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MEMO/06/411

Brussels, 8 November 2006

Key findings of the progress reports on the candidate countries: Croatia, the former Yugoslav Republic of Macedonia and Turkey

Croatia

EU accession negotiations began with Croatia on 3 October 2005 and are continuing.

Political criteria

Croatia continues to meet the Copenhagen political criteria and the political situation has continued to improve. Implementation of strategies for reforming the judiciary and fighting corruption has begun. Croatia has moved forward on minorities and refugee return, albeit at a slow pace. Full cooperation with ICTY has continued. The conduct of war crimes trials in Croatia has improved. Croatia continues to play a positive role in regional cooperation.

However, reform is at an early stage and there is considerable scope for improvement in the judiciary, public administration and in the fight against corruption. Further progress is essential in the protection of minorities, on refugee return, and in the conduct of war crimes trials, including witness protection. Further regional cooperation is vital, as are efforts to solve outstanding bilateral problems with neighbours, especially on border demarcation.

Economic criteria

As regards economic criteria, Croatia can be regarded as a functioning market economy. The country should be able to cope with competitive pressures and market forces within the Union in the medium term, provided that it vigorously implements its reform programme to remove the significant remaining weaknesses. inflation is low, the exchange rate stable, fiscal consolidation has continued and growth has accelerated slightly. Private investment has risen, the banking sector has continued to grow and unemployment has declined. Road infrastructure has improved and competition increased in the telecommunication sector.

However, significant and rising imbalances in the trade and current accounts and a high external debt constitute potential risks to macroeconomic stability. The pace of structural reforms has generally been slow. Subsidies to loss making enterprises continued, while state intervention in the economy remained significant. Reforms need to be implemented vigorously.

EU legal order

Croatia has improved its ability to take on the obligations of membership. In most areas there has been some progress, mainly in terms of legislative alignment. Implementing capacity has also been improved.

However, in many cases enforcement is weak and administrative capacity remains uneven. Progress has varied considerably between different policy areas. As regards the overall level of alignment and administrative capacity, much remains to be done. Considerable and sustained efforts will be needed in a number of chapters such as free movement of capital, competition policy, public procurement, agriculture, justice freedom and security, judiciary and fundamental rights and environment.

Pre-Accession Assistance

The EU will continue to provide significant pre-accession financial assistance to support Croatia. A total of €140 million has been allocated to Croatia in 2006.

The former Yugoslav Republic of Macedonia

The former Yugoslav Republic of Macedonia obtained the status of candidate country in December 2005.

Political criteria

The former Yugoslav Republic of Macedonia is well on the way to satisfy the political criteria. It has pursued political reforms in 2006, although at a slower pace. To some extent, this is due to formation of a new government. Steps were taken to allow for sound parliamentary elections. Still, irregularities occurred and major efforts will be needed to ensure that standards are fully met at the next elections. An important reform of the judicial system has been initiated, and needs to be fulfilled. The decentralisation process has moved forward. The country has continued to play a positive political role in the region.

However, the country should step up its efforts in a number of areas. Additional efforts will be needed to build consensus in order to achieve further progress and pursue the implementation of the Ohrid Framework Agreement. A constructive dialogue among all political parties is needed to ensure the proper functioning of the institutions. It will allow for the smooth implementation of reforms such as in the police, the judiciary, and the decentralisation. Concrete results in the fight against corruption remain to be achieved, which will require strong political will and the full implementation of the legal framework. Large scale changes occurred in the administration. The independence and professionalism of the state administration, as well as administrative capacity, need to be strengthened.

Economic criteria

The country is well advanced in establishing a functioning market economy. The country has maintained a broad consensus on the essentials of economic policies. Macroeconomic stability and predictability have further increased. Inflation has remained under control. Barriers to market entry and exit have been reduced by simplifying and accelerating registration and bankruptcy procedures.

However, institutional weaknesses remain, such as cumbersome administrative procedures, corruption, as well as a low degree of legal certainty, affecting the business climate and a proper functioning of the market economy.

Labour and financial markets are functioning badly, and the informal sector distorts the economy. Continued stabilisation and reform efforts are needed to enable the country to cope with competitive pressure and market forces within the Union in the medium-term.

EU legal order

The country has made some progress. New legislation and the establishment of new institutions constitute progress. Progress has been made, notably on some areas concerning the internal market.

However, the country still faces major challenges in implementing and effectively enforcing the legislation. It needs to intensify its efforts in areas such as agriculture, food safety, competition, environment, justice, freedom and security. Customs fees, which were in breach of the Stabilisation and Association Agreement, have been abolished. The telecommunications market has not yet been liberalised and intellectual property rights are not yet adequately protected to allow the country to fully meet its SAA obligations.

Pre-Accession Assistance

The EU will continue to provide significant financial assistance to support the former Yugoslav Republic of Macedonia. In 2006, € 43.6 million pre-accession assistance is available for this country.

Turkey

EU accession negotiations began with Turkey on 3 October 2005 and are continuing.

Political criteria

Although Turkey continues to sufficiently fulfil the Copenhagen political criteria and has pursued political reform, the pace has slowed during the past year and significant further efforts are needed. Some elements of the 9th reform package, which were part of the short term priorities under the Accession partnership, like the law creating an ombudsman or the law on settlements (which addresses the situation of the Roma people), were adopted, and preparation on the ground, like training of judges and prosecutors, is ongoing. However, most of the short-term priorities of the Accession Partnership remain to be met. Additional efforts need to be made to assert civilian control over the military. As regards fundamental rights, elements of the revised Penal Code need to be amended to adequately protect freedom of expression. Efforts should also be made in the areas of freedom of religion and economic and social rights, in particular women's and trade union rights. There is a need for Turkey to address the serious economic and social problems of the South East and ensure full enjoyment of rights and freedoms by the Kurdish population. Turkey also maintained its restrictions on direct transport links with Cyprus.

Economic criteria

Turkey continues to be regarded as a functioning market economy, as long as it firmly maintains its recent stabilisation and reform achievements. Turkey should also be able to cope with competitive pressure and market forces within the Union in the medium term, provided that it firmly maintains its stabilisation policy and takes further decisive steps towards structural reforms. Progress has been made in the adoption of new legislation and the establishment of new institutions.

However, administrative capacity needs further strengthening, and in many cases there is a need for more commitment and resources.

EU legal order

Turkey has improved its ability to take on the obligations of membership. In most areas some progress was made. However, fulfilment of short-term priorities under the Accession Partnership is lagging behind in many areas.

When assessing the overall alignment of Turkish legislation to the EU legal order clearly much remains to be done. Some areas related to internal market are fairly advanced, partly due to commitments under the Customs Union, such as the free movement of goods, customs, and trade. Alignment is also fairly advanced in areas like intellectual property law, antitrust, transport, enterprise and social policy. In other areas, alignment remained limited, particularly as regards services, capital movement, company law, agriculture, and environment. In most areas, much further improvement in the institutional and administrative capacity is needed to also implement the EU’s laws and standards.

Pre-Accession Assistance

The EU will continue providing significant financial assistance to support Turkey. In 2006, €500 million pre-accession assistance is available for Turkey.


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