Turkiye, the EU’s ‘Made in Europe’ drive, and a region on edge after Iran |
The European Union’s long-delayed “Made in Europe” plan is no longer just an industrial policy debate inside Brussels. It has evolved into a geopolitical inflection point-one that directly affects Turkiye, reshapes supply chains across the Mediterranean, and now unfolds against the backdrop of a dramatically altered Middle East following the reported US-Israeli strike on Iran and the death of Ali Khamenei.
For Ankara, this is not an abstract regulatory adjustment. It is a strategic moment that could determine whether Turkiye remains embedded in Europe’s industrial ecosystem or is gradually pushed to its periphery.
The “Made in Europe” initiative is part of a broader industrial push under the European Commission led by Ursula von der Leyen. Designed to reinforce the bloc’s competitiveness against the United States and China, the plan aims to introduce a stronger “European preference” in public procurement and state aid in strategic sectors-renewables, batteries, vehicles, steel, and clean technologies.
At its heart lies a simple proposition: European taxpayers’ money should support European industrial capacity.
The policy emerges amid intensifying global competition. Washington’s Inflation Reduction Act and Beijing’s heavy state support for industry have placed European firms at a structural disadvantage. The EU’s response is to build industrial resilience, shorten supply chains, and encourage production within its borders.
Yet, as straightforward as this sounds, the implications are complex. The EU’s 27 member states are divided. Countries such as the Czech Republic, Sweden, Ireland, and others have raised concerns about protectionism, competition distortion, and higher consumer prices. Germany-the EU’s industrial powerhouse-has reportedly floated a softer alternative: “Made with Europe,” which would extend eligibility to countries with close trade and economic partnerships.
That distinction-“in” versus “with”-matters enormously for Turkiye.
Over the past two decades, Turkiye has become deeply embedded in European supply chains through nearshoring. In sectors such as automotive manufacturing, machinery, steel, textiles, and defense components, Turkish production capacity complements European design and capital.
Turkiye’s Customs Union with the EU has facilitated this integration. Additionally, frameworks such as the Pan-Euro-Mediterranean Cumulation of Origin system enable value-added processes across borders to qualify under preferential trade arrangements. Turkish policymakers argue that these agreements justify extending the geographic scope of “Made in Europe” to include countries like Turkiye.
Ankara’s lobbying strategy is clear: inclusion or alignment.
Exclusion would be costly. If EU preferences are strictly limited to production within EU territory (plus the European Free Trade Association states), companies might be incentivized to relocate manufacturing back inside the bloc. Such reshoring would not happen overnight-it is capital-intensive and logistically complex-but over time it could marginalize Turkiye’s role.
In contrast, a “Made with Europe” framework would preserve Turkiye’s position as an indispensable manufacturing partner.
The automotive sector illustrates the stakes. The EU has already signaled a shift toward stricter domestic production requirements, including a 70 percent EU-origin threshold for certain incentives. Simultaneously, climate targets under the Net-Zero Industry Act and related legislation require a growing share of low-emission vehicles-40 percent by 2030 and 75 percent by 2035.
These targets extend beyond final vehicle assembly to suppliers of batteries, steel, and components. For Turkish firms integrated into European automotive supply chains, compliance with environmental and technological criteria will become non-negotiable.
If Turkiye remains inside the EU’s preferred ecosystem, its manufacturers could benefit from expanded clean-tech investment, battery production, and raw material partnerships. If not, European procurement policies may gradually privilege competitors inside the bloc.
All of this was already strategically significant. But the situation has shifted dramatically following the attack on Iran and the reported death of Ali Khamenei.
Iran’s internal succession process introduces profound uncertainty. Even if institutional continuity is maintained, regional stability is far from guaranteed. Energy markets, maritime routes, and proxy conflicts could all experience renewed volatility.
For the EU, this reinforces the logic of strategic autonomy. Dependence on unstable regions for energy, raw materials, or industrial inputs is politically untenable. For Turkiye, however, the calculus is more nuanced.
Geographically and politically, Turkiye straddles Europe and the Middle East. It maintains economic ties with the EU while navigating complex relationships with Iran, Russia, and Gulf states. A destabilized Iran could have several implications for Ankara:
Energy Corridors:Turkiye is a transit hub for energy flows into Europe. Any disruption in Iranian production or regional transport routes could increase Turkiye’s strategic leverage-but also its exposure to risk.
Security Spillovers:Escalation across the region could strain Turkiye’s security environment, affecting trade routes and investor confidence.
Diplomatic Positioning:As a NATO member with an independent foreign policy, Turkiye may seek to position itself as a stabilizing intermediary-potentially enhancing its strategic value to the EU.
In this new context, the EU’s industrial strategy cannot be divorced from geopolitics. A more volatile Middle East may strengthen the argument inside Brussels for consolidating production strictly within EU borders. But it could also highlight the value of reliable neighboring partners like Turkiye.
Another pillar of the EU’s plan is the establishment of a European Critical Raw Materials Center, aimed at coordinating procurement and reducing external dependence in sectors such as batteries, defense, and AI chips.
This is where strategic autonomy intersects with global supply competition. China dominates many critical mineral processing chains. The EU’s response is diversification and joint purchasing.
Turkiye, while not a major critical mineral exporter on the scale of Australia or Chile, does possess certain mineral resources and processing capabilities. More importantly, it offers geographic proximity and logistical connectivity between Europe and resource-rich regions in Central Asia and the Middle East.
If Brussels adopts an inclusive “Made with Europe” approach, Turkiye could integrate more deeply into this ecosystem. If the framework remains restrictive, Ankara may intensify partnerships elsewhere.
European and Turkish companies alike are wary of rigid geographic definitions. Multinational manufacturers operate through complex cross-border value chains. A hardline “Made in Europe” model risks fragmenting these networks.
From a corporate perspective, predictability is paramount. Investment decisions in automotive plants, battery gigafactories, or steel decarbonization facilities are measured in decades, not electoral cycles. Uncertainty over eligibility for EU incentives could delay or redirect capital flows.
For Turkiye’s private sector, alignment with EU environmental, social, and technological standards will be essential regardless of formal inclusion. Decarbonization is no longer optional; it is a market access requirement.
The immediate aftermath of Iran’s leadership shock introduces an additional layer of unpredictability. Regional escalation could disrupt energy markets and investor sentiment. Conversely, a controlled transition in Tehran might limit turbulence.
For the EU, the momentum behind industrial consolidation is unlikely to dissipate. The political logic of strengthening domestic capacity has broad support. The unresolved question is whether the EU defines “European” narrowly or strategically.
For Turkiye, the path forward involves three parallel tracks:
Diplomatic Engagement:Sustained lobbying to secure inclusion under a flexible interpretation of origin rules and partnership frameworks.
Regulatory Alignment:Accelerated compliance with EU climate and industrial standards to remain competitive.
Strategic Diversification:Maintaining alternative trade and investment channels to hedge against exclusion.
In an era defined by economic securitization and geopolitical fragmentation, industrial policy is no longer merely about competitiveness. It is about alliances.
The “Made in Europe” debate, once a technical argument over procurement thresholds, now sits at the intersection of supply chains and security architecture. Turkiye’s future role will depend less on rhetoric and more on how convincingly it positions itself as indispensable to Europe’s resilience.
And in a region newly unsettled by events in Iran, resilience-industrial and geopolitical alike-has become the defining currency of power.
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