Turkey's EU bid: follow the money

By Paul Taylor, European Affairs Editor - Analysis

BRUSSELS (Reuters) - Turkey's bid to join the European Union offers a bonanza for European business, but not for everyone.

European companies have already invested 16 billion euros ($23 billion) in the EU's biggest candidate country. Tens of billions more are expected as Turkey, growing at 5-7 percent a year, modernizes its infrastructure and privatizes key sectors.

Yet while German trade and investment are booming, French business is suffering a backlash over President Nicolas Sarkozy's hostility to Turkish membership of the bloc.

"France has lost contracts to Germany, the UK, Spain, Italy and Greece because of its constant Turkey-bashing discourse," says Bahadir Kaleagasi, Brussels representative of the Turkish Industrialists' and Business Association (Tusiad).

The latest blow came last week when state-controlled Gaz de France GAZ.PA was shut out of a consortium to build the 5 billion euro ($7.3 billion) Nabucco gas pipeline from Turkey to central Europe in favor of German utility RWE (RWEG.DE) (RWEG.DE) at Ankara's behest.

Turkey earlier awarded a big military helicopter order to an Italian firm rather than French-based aerospace group EADS (EAD.PA) after the French National Assembly voted to make it a crime to deny the killing of Armenians in Ottoman Turkey in 1915 was genocide.

That bill has yet to become law, and Laurence Parisot, head of French employers' movement MEDEF, has lobbied to prevent its passage through the upper house of parliament.

Across Europe, the business community supports Turkey's EU accession process, even in countries such as Germany and Austria where opinion polls show majority public opposition to the idea.

Yet business leaders acknowledge their voice is muted due to political sensitivities.

"We are in favor of a strong economic relationship," says Philippe de Buck, secretary-general of BusinessEurope, the main umbrella organization for EU business. "But the political issues are not for us to judge. It's not up to us to judge membership."

Executives see the sprawling NATO member on the hinge of Europe and the Middle East as a giant market of 71 million consumers, with a booming economy, plentiful cheap labor and major modernization needs.

"Turkey ... has a gigantic economic potential," Parisot told Reuters. French companies with major investments there include carmaker Renault (RENA.PA) and supermarket chain Carrefour (CARR.PA).

"What we tell our Turkish opposite numbers is 'keep moving forward in the negotiation process with Europe and don't ask all the time whether Europe wants your accession or not'," she said.

"We'll see how the accession dynamics turn out in 10 years' time. In the meantime, above all let us not make it harder on either side to work together."

The European Commission is trying to use the talks to coax Turkey into opening its markets wider to European firms.