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

European Commission - MEMO/07/447   06/11/2007

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MEMO/07/447

Brussels, 6 November 2007

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 progressing well.

Fourteen[1] out of 33 negotiation chapters have been opened so far. Out of these chapters, two have been provisionally closed[2]. For the opening of ten other chapters[3], opening benchmarks have been defined. The Commission hopes that Croatia will be able to meet outstanding benchmarks[4] shortly.

Political criteria

Croatia continues to meet the Copenhagen political criteria. Implementation of strategies for reforming the judiciary and fighting corruption has continued. The case backlog before the courts has been reduced. Some first results are appearing in the fight against corruption. Croatia has taken further steps to address problems of minorities and, to a lesser extent, refugee return. Full cooperation with ICTY has continued. Croatia ratified the new Central European Free Trade Agreement (CEFTA), and has continued to participate actively in regional cooperation, for example in the establishment of the new Regional Cooperation Council.

However, considerable challenges remain in key areas, such as reform of the inefficient judicial system, public administration reform and fighting corruption, which remains widespread. Increased attention needs to be paid to minority rights, especially refugee return. The prosecution of war crimes requires further attention. Further regional cooperation is vital, as are efforts to solve outstanding bilateral problems with neighbours, especially on border delimitation.

Economic criteria

As regards economic criteria, Croatia is a functioning market economy. It should be able to cope with competitive pressures and market forces within the Union in the medium term, provided that it implements its comprehensive reform programme with determination in order to reduce structural weaknesses. Economic growth has increased and macroeconomic stability was maintained. The general government deficit was reduced significantly. Inflation remained low. Private investment picked up further. Employment rose and the business environment improved. The stability of the financial sector increased. The government's economic policy capacity was further strengthened

However, rising external imbalances can become a risk. Structural reforms, including the restructuring of the shipbuilding and steel sectors moved forward only slowly. State intervention in the economy remained significant. Inefficiencies in public administration and the judiciary continued to hamper private sector development. The external debt has not been reduced, highlighting the need for tighter fiscal policies.

EU legal order

Croatia has improved its ability to take on the obligations of EU membership. Preparations for meeting EU requirements are moving forward at a steady pace and alignment with EU rules is high in some sectors. However, significant efforts lie ahead in order to reach full alignment. In most areas there has been some progress, principally in terms of legislative alignment but also as regards administrative capacity building. In some chapters such as transport and environment, good progress made in previous years has been sustained. In other chapters such as public procurement and taxation, progress has remained limited. As regards the overall level of alignment and administrative capacity, much remains to be done.

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 has taken some further steps to meet the political criteria. The implementation of the Ohrid Framework Agreement continues to contribute to the consolidation of democracy and the rule of law. Some progress has been made in the reform of the judicial system and some encouraging results have been achieved in the fight against corruption. Overall, human rights and the protection of minorities, including inter-ethnic relations have improved.

However, continuing political tensions in the country are delaying reforms. The dialogue between all parties within the Parliament needs to be conducted in peaceful and constructive manner. It needs to be ensured that all political stakeholders play the role foreseen by the Constitution and cooperate to guarantee an effective democratic process. In that way further progress can be achieved in essential areas like the police and the judiciary, the consolidation of the rule of law, as well as the protection and promotion of the rights of the non majority communities. In addition, corruption remains widespread. The country has continued to participate actively in regional co-operation and given its support to the South East Europe Co-operation Process (SEECP), the Regional Co-operation Council and the amended Central European Free Trade Agreement (CEFTA).

Economic criteria

The Former Yugoslav Republic of Macedonia is well advanced in, and has further moved towards establishing a functioning market economy. It should be able to cope with competitive pressures and market forces within the Union in the medium term, provided that it vigorously implements its comprehensive reform programme in order to reduce significant structural weaknesses.

The country has maintained a broad consensus on economic policies. Its policy mix has contributed to macroeconomic stability. The country's growth has been solid, while inflation has remained low. The current account was close to balance. Price and trade liberalisation are largely completed, and the privatisation has continued. Property registration has been accelerated. Measures have been taken to improve the quality of education and training.

However, unemployment has remained particularly high. The functioning of the market economy is still hampered by institutional weaknesses. The judiciary continues to be a bottleneck. Regulatory and supervisory agencies are not always able fulfil their functions effectively. The degree of legal certainty is still low. Labour markets are still functioning poorly.

EU legal order

The Former Yugoslav Republic of Macedonia has made further efforts to improve its ability to assume the obligations of membership. There was some progress in the fulfilment of the short term priorities of the European partnership. However, the country still faces major shortcomings in implementing and effectively enforcing legislation. Adequate human and financial resources to fully implement the Stabilisation and Association Agreement are lacking. Large scale replacement of qualified staff following political changes hampered efforts to improve administrative capacity.

Turkey

EU accession negotiations began with Turkey on 3 October 2005 and remain on track.

Four[5] out of 33 negotiation chapters have been opened so far. One chapter[6] has been provisionally closed. In addition, opening benchmarks have been set as conditions for opening negotiations on 14 chapters[7]. The Commission hopes that Turkey will be able to meet further benchmarks shortly, so that additional chapters can be opened.

Political criteria

Turkey continues to sufficiently fulfil the Copenhagen political criteria. Turkey has overcome smoothly its political and institutional crisis. Early parliamentary elections were held in full respect of democratic standards and of the rule of law. The election of the President by Parliament in August took place in accordance with the Constitution and a new government was established swiftly. Democracy prevailed in a crisis in civil-military relations.

There has been some progress in legislative reform of the public administration, and some progress has been made in improving the efficiency of the judiciary. More action has been taken to improve women's rights. The reported number of cases of torture and ill-treatment continued to decrease. Turkey has made progress on the ratification of international human rights instruments and in implementing the European Court of Human Rights (ECtHR) judgements.

However, there was limited progress on political reforms in 2007. Significant further efforts are needed on freedom of expression and on the rights of non-Muslim religious communities. Further progress is needed on the fight against corruption, , the judicial system, trade union rights, children's and women's rights, cultural rights, as well as civilian oversight of the security forces.

It is now important that the new government takes immediate action on these priority areas. Freedom of expression and freedom of religion are the most urgent issues, on which we want to see the government take action without delay. There has been a further increase in terrorist attacks by the PKK, which is on the EU list of terrorist organisations. It is crucial that Turkey and Iraq continue to tackle this problem through cooperation between the relevant authorities and by respecting international law. There remains a need for Turkey to address the serious economic and social problems of the South East. Turkey also maintained its restrictions on direct transport links with Cyprus.

Economic criteria

Turkey can be regarded as a functioning market economy. It should be able to cope with competitive pressure and market forces within the Union in the medium term, provided that it implements its comprehensive reform programme to address structural weaknesses.

Economic growth remained robust, due to higher exports, and business confidence was strong. A strong lira and fiscal discipline have reduced the public debt. The central bank has been conducting a cautious and responsible monetary policy. Foreign direct investment grew sharply, notably in the form of purchases of Turkish companies by foreign entities, and has played a greater role in reducing risks related to macroeconomic imbalances.

However, a tax relief and higher infrastructure spending led to a fiscal loosening in 2007. Inflationary pressures have increased. Structural rigidities in the labour market and fiscal pressure on labour hamper job creation in the formal sector, in particular for the employment of women.

EU legal order

Turkey has further improved its ability to take on the obligations of membership. Owing to Turkey's non compliance with its obligations related to the additional protocol to the Ankara Agreement in December 2006, the EU decided to freeze eight chapters of the negotiations, but to continue with the other chapters.

Progress was made in most areas, in particular in the chapters on free movement of goods, financial services, trans-European Networks, and science and research. However, alignment needs to be pursued, in particular in areas such as, free movement of services, state aid, agriculture, fisheries, food safety, veterinary and phytosanitary policies, and environment. Fulfilment of short-term priorities under the Accession Partnership is lagging behind in many areas.

EU Financial Assistance under the Instrument for Pre-Accession Assistance (IPA)[8] for the candidate countries

Pre-acc. Assistance envelopes, in Є Million
2007
2008
2009
2010
2011
Total
2007-2011
Croatia
141.2
146.0
151.2
154.2
157.2
749.8
Former Yugoslav Rep. of Macedonia
58.5
70.2
81.8
92.3
98.7
401.5
Turkey
497.2
538.7
566.4
653.7
781.9
3037.9
Total
696.9
754.9
799.4
900.2
1037.8
4189.2


[1] 12 open chapters: Right of establishment and freedom to provide services, Company law, Intellectual property law, Financial services, Information society and media, Economic and monetary policy, Statistics, Enterprise and industrial policy, Consumer and health protection, Customs union, Financial control, External relations

[2] Opened and provisionally closed: Science and research, Education and culture.

[3] Public procurement; competition policy;Justice, Freedom and Security; Social policy and Employment; Free movement of capital; Free movement of goods; Agriculture; Environment; Food safety; regional policy); opening benchmarks were agreed by Council and communicated to Croatia. At this stage, the Commission considers only the opening benchmark on justice, freedom and security to be met.

[4] Benchmarks are a new tool introduced as a result of lessons learnt from the fifth enlargement. Their purpose is to further improve the quality of the negotiations, by providing incentives for the candidate countries to undertake necessary reforms at an early stage. In general, opening benchmarks concern key preparatory steps for future alignment with the EU's legal order, such as strategies or action plans. Closing benchmarks primarily concern legislative measures, administrative or judicial bodies, and a track record of implementation of EU laws and standards.

[5] Statistics, enterprise and industrial policy, financial control

[6] Science and Research

[7] Free movement of capital, Public procurement; Intellectual property rights, Competition policy; Agriculture, Taxation, Employment and Social policy, Customs union, Company law, Free movement of services, Food safety, Free movement of goods; Environment, Financial services.

[8] MEMO/06/410 frequently asked questions on IPA


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