Turkey’s prime minister poured scorn on Tuesday on the European Union’s decision to freeze part of Ankara’s membership negotiations despite attempts by the EU to limit the fallout from its controversial decision.

“This decision is unfair to Turkey,” Recep Tayyip Erdogan told parliament. “Turkey-EU relations are going through a serious test, despite all our efforts.”

His comments came a day after EU foreign ministers agreed to suspend talks on eight out of 35 negotiating topics because of Ankara’s refusal to meet the bloc’s demands on Cyprus.

Diplomats and commentators said they had rarely heard Mr Erdogan sound so gloomy about the EU. Much of the reaction in Turkey to the partial freeze was hostile and aimed at the EU rather than Cyprus, which Turkey does not recognise. “Is the EU a strategic dwarf?” the newspaper Milliyet asked in a front-page editorial.

The EU’s decision is a big setback for Mr Erdogan’s government, particularly as it comes despite an offer by Ankara last week to establish some trading ties with Cyprus. The offer was prompted at least in part by domestic policy issues, with Mr Erdogan keen to neutralise Cyprus as a political football ahead of presidential and parliamentary elections next year.

But the move has backfired. The opposition accused him of selling out to Cyprus, and the military and the president complained of not being informed. That undermined any hope Mr Erdogan had of convincing the EU that Ankara was really serious about its offer.

“The way it was handled did not help the Turkish cause [in Brussels],” said Suat Kiniklioglu, who runs the Ankara office of the German Marshall Fund of the United States. Instead, he said, it had played into rising political infighting at home. Parliament elects a president next May – a position Mr Erdogan is said to covet – and his government faces a general election by November.

Turkish financial markets reacted with relative calm. Stocks closed slightly lower and the lira was stable.

Analysts said the mood among investors was that the EU outcome could have been worse. Tolga Ediz, an economist at Lehman Brothers, said Turkey’s EU membership prospects, which he said were never an important driver of investor
sentiment, “should disappear from the market agenda for now”, a prospect
that he described as “a welcome relief” in a note to investors.

Ankara’s allies in the European Commission and among member states argue that the partial freeze clears the way for four to five years of productive negotiations on Turkey’s membership, instead of the total deadlock that has prevailed since July.

That theory is set to be tested in the coming days – and the key role will be played by Cyprus. At stake is whether the negotiation process continues, albeit with reduced horizons, or whether new problems appear, further damaging relations between Brussels and Ankara.

Diplomats say Cyprus and Greece have prevented the EU from beginning talks with Turkey on four to six negotiating topics, with the result that the talks have not advanced at all since July. But, since this week’s decision says that only eight of 35 negotiating “chapters” should be put on hold, it implies that other topics currently frozen because of the trade dispute should go ahead.

Yesterday Olli Rehn, EU enlargement commissioner, said a new push to unblock the negotiations could come as early as this week.

Cyprus and Greece have pronounced themselves satisfied with this week’s decision. There is still uncertainty on whether Cyprus will abandon its efforts to block Turkey’s wider EU entry talks.

The Commission, however, does not expect any breakthrough on the issue of Cyprus itself until after Greek Cypriot elections in 2008.

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