In June this year, President Bush and Prime Minister Erdogan talked of their new strategic relationship.

n October 3 Turkey gave a huge leap in its history: after intensive talks with the European Union, its members agreed to start negotiations for Turkey’s accession to the EU. In order to comply with the requirements, the ruling Justice and Development Party (AK), led by Prime Minister Recep Tayyip Erdogan, is introducing reforms across the board, providing Turkey with a much needed political and economic stability.

The government’s International Monetary Fund (IMF) led recovery program is making impressive progress: economic growth has averaged more than 5% a year and inflation has fallen to single-digit figures for the first time in the past three decades. Andrew Vorkink, the World Bank’s Country Director for Turkey, believes the government’s current efforts, backed by its reputation for honesty in public affairs, will bring in more investors.

Indeed, foreign investment is already on the rise, with foreign banks buying into their Turkish counterparts. “The banking sector in Turkey is one of the best monitored, regulated and transparent in the world,” says Tolga Egemen, Executive Vice-President of Garanti Bank.

With EU accession on the horizon as a driving incentive, Turkey is making a commendable economic recovery. To acquire candidate status, Turkey abolished the death penalty, allowed the use of the Kurdish language in schools and in broadcasting, and tightened civilian control over the army. Also, Turkey implemented its revised penal code (including more than 30 amendments that safeguard women’s rights) and amended its customs-union agreement with the EU to cover all new members, including Cyprus.

Turkey has also been streamlining certain aspects of the business climate to make it more investor-friendly. It is now focusing on increasing privatization – in the first nine months of 2005, privatization revenues reached $16.2 billion – and the redistribution of wealth.

Kürsad Tüzmen, Minister of Foreign Trade, emphasizes the country’s economic pluses. “We are very competitive in terms of skilled labor, young population and availability of materials,” he states.

Turkey’s volume of trade amounted to $160 billion in 2004, with nearly $64 billion of that in exports. Textiles and the automotive industry represent the bulk of Turkey’s exports, but other promising sectors are transportation and shipbuilding, software, and the fashion side of the textile and garment sector. Developing high technology is also seen as vital for the future of Turkey’s export industry.