Germany Sees a Bright Future in Turkish Markets

In the 19th Century, Germans helped build the Baghdad Railway connecting Turkey to Iraq. Turkey remains an important trading partner today and German businessmen are eager to tap into the market of the future.

One of the stops on Chancellor Gerhard Schröder's brief trip through Turkey on Monday will be an enormous coal power plant near the Syrian border.

For the past three months the Steag plant has been supplying Turkey with 8 percent of its energy. Steag is a daughter company of Germany's coal and chemical producer RAG and the €1.2 billion ($1.5 billion) invested in the plant is the single biggest German investment in Turkey.

But it is by far not the only one. The Mediterranean country is not only politically interesting for Germany, but holds great economic potential as well. Fifteen top managers, from companies such as BASF, ThyssenKrupp and the Deutsche Bahn are accompanying Chancellor Schröder during his visit. There are already more than 1,000 Turkish-German companies in Turkey, making up 40 percent of all foreign investment in the country, according to the German Industry Association.

With Deutsche Bank to Baghdad

"This is a market of the future, and Germany needs to find other markets at the moment," Ahmet Güler, of the Alliance of European-Turkish Entrepreneurs Association, told DW-WORLD. "China and Turkey are growth markets."

Germany and Turkey already have historic economic ties dating back to the mid-19th century. In 1888, at the encouragement of German military men training the Ottoman army, Deutsche Bank headed a consortium that won the bid to build the Baghdad Railway which connected Europe to Asia Minor and the Middle East.

Today, Germany is Turkey's most important trading partner and last year, German exports to Turkey increased more than 25 percent, according to Güler.

Cars, machines and IT products, traditionally strong markets worldwide for Germany are in demand in Turkey, said Güler. More important, perhaps, is the access Turkey can provide German companies to the surrounding Middle Eastern regions.

"German business has a large interest in using Turkey as an opening into these other markets," said Güler, who is currently in Ankara with Schröder. The head of the German Industry Association, a proponent of Turkey's EU drive, is planning a trip to discuss business ties in April.

Democratic reforms tied to economic success

In exchange, Turkey is looking for German help in convicing the European Commission in December that it is ready to start EU membership negotiations. Until now, the EU has supported Turkey's reform drive but says there are still major problems in the areas of human rights and freedom of religion.

Schröder has said that a negotiation date will give Turkey the necessary resolve to complete further reforms, something that is crucial for bilateral trade ties as well. Turkey is aiming for membership some time in 2015.

"Turkey can only be a strong business partner if it elevates its democracy to EU standards," Güler said.

The European Union's expansion this May into Eastern Europe and the Mediterranean may serve as a testing ground for gauging the viability of Turkey's membership, according to the head of the German Trade Union Federation.

Anti-membership politicians from the German conservative opposition may repeat arguments over cheap labor flooding European markets and investment competition.

But union chief Michael Sommer is convinced of the long-term benefits. "There will be difficulties at the beginning," Sommer said. "But it will be good in the long term for German companies and workers, because there will be new markets."