The country takes great interest in the political process in the Middle East and Arab world (in the context of the "Arab spring"). In addition, in the southeast Turkey an American missile defense system has been launched. At some point in time, Russia and Turkey were at war with each other over 30 times. Now the Turks are actively "courting" the representatives of Muslim, particularly the Turkic peoples of Russia. Turkey is seeking to increase its influence in the Caucasus, Central Asia and the Crimea. Finally, the Turkish army is one of the pillars of NATO. Today, Russia should pay special attention to its southern borders, where the powerful Turkish army is located.

There has been an investment in Turkeys think-tank business in the last eight years since the Justice and Development (AK) Party came to power. Foundations and institutes have expanded and become more independent. They have smart English websites, glossy English publications, and some have swanky offices. All are keen to assert their clean funding. Another element of Turkeys new soft power. Tesev (Turkish Economic and Social Studies Foundation) founded in 1994 in Istanbul and known for its liberal views, pro-individual choice, against state influence used to be the only research institute of note. It is now one of many. Among them are the Global Political Trends

Centre (GPoT), established as a research unit under the auspices of Istanbul Kultur University in 2008, and Bilgesam (or Wise Men) Centre for Strategic Studies, founded 2007. Ozdem Sanberk, former deputy foreign minister and ambassador to the EU and UK, is a founding member of the Bilgesam (he was previously a director of Tesev). The Wise Men are all retired civil servants, academics or military. Bilgesam isnt as liberal as Tesev, said Sanberk, but I wouldnt call our Wise Men Kemalists. They have social democratic leanings and an idea of the role of the state, they are secular, but they dont reject AKP policies. The idea is to research sensitive issues and make policy recommendations. Funding comes from Anatolian businessmen. Its aimed at the urban middle-class people who are the new agents of change in Turkey; the future of secularism rests with this class, and with civilians, as the military return to their barracks and withdraw from public life," said Sanberk. "Its a real metamorphosis, and Bilgesam and all these other think-tanks are there to encourage and accompany this change. Its one of the healthiest developments in Turkey." The new Ankara think-tanks now have the most clout, however. A favourite, SETA (Foundation for Political, Economical and Social Research), chose a prime ministerial visit to inaugurate its Washington office in December. SETA, which is privately funded by a group of young businessmen, is believed to have much influence with the government. Its founding director, Ibrahim Kalin, happens to be chief foreign policy adviser to the prime minister (a position held by his mentor, Ahmet Davutoglu, until his appointment as Turkeys foreign minister last May). Kalin, like Davutoglu, is an academic: an expert in Islamic philosophy, with a PhD from George Washington University, and a faculty member of Georgetown University (both in Washington DC). Bigger in size than SETA, and housed in a handsome building in the centre of Ankara, is USAK (International Strategic Research Organisation), founded in 2004 with a focus on security. Sedat Laciner, its director, explained the reason for this growth industry: Universities werent able to play their full role in the days of military coups or work on sensitive issues. He says there are now some 50 think-tanks; USAK is one of the three or four most important ones, and one of the biggest. "We call ourselves liberal and patriotic. The AKP government defends values we support. But we only support policies as we see fit. Professor Ihsan Bal of the Police Academy, also from USAK, talked of the new interest in soft power: We used to be proud of the military. Now were proud of business; Turkish business people have started going round the world. And tourists are coming here. A vibrant middle class is driving the economy: the AKP inherited all this. Big business is represented by the influential association Tusiad (Turkish Industrialists and Businessmens Association), which acts as a think-tank and produces policy reports. The Anatolian businessmen who grew in importance in the 1980-90s during the presidency of Turgut Ozal have a parallel association, Musiad (Independent Industrialists and Businessmens Association). They have been joined by a newer group, Tuskon (Confederation of Businessmen and Industrialists of Turkey), founded in 2005 and representing businesses in Anatolia. Tusiads

secretary-general, Zafer Yavan said: Tuskon is active in Africa. And with globalisation, there may be important openings there. Turkey doesnt have money to invest in Africa, like China does, but it can export and trade. Ibrahim Kalin added: Businessmen, journalists, writers, artists, civil society, think-tanks: all these non-state actors are becoming increasingly important. Turkey has long had a very active civil society. The key is to coordinate state and civilian input; and a healthy convergence is now in place, and growing. All this is contributing to Turkeys soft power. Our definition of soft power stresses regional, geographic and cultural elements: look at the success of the TV soap Noor (1); and the tourists from the region who flock here to share our cultural heritage; and the culture of food, music, handicrafts and so on shared from the Balkans to Baku. Turkey is at the centre of all this; and its the only soft power of significance in the region.

.S. Secretary of State Hillary Clinton called on Turkey to leverage its growing economic power to promote democracy and prosperity at home and among its Middle East neighbors and to repair its damaged relationship with Israel.
To succeed, the Arab political awakening must also be an economic awakening, Clinton said tonight in Washington at an annual conference on U.S.-Turkey Relations, according to a text of her speech. Clinton urged Turkey to wield economic leadership as a powerful force for progress across the region. Clinton will make her third trip to Istanbul as secretary of state later this week, where she plans to attend a regional conference on Afghanistan and meet with her Turkish counterpart, Foreign Minister Ahmet Davutolu. The Obama administration wants to boost access for new democracies to U.S., European and Turkish markets and to open the door for those countries who adopt high standards of reform and trade liberalization to construct a free, open and integrated trade and investment area, Clinton told the American-Turkish Council, a group of business leaders dedicated to promoting U.S.-Turkish cooperation on commerce, defense, technology and culture. Clinton also said the U.S. was dismayed by the deterioration of ties between Israel and Turkey, one of the few Muslim nations to recognize the Jewish state. At Low Point Relations between Turkey and Israel are at a low point following the killing of Turkish activists by Israeli commandos during a May 2010 raid on an aid ship bound for the Gaza Strip. Turkish Prime Minister Recep Tayyip Erdogan suspended military ties with Israel and downgraded diplomatic relations last month after Israel refused to apologize for the incident. Still, government ministers and business leaders in both nations said commercial ties shouldnt be affected, and trade between the two countries is on the rise.

The Turkey-Israel relationship has served both countries well over the years, Clinton said, praising both sides for leaving the door open to reconciliation and noting that Israel has sent mobile housing units to help relief efforts following the Oct. 23 earthquake in eastern Turkey that the government said has claimed 601 lives. We continue to urge both countries to look for opportunities to get this important relationship back on track, Clinton said. Growing Role Clinton welcomed Turkeys growing role in the region and on the world stage and reiterated U.S. support for Turkey joining the European Union. Turkeys economy has tripled in size in the last decade to the 17th largest in the world, Clinton noted, saying that a strong U.S.-Turkey relationship has contributed to this prosperity. The U.S. believes Turkeys new economic power enables it to play a leadership role in helping Arab and North Africans nations affected by democratic uprisings, she said. Increasing trade between the countries of the region would help them diversify their economies, create new opportunities for young people and support democratic development, she said. Clinton also urged Turkey to enhance political freedom for its own citizens. For Turkey to take full advantage of its new opportunities, it will have to consolidate democratic progress at home, she said, citing the need for ongoing constitutional reform and greater human rights for all Turkish citizens -- including the right to speak and worship freely. Clinton also praised Coca-Cola Co. (KO), Cisco Systems Inc. (CSCO) and Intel Corp. (INTC) for promoting entrepreneurship in Turkey.

Turkey: The growing power

Gavin Hewitt | 17:32 UK time, Wednesday, 30 March 2011

In the era of awakenings, upheavals and revolutions: watch Turkey. It has become a hugely ambitious country, bristling with self-belief. In a turbulent Middle East it believes it is the democratic role model. It eyes the role as spokesman for the region as a whole. When disputes need to be settled, it offers itself as the mediator. The State Minister and Deputy Prime Minister Cemil Cicek summed it up: "Everybody has to see Turkey's power."

Over Libya it is the country that the West watches more carefully than any other. For the moment, Turkey is supporting Nato's campaign whilst refraining from joining in any attacks on Gaddafi's ground forces. It is holding itself back, ready to step forward as the indispensable locator when the hour of negotiation approaches. On the Libyan conflict it has flipped and flopped however. Early on, the Turkish Prime Minister Recep Tayyip Erdogan denounced any Western intervention as "absurd". He raised fears of a "second Iraq". Turkish officials seemed to lash out at what they portrayed as an oil grab by the West. They picked a fight with the French interior minister Claude Gueant who unwisely said the French President was leading a "crusade" to stop Gaddafi's barbarism. He didn't mean it of course in the historical sense but Turkish officials pounced on the tongue-slip. That was then. Now Turkey is committing five or six vessels to police the arms embargo and is running Benghazi airport to co-ordinate humanitarian assistance. Turkey wanted to disguise its hand, to see which way the battle flowed. Twenty thousand of its citizens work in Libya and it has lucrative contracts there. Commercial self-interest made it cautious. The u-turn was driven by the realisation that the international community, including the Arab League, was determined that the killing of civilians had to stop. Turkey had two positions. Firstly, it would not attack Gaddafi's forces directly. Secondly, it was fiercely opposed to a coalition, led by France, setting the agenda. Its problem with France is simple. President Sarkozy is against Turkey joining the EU as a full member. Ankara feels insulted and it is easy to meet Turkish officials with a mouthful of rage against the French president. So Turkey wanted the operation run under Nato, where it has a role in decision-making and drafting the rules of engagement. Its position is hard-headed. "We are one of the very few

countries that is speaking to both sides," said one official. It waits for that moment when the mediator is summoned on to the field of play. On the turmoil in the Arab world, Turkey has sold itself as the role-model. Early on it urged Hosni Mubarak to stand down. Many of the Egyptian demonstrators wanted Egypt to be like Turkey; secular yet certain of its Muslim identity but with free elections. When the killings started in Syria, Prime Minister Erdogan was immediately on the phone. "I have made two calls to President Assad in the last three days and I have sent top intelligence official to Syria. I have called for a reformist approach." It is all skilfully balanced; on the side of reform but keeping a hand in with the man in power. Sometimes it seems Turkish officials are everywhere. Such as when the prime minister shows up in Baghdad. It is Turkish goods and companies that so far have conquered Iraq's markets. With the prime minister were 200 businessmen. President Ahmadinejad of Iran may be isolated, but not with Turkey. Ankara has again positioned itself as the deal-maker. There is also the not-so-small matter of $10 billion in trade with Tehran. Turkey has also helped shine its credentials in the Middle East with a major row with Israel over the interception of a boat heading for Gaza. Turkish citizens died in the incident. So Turkey's sphere of influence widens but, even so, there are the problems. Since 2005 it has been engaged in accession talks with the EU. For the moment they are going nowhere. President Sarkozy and Chancellor Merkel favour instead of membership "a privileged partnership". Turkey wants none of it and seethes with resentment. Some - but not all - in the EU are wary. There are 24 million without work in Europe and the appetite for enlargement has dimmed. Not everyone is convinced that a Muslim country should be in the EU. It would be difficult to have Turkey join without its people being consulted. Turkey knows this and asks the searching question: "Is the EU a Christian Club or is it the address of a community of civilisations? The current picture shows the EU is a Christian Club. This must be overcome." It touches a raw nerve. But plenty in Europe ask whether Turkey would accept becoming a community of civilisations. You could sense the strains and tensions when recently Prime Minister Erdogan went to Germany, where two million people of Turkish origin live. He caused huge offence when he told an audience in Dusseldorf: "Our children must learn German but they must learn Turkish first." It was an open challenge to the German government which had been insisting that those who live in Germany must speak the language and integrate. The German chancellor opined that multiculturalism had failed because it led to separation. There is, too, friction over Cyprus, and the disturbing detentions of reporters and writers. It forced the European Commission to warn Turkey over its democratic credibility.

And then there are the doubts as to how committed the ruling party is to secularism. Recently Ayse Sucu, who headed a woman's group, was squeezed out after suggesting women themselves should decide whether to cover their hair. There is an ongoing struggle within Turkey which will demonstrate its commitment to tolerance. That, more than anything, will determine whether it is indeed a role model. But Turkey is on a roll. Sometimes - irritated at being rebuffed - it contemplates abandoning its pursuit of EU membership. It survived the economic downturn and its growth is an enviable 5%. It may prefer to go it alone and, like the Ottomans, revel in newfound influence. But when it comes to Libya, Turkey demands to be listened to. And the West needs Turkey on side.