Turkey has had a customs union with Europe since 1996, and there's free trade in everything other than farm products and services. And Turkey has shown that it can compete. It's good at making cheap goods - household appliances, food, detergents, cheap clothes. And they make a lot of white goods, cheap TVs, washing machines, electric appliances, steel, and, recently, auto parts. And Turks are gradually moving into IT.

As things change in Turkey people find in religious observance a certain framework of safety, of continuity. This is quite a common phenomenon. In a strange way it's part of a democratization of society. Although religious observance seems more common these days, it's not that people who did not go to mosques have started to go to mosques. I don't know anyone in Turkey who's become a born-again Muslim. It's a question of individual choice, and it does not stop the organic secularization of Turkish society, which carries on regardless.

Turkey's relations with its immediate neighbors are improving. They were pretty bad for a long time - with Syria they were abominable, and with Iran they were pretty bad. In both cases Turkey sees potential for trade, especially with Iran, where it gets a lot of natural gas. In good times Iran and Turkey find mutually profitable objects of exchange, but with Syria things have been very bad; Syria doesn't have much money and never will.

There's opposition in Europe to Turkish membership because these are the inevitable fears of energetic, poorer, Muslim outsiders who will come in and work hard and take jobs. There's also a fear that under E.U. rules Turkey might get a disproportionate amount of cohesion funds and agricultural subsidies - although it's quite clear that Europe is changing its rules, and that there will not be very much in the way of net transfers of resources from Europe to Turkey.

There are of course economic advantages to having Turkey as a member of the European club. It's a developing country with a large, reasonably well-trained labor force at a time when the European birth rate is dropping at a catastrophic rate and Europe is graying. It offers opportunities for greater trade and investment to the benefit of both Turkey and Europe.

I'm optimistic about Turkey's prospects for reaching the E.U.'s standards of development, governance, and democracy, whether inside or outside the E.U. Provided you have a prosperous, rational society in Turkey that can interact with Europe and the West, I don't really care what kind of institutional arrangement you have. The point to make about Turkey and Europe is that it's a very long, drawn-out process. What's important is that the process not be stopped, that Turkey and Europe evolve in the right direction, on a path of convergence. Convergence is the name of the game.

Historically Turkey hasn't had much success in attracting foreign investment. Slowly that is changing. There's a tradition of arbitrary decisions by government ministers and senior civil servants, which would ruin businesses from one day to the next, and which has tended to deter foreign investment. That's changing, and convergence with E.U. practices is a good thing in that it improves governance.