At the end of this week there will be a ceremony in the southeastern Turkish port of Ceyhan to mark the first tanker to be loaded with the oil that has been piped over a thousand kilometres from Baku in Azerbaijan. One of the most ambitious and controversial energy schemes in the world is finally coming to completion. It will transport the oil wealth of central Asia to hungry world markets, bypassing the increasingly capricious Russia.

And this huge pipeline, whose course runs through zones of chronic political and seismic instability across the Caucasus, is only the beginning of how Turkey is exploiting its old strategic and geographic advantages to develop a web of pipelines for oil and gas, stretching from Asia into the heart of Europe. Plans for a gas pipeline across Turkey, under the Aegean to Greece and eventually to Italy, are well advanced. The reserves of Turkmenistan and Kazakhstan will soon be linked to energy-hungry Europe.

Turkey is offering Europe a cornucopia of dazzling possibilities as the pipelines are laid and the economy booms. Not surprising then that the Turkish and western European political and economic elites feasting at last week's Forum Istanbul - the Turkish equivalent of the Davos World Economic Forum - are chorusing heartily from the same hymn sheet. It was a lovefest as participants got giddy on the dream of a utopian future in which Muslims and secularists happily co-exist, ancient enmities between Christian and Muslim are reconciled, and Turkey pioneers a way forward beyond "clash of civilisations" simplicities.

Sound a bit far-fetched? Plenty of Kurds, Armenians and Greek Cypriots would snort with derision. But Istanbul has that kind of intoxicating impact on many. It is a city whose history is steeped in the exchange of civilisations as well as their clash. Istanbul sits on a cultural fault line as well as a geological fault line, yet that has been a source of cross-fertilisation as well as conflict.

That cross-fertilisation is evident on the streets and the ferries criss-crossing the Bosporus. Women in headscarves walk arm in arm with peers sporting long flowing hair, tight T-shirts, jeans and trainers, and young women canoodle with their boyfriends or husbands - public displays of heterosexual affection inconceivable in any other Muslim culture. The promise held out in these commonplace Istanbul images are of an accommodation between western individualistic modernity and religious traditionalism.

This is now part of Turkey's sales pitch for its EU membership. "We can draw on our Ottoman past of a multi-ethnic empire which achieved a remarkable degree of religious tolerance, to help Europe reach an accommodation with its 15 million Muslim minorities," runs the spiel. "We don't just offer to keep your lights on, heat your hot water and provide young labour to pay for your ageing populations' pensions. We also offer a thousand years of experience in bridging cultures, in hybrid civilisations. We hold out Istanbul as a model for the cities of western Europe with large Muslim populations such as Birmingham, Rotterdam and Marseilles."

But what slowly dawns is the shrill undertone of this sales pitch and how it is chorused by Turks to convince themselves as much as anyone else. For this is a country that spent much of the 20th century poised precariously between secularism and political Islam. As both become more globally aggressive, it risks being torn between them.

That danger was brought sharply home last week when a gunman opened fire in a Turkish court, killing one judge and injuring four others. The assailant, a lawyer, subsequently explained his attack as revenge for the judge's ruling in a recent case that a teacher who wore a veil outside work should not be promoted to headteacher of a primary school. The ruling is in line with Turkey's strict interpretation of secularism. The state rules out veils in any public building (thus banning even the current prime minister's wife from public functions); yet it has always funded and closely regulated the country's Islamic worship.

The murder was a brutal reminder of just how much of this conflict is mediated through what women do or don't wear. Eavesdrop on conversations about the veil among Turks, and the complex and contested symbolism of covering female hair is mind-boggling. Is it a symbol of female oppression, political identity or puritanical piety - or a purely pragmatic response to the aggressive male sexuality of Turkey's burgeoning cities, fuelled by a steady supply of western porn? Could it be all of these to different people at different times?

Maintaining the ban, a sacred legacy of the revered father of Turkey, Ataturk, risks excluding a lot of girls from a university education and the labour market, while a relaxation of the ban risks alienating the powerful military, who regard themselves as the keepers of the Ataturk flame.

This murder will only confirm the fears of the secular Europeanised elite that Turkey's delicate balance of faith and secularism is unravelling. They feel beleaguered as the ruling Justice and Development party promotes the religious into positions of power. A wife in a headscarf has become an essential attribute for the ambitious Turk.

The secular elite is clinging to EU membership as the one hope of reversing this trend. If the process slows down - as it might well given such incidents as the fracas that has erupted between France and Turkey over a law proposed in the French legislature outlawing denial of the Armenian genocide - the reaction could prompt an intensification of Islamism.

The application to the EU is characterised by two ironies, neither of which is lost on Turks. Firstly, although Turkey pioneered secularism in the Muslim world, discussion in the EU of Turkey's application to join has focused on its 97% Muslim population. Secondly, although Turkey has finally resolved its decades-old identity crisis as to whether it is European or Asian - the majorities in favour of EU accession are substantial - Europe has now plunged into an identity crisis.

Much of the opposition to Turkish EU membership pivots on these ironies and the questions they prompt: is Europe a geographical or a cultural entity, and how do you define the boundaries of either? Nilufer Gole, a Turkish academic working in France, warns of the grave dangers of a narcissistic European Union obsessed by these questions of identity rather than motivated by the sense of project (initially, Franco-German peace) that gave birth to the EU and has sustained it. It's the project - of peace, of economic growth, of democracy and human rights - that appeals to Turkey, not indeterminate questions of identity.

An EU project that carved out a distinctive European engagement with Islam in which Turkey was a key partner would trounce Samuel Huntingdon's specious and self-fulfilling theory of a "clash of civilisations". Naked self-interest - those pipelines and pensions - will help drive this project forward. But I'm aware that many would attribute my enthusiasm to that intoxicating Istanbul effect of a city prickling with minarets above a sparkling blue sea.

By Madeleine Bunting

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