Turkey, The Next Euro Member?

As a currency, the Euro is said to be headed for the gutters.

Yet there seem to be more chatters about having additional members.

Aside from Estonia, which officially adopts the Euro in 2011, (see previous discussion in Three More Reasons Why The Euro Rally Should Continue), now media is talking Turkey.

This from the New York Times, (bold highlights mine)

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.

That argument may no longer hold.

Today, Turkey is a fast-rising economic power, with a core of internationally competitive companies that are 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, Turkey’s 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?

chart from tradingeconomics.com

“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.

Indeed, 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, at 49 percent of G.D.P., and could well get its annual budget deficit below the 3 percent benchmark next year. That leaves reducing inflation, now running at 8 percent, as the only remaining major policy goal.”

So there you have it, Turkey’s turnaround has been due to…

fiscal conservative cautious policies (or reduced government spending)

and importantly,

“turning the youthful nation into an entrepreneurial hub” or the other way to say it is—greater economic freedom

Turkey’s leap to increased economic freedom can be seen in the chart above from the Heritage Foundation.

Now as for the Euro, qualified and able members should give her a boost and reduce the odds for her vanquishment.