# EUR-Lex - 52014DC0700 - EN

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# 52014DC0700

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Enlargement Strategy and Main Challenges 2014-15 /* COM/2014/0700 final */**

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Completing
the foundations for credibility

I. 
The
enlargement agenda — Achievements & Challenges

Over the past
five years, the Commission has strengthened the credibility of
enlargement policy and enhanced its transformative power by ensuring a
stronger focus on addressing fundamental reforms early in the enlargement
process. The Commission has put particular emphasis on the three pillars of rule
of law, economic governance and public administration reform.

In its
enlargement strategy Communication[1] in
2012 the Commission introduced a new approach to rule of law. In its 2013
Communication,[2] the
Commission set out a framework for strengthening economic governance, drawing
on the experience of the European Semester. This year, the Commission sets out
new ideas to support public administration reform in the enlargement countries.
These three pillars are interlinked and progress in these areas will be key to
determining when countries will be fully ready to join the EU.

The EU’s
enlargement policy contributes to mutual benefits of peace, security and
prosperity in Europe. It reinforces the EU’s political and economic
strength and has a powerful transformative effect on the countries concerned. A
well prepared accession process ensures enlargement is not at the expense of
the effectiveness of the Union.

The tenth
anniversary in May of the accession of ten Member States in 2004 is a reminder
of the progress achieved. As the EU expands so do opportunities for our
companies, financial investors, consumers, tourists, students and property
owners. Accession benefited both those countries joining the EU and the
established member states. Trade and investment have increased. The quality of
life of citizens has improved as EU environmental, consumer and other standards
apply more widely.

For the
countries of the Western Balkans, the clear perspective of EU membership
granted by the EU’s Member States is a key stabilising factor. It supports
progress towards fulfilment of the necessary conditions, including those of the
Stabilisation and Association Process. Good neighbourly relations and inclusive
regional cooperation are essential. There has been progress in this regard over
the past year, while some open issues still remain. Continuous efforts to
tackle bilateral issues among enlargement countries and with Member States,
including under UN auspices where relevant, and overcome the legacy of the past
are crucial in view of the history of this region so recently riven by
conflict.

The accession
process is rigorous, built on strict but fair conditionality, established
criteria and the principle of own merit. This is crucial for the credibility of
enlargement policy, for providing incentives to enlargement countries to pursue
far-reaching reforms and for ensuring the support of EU
citizens. For their part, Member States, together with the EU institutions,
should lead an informed debate on the political, economic and social impact of
enlargement policy.

***

The current
enlargement agenda covers the countries of the Western Balkans, Turkey and
Iceland. It has been a significant year for a number of the countries of the
Western Balkans:

Montenegro has
taken further steps in accession negotiations. Twelve chapters have been
opened. Implementation of rule of law reforms has started. Tangible results are
now needed and will be key to determining the overall pace of the accession
negotiations.

The opening of
accession negotiations is a turning point in the EU’s relations with Serbia.
Now Serbia needs to deliver on its reform priorities in a sustained manner as
the pace of negotiations will depend on progress in key areas, notably on rule
of law and the normalisation process with Kosovo*. New momentum needs to be generated in
the dialogue between Belgrade and Pristina in order to tackle key outstanding
issues and open a new phase in the normalisation of relations.

Albania was
granted candidate status in June as recognition for its reform efforts and
progress made in meeting the required conditionality. The country needs to
build on and consolidate the reform momentum and focus its efforts on tackling
its EU-integration challenges in a sustainable and inclusive way. Both
government and opposition need to ensure political debate takes place primarily
in parliament.

The initialling
of a Stabilisation and Association Agreement with Kosovo in July is
a major milestone in EU-Kosovo relations. Now Kosovo needs to deliver on key
reforms, in particular the rule of law.

The EU accession
process with the former Yugoslav Republic of Macedonia is at an
impasse. Action is needed to reverse recent backsliding, notably as regards
freedom of expression and of the media and the independence of the judiciary. There
is an urgent need to find a negotiated and mutually acceptable solution to the
name issue.
Government
and opposition should take steps to restore political dialogue in parliament.

Bosnia and
Herzegovina remains at a standstill on its European integration
path. Following the elections, it will be essential for the country to speak
with one voice, to tackle urgent socio-economic reforms and to progress on its
European agenda.

Implementation
of certain reform commitments by Turkey has continued, such as
the 2013 democratisation package, and steps have been taken towards a
settlement of the Kurdish issue. However, there have also been grounds for
serious concerns regarding the independence of the judiciary and the protection
of fundamental freedoms. Active and credible accession negotiations provide the
most suitable framework for exploiting the full potential of EU-Turkey
relations. Opening negotiations on the relevant chapters on rule of law and
fundamental rights would provide a roadmap for reforms in these key areas.

Following a
decision of Iceland’s government, accession negotiations have
been on hold since May 2013.

***

The Commission’s
approach of addressing fundamentals first prioritises reforms related to rule
of law and fundamental rights, economic governance and improving economic
competitiveness, and strengthening democratic institutions. This includes
public administration, which remains weak in most enlargement countries,
with limited administrative capacity, high levels of politicisation and a lack
of transparency. Strengthening the functioning of democratic institutions also
requires sound electoral processes and proper functioning of parliaments,
including constructive and sustainable dialogue across the political spectrum.
More needs to be done to foster an enabling environment for civil society
organisations. A strong civil society enhances political accountability and
promotes deeper understanding of accession related reforms.

Section II of
this Communication focuses on the key challenges and reviews progress in the
fields of public administration reform, economic governance and
competitiveness, and the rule of law and fundamental rights. Section III takes
stock of regional and bilateral issues, particularly in the Western Balkans.
Section IV sets out conclusions and recommendations on both horizontal and
country-specific issues.

In all the above
fields, the Commission aims to make maximum use of existing mechanisms and fora
to drive reforms forward, be it through Stabilisation and Association
Agreements (SAA) structures, the accession negotiations or Commission-led
targeted country-specific initiatives such as high-level dialogues or
structured dialogues on the rule of law. Such initiatives were further expanded
in November 2013 with the establishment of a high-level dialogue with Albania
on the key priorities. On public administration reform the Commission is
introducing a more structured dialogue and setting up ‘special groups’ with the
enlargement countries.

2014 has seen
the launch of the new Instrument for Pre-Accession Assistance (IPA II). Through
IPA II, the EU will provide EUR11.7 billion for the period 2014-2020 to
support the enlargement countries in their preparation for accession as
well as regional and cross-border cooperation. IPA II increases focus on
priorities for EU accession in the areas of democracy and rule of law as well
as competitiveness and growth, IPA II also introduces a sector approach,
incentives for delivery on results, increased budget support and prioritisation
of projects. A coordinated approach is required for the major investments along
the main infrastructure corridors. Coordination with international financial
institutions (IFIs) is being strengthened. The Western Balkans Investment
Framework will continue to support investments boosting jobs and growth and
promoting connectivity in the region.

Three
strategic benefits of enlargement

(1) makes
Europe a safer place. Through the accession process, the EU promotes democracy
and fundamental freedoms and consolidates the rule of law across the aspirant
countries, reducing the impact of cross-border crime. Current enlargement
policy is reinforcing peace and stability in the Western Balkans and
promoting recovery and reconciliation after the wars of the 1990s.

(2) helps
improve the quality of people’s lives through integration and cooperation
in areas like energy, transport, rule of law, migration, food safety, consumer
and environmental protection and climate change. Enlargement helps us ensure
that our own high standards are applied beyond our borders, which reduces the
risks of EU citizens being affected for example by imported pollution.

(3) makes
us more prosperous. A bigger Europe is a stronger Europe. In 2012, EU GDP
was 23 % of world GDP, amounting to EUR13 trillion. Accession benefited
both those countries joining the EU and the established Member States. As the
EU expands so do opportunities for our companies, investors, consumers,
tourists, students and property owners. A larger single market is more
attractive to investors: Foreign direct investment from the rest of the world
to the EU has doubled as a percentage of GDP since the 2004 accession (from
15.2 % of GDP in 2004 to 30.5 % of GDP in 2012).

***

II. 
Fundamentals
first — Consolidating Reform and Strengthening Credibility

This section
identifies key challenges and reviews progress in the fields of public
administration reform, economic governance and competitiveness, and the rule of
law and fundamental rights. It sets out new ideas for strengthening the focus
on public administration reform and further refines the approach to economic
governance. In last year’s Communication particular emphasis was put on how
pre-accession funding supports the reform process across the board. This year,
attention is drawn to certain practices in the above fields which are in place
in enlargement countries and which can serve as inspiration for reforms
elsewhere.

a) 
Public administration reform

Together with
rule of law and economic governance, public administration reform (PAR) is a
pillar of the enlargement process. All three ‘pillars’ are closely linked,
cross-cutting issues of fundamental importance for success in political and
economic reforms and building a basis for implementing EU rules and standards.
A well-functioning public administration is necessary for democratic
governance. It also directly impacts governments’ ability to provide public
services and to foster competitiveness and growth.

Public
administration reform aims at enhanced transparency, accountability and
effectiveness and greater focus on the needs of citizens and business. Adequate
management of human resources, better policy planning, coordination and
development, sound administrative procedures and improved public financial
management, including revenue administration and collection are of fundamental
importance for the functioning of the state and for implementing the reforms
needed for EU integration. Countries need to increase their efforts to improve
their public administrations at all levels on the basis of national strategies.
Recognising the challenges faced by the enlargement countries, the Commission
is strengthening its support towards the establishment of the necessary
administrative structures and capacity in the accession process.

The Commission
will structure its work on PAR with the enlargement countries around the
following key issues:

Key
issues for public administration reform

1.     Strategic
framework for public administration reform —
this includes the political commitment to the reform process, including
political leadership and technical coordination and monitoring of
implementation.

2.     Policy
development and coordination — this includes appropriate coordination
at the centre of government, inter-ministerial coordination, policy development
and financial analysis.

3.     Public
service and human resources management — this includes
organisation and functioning of the public service, including depoliticisation,
merit-based recruitment and promotion, training and professionalisation.

4.     Accountability
—
this includes transparency of administration, including access to
information and possibility of administrative and legal redress.

5.     Service
delivery
— this includes improving services for citizens and business, including better
administrative procedures and e-government services.

6.     Public
financial management (PFM) — this includes a commitment to a
more comprehensive approach to improving management of public finances and the
overall budgetary process through preparation and implementation of
multi-annual PFM programmes and engaging in a PFM policy dialogue with the
Commission and IFIs. A credible and relevant PFM programme is also key for IPA
sector budget support.

The Commission
aims to better integrate public administration reform into the enlargement
process. ‘Special groups on PAR’ have been set up or are in the process of
being established with the countries of the Western Balkans on the model of the
SAA sub-committees. Special groups have already met in the case of Albania,
Kosovo, the former Yugoslav Republic of Macedonia and Montenegro. The first
special group on PAR with Serbia will meet in October. The special groups will
become the key platform for taking forward work on PAR, which will be based
around the above key issues. The results of the PAR special groups should feed
into the SAA Council/Committee, with a more structured, political discussion on
key PAR issues.

Although there
is no specific acquis chapter covering public administration as such,
accession negotiations should also be used to encourage the necessary reforms.
Key issues should be addressed through relevant chapters — notably public
procurement, financial control, judiciary and fundamental rights, taxation and
economic and monetary policy, — and in the context of inter-governmental
conferences where this is important for acquis implementation.
Coordination with IFIs especially in the area of PFM will be crucial. The
Commission continues to support the Regional School of Public Administration,
which has an important role for sharing experience in the region on PAR,
also in relation to the EU integration process.

Increasing
capacity of the public administration in Kosovo:

In order to strengthen professional and
institutional capacity of its public administration, Kosovo established a young
professionals’ programme. With a strong focus on European integration needs,
this programme provides scholarships for the brightest students to follow a
special Masters programme in Kosovo together with the opportunity to study in
the EU. Around 80 % of the graduates have been employed by the Kosovo
authorities. This is benefitting not only the Ministry of European Integration,
but also sectoral ministries and institutions that will be responsible for
implementation of obligations under the future SAA.

b) 
Economic governance and competitiveness

The Commission
is strengthening its support to improving economic governance and
competitiveness in enlargement countries. This is key to addressing concerns of
citizens in a persistently difficult economic environment, with high
unemployment and low investment. This new approach is particularly important in
relation to the Western Balkan countries since none of them is yet considered
to be a functioning market economy. It will build on the experience of EU
Member States in the European Semester. There will be an increased emphasis on
structural reforms which are sectoral in nature. The enlargement countries will
be asked to submit National Economic Reform Programmes. For its part the EU
will provide more guidance for reform priorities and better targeted IPA
funding. Improving economic governance in the enlargement countries is also of
importance for maintaining support for enlargement within the European Union.

All Western
Balkan countries face major structural economic challenges, with high
unemployment rates and low levels of foreign investments. There remain significant
challenges in all enlargement countries in terms of economic reform,
competitiveness, job creation and fiscal consolidation. Weaknesses with the
rule of law and public financial management exacerbate the risk of corruption,
negatively impacting on the investment climate. To
date, none of the countries have produced a comprehensive and convincing
domestic reform agenda.

Macroeconomic
situation in the enlargement countries

Þ
There is a mixed picture in terms of socio-economic developments in the enlargement
countries. All enlargement countries have largely maintained overall
macroeconomic stability but fiscal risks have increased significantly in a
number of them. Modest recovery is continuing. The Commission’s most recent
forecast is that the candidate countries in the Western Balkans should grow by
1.6 % on average in 2014. The recovery has not translated into more jobs.
Unemployment has remained high, particularly among the young, and is now on
average 21 % in the Western Balkans, but much higher in Bosnia and
Herzegovina, the former Yugoslav Republic of Macedonia and Kosovo. Poverty
levels remain stubbornly high.

Þ The
EU is the main trading partner for the Western Balkan countries, receiving
approximately 60 % of the exports from the region. The EU is also by far
the biggest provider of foreign direct investment.

Þ In
2013, Turkey has seen growth increase to 4 % and the growth estimate for
2014 is 2.6 %. The Turkish lira has weakened and the current account
deficit went up to almost 8 % of GDP in 2013. Turkey’s recent economic
performance illustrates both the high potential and the continuing imbalances
of its economy. The EU remains the main trading partner of Turkey with over 40 %
of its exports going to the EU. Turkey has become an investment base for
European business with increasing integration into the EU’s supply and
production chain. Around 70 % of the foreign direct investments in Turkey
come from the EU.

Key
economic indicators

|| GDP per capita in PPS (% of EU) || GDP growth (%) || Inflation (%) || Unemployment (%) || Employment rate, age 20-64 (%) || Participation rate, age 20-64 (%) || Exports (goods & services % of GDP) || Gov. debt (% of GDP) || Gov. deficit (% of GDP)

Albania || 30 || 1.4 || 1.9 || 15.6 || 57.2 || 68.0 || 40.2 || 62.0* || -3.4*

Bosnia and Herzegovina || 29 || 2.5 || -0.2 || 27.5 || n/a || n/a || 30.0 || n/a || -2.2

the former Yugoslav Republic of Macedonia || 35 || 2.9 || 2.8 || 29.0 || 50.3 || 70.4 || 53.9 || 36.0 || -4.1

Kosovo || n/a || 3.4 || 1.8 || 30.0 || n/a || n/a || 17.4 || n/a || n/a

Montenegro || 42 || -2.5* || 1.8 || 19.5 || 52.6 || 65.1 || 44.1* || 58.0 || -2.3

Serbia || 36 || 2.5 || 7.8 || 22.1 || 51.2 || 66.0 || 44.7 || 63.2 || -5.0

Turkey || 55 || 4.0 || 7.5 || 8.8 || 53.4 || 58.4 || 25.7 || 36.2* || -0.3*

Source: Eurostat. Reference
year 2013 except (*) 2012.

Ø Enhancing
economic governance

The enlargement
strategy 2013-14 proposed a new approach to help the enlargement countries
tackle the economic fundamentals and to meet the economic criteria. The new
approach implies a change in the dialogue and improved reporting in order to
give clearer guidance on the reforms needed to support long-term growth and
competitiveness.

Key
economic challenges in the Western Balkans

Þ
Strengthening fiscal consolidation by reducing budget deficits and implementing
credible public sector reforms, including reform of the public administration
and pension systems.

Þ
Strengthening public financial management, including revenue administration and
collection, budget formulation and execution, accounting and reporting, and
external oversight.

Þ
Addressing the high burden of non-performing loans.

Þ
Restructuring and improving governance of state-owned enterprises,

Þ
Improving the business environment, including the digital economy, and
supporting private-sector development, reducing para-fiscal charges,
simplifying regulation and boosting research investment.

Þ
Improving energy and transport networks and increasing connectivity.

Þ
Establishing functioning labour markets, including sufficient flexibility,
addressing the informal sector, improving the employability of workers, and
better aligning education and skills with labour market needs.

The countries of
the Western Balkans are invited to enhance economic policy and its governance
through the preparation of annual National Economic Reform Programmes. These
programmes will comprise two parts. The first part will consist of an enhanced
version of the existing Pre-Accession Economic Programmes (PEP) for candidate
countries and Economic and Fiscal Programmes (EFP) for potential candidates and
extended also to include Kosovo. Part one of the National Economic Reform
Programmes will set out a medium-term macroeconomic and fiscal policy framework,
with increased focus on assessing external sustainability and structural
obstacles to growth, as well as concrete reform measures to support the policy
framework. Part two of the National Economic Reform Programmes will cover
structural reforms which are sectoral in nature (such as transport, energy,
education, environment, research, industry, competition, internal market) and
of most concern for improved competitiveness and growth in the individual
countries, including infrastructure investment needs. The Commission will
provide the countries with clear and consolidated guidance to ensure that these
programmes are targeted on the key issues.

With regard to
the increased focus on structural reforms, 2015 should be considered as a
first-year pilot phase. Reforms addressed in these documents will be
underpinned by IPA assistance. To strengthen surveillance, the process of
evaluation will result in more targeted policy guidance for each
country. Already in May 2014, the Joint ECOFIN Council issued more targeted
guidance for each of the Candidate Countries.

Turkey and the
EU share a mutual interest in promoting an agenda of economic reform, and the
exchange of experience, aligning of positions in the G20 and deepening economic
integration. Moreover, the recent evaluation of the EU-Turkey Customs Union
provides important elements for upgrading this trade agreement. It is in the
interest of both parties to enhance their trade relations to a level
commensurate with modern trade agreements and the strategic importance of
EU-Turkey relations. The economic agenda could be addressed in a regular
EU-Turkey high-level economic dialogue. These intensified political contacts
could be complemented by an annual EU-Turkey business forum.

An
annual cycle of economic policy review and guidance for the Western Balkans

31 January — Submission by
the countries of the National Economic Reform Programmes (part 1 on the
macroeconomic and fiscal framework and supporting reforms, part 2 on structural
reforms which are sectoral in nature and competitiveness) to the Commission.
Given the longer term nature of reforms under part 2, this would be subject to
simple annual updating in each subsequent NERP.

February — Commission
assessment missions to Western Balkan countries.

April — Country meetings
with the Commission to discuss Targeted Policy Guidance

May — ECOFIN
Council conclusions

June/July — Country-specific
meetings at Ministerial level.

Autumn — Commission’s
enlargement package takes stock of further progress since ECOFIN Council, offering
further, more detailed forward looking guidance to be reflected in the
programmes to be submitted the following January.

Dedicated
technical assistance is needed to help support the implementation of this
approach. The implementation of country-specific policy guidance will have to
be rapidly supported by targeted and concrete IPA projects to improve economic
governance. IPA Country and Multi-country Strategy Papers 2014-2020 reflect the
importance of economic governance and allocate indicative funds to this aim.
Concrete IPA projects are being prepared and will be rolled out as of 2015.

Increasing
competitiveness and introducing measures fostering job creation in the region
will mitigate migratory pressures from the enlargement countries to the EU. In
the most recent enlargements, transitional arrangements were in place to
phase-in the full free movement of workers from the new Member States. The
possible need for and nature of transitional measures and/or a safeguard
mechanism on the free movement of workers will be addressed in the course of
accession negotiations on future enlargement, taking into account a future
impact assessment.

Ø Dialogue
on employment and social reform

The Commission’s
support for sustainable economic development in the Western Balkans goes beyond
macroeconomic stabilisation and the achievement of the functioning market
economy status. Since the beginning of the crisis, the Commission has been
insisting that more needs to be done to address the difficult socio-economic
situation, in particular high unemployment.

The Commission
has already started a new dialogue on employment and social reform programmes
(ESRPs) with Turkey and Serbia. Dialogues with the former Yugoslav Republic of
Macedonia and Montenegro are under preparation. The socio-economic situation in
the remaining countries is more challenging and extra support will be needed to
build administrative capacity to facilitate participation in the new process.
These countries will be gradually invited to the new dialogue. Comprehensive
technical assistance is being provided through IPA, in addition to wider
support in the employment and social area. The Commission will launch an
employment and social platform as a further tool to help countries share
experience and prepare for the ESRP dialogue.

In a separate
exercise, with a view to reducing the skills gap and improving education
systems, the Commission will also continue developing the Western Balkans
platform on education and training.

Ø Boosting
investments for growth and jobs; networks and regional cooperation

Cross-border
transport, energy and communications networks are underdeveloped in
the Western Balkans. Infrastructure investments are much needed to boost
economic development in the region. In view of the size of the Western Balkan
economies, closer
integration is key. Regional economic cooperation is not only an
opportunity for sustainable growth but also for political cooperation and good
neighbourly relations. Work is ongoing under the auspices of the Regional
Cooperation Council (RCC) to address the targets and priorities of SEE2020. The
planned liberalisation of services in the Central European Free Trade Area
(CEFTA) would further support this aim.

Energy
and transport networks

Improving energy and transport interconnection
between the EU and enlargement countries is a priority for promoting
sustainable economic growth, jobs, trade and cultural exchange.

In May, the Commission adopted its European Energy
Security Strategy[3]
aimed at strengthening the EU’s energy security. In the short-term, the
strategy proposes that the Commission launches energy security stress tests
to simulate a disruption in the gas supply for the coming winter and to check
how the energy system can cope with security of supply risks. Bearing in mind
the pan-European dimension of energy security, the Commission has invited all
countries of the Western Balkans and Turkey to contribute to the stress test
exercise. Albania, Bosnia and Herzegovina, the former Yugoslav Republic of
Macedonia, Kosovo, Serbia and Turkey have contributed to this exercise. Further
development of trans-European energy infrastructure and cooperation with
the Energy Community is essential. The Energy Community, which aims to expand
the EU’s energy acquis to enlargement and neighbourhood countries,
should be further strengthened in the light of the EU’s security of supply
concerns. This should be achieved by further promoting energy sector reforms in
the participating countries, while also supporting the modernisation and
sustainability of their energy system and their full integration in the EU
energy regulatory framework.

A particular focus of the Energy Community’s future
work should be on improved implementation and enforcement of reforms to create
a genuine internal market at both wholesale and retail level, particularly as
regards unbundling utilities, price transparency or guaranteeing third party
access to networks. The need for guaranteed third party access is one of the
reasons why the Commission has declared that the Inter-Governmental Agreements,
signed between Russia and a number of countries involved in the South Stream
project, need to be renegotiated and construction on the project suspended.

Cooperation with Turkey in view of its strategic
location and potential as an energy hub should be further developed.
Strengthening of the EU-Turkey energy cooperation as well as relevant progress
in the accession negotiations would facilitate further progress towards the
interconnection and integration of energy markets.

The Commission has adopted a list of Projects of
Common Interest (PCIs) for the development of trans-European energy
infrastructure. A list of Projects of Energy Community interest (PECIs) has
been adopted by the Energy Community Ministerial Council. To implement these
networks, parties (with the EU’s help) will need to overcome difficulties in
financing interconnections between countries.

The forthcoming Transport Community Treaty
will promote integration of land transport markets and infrastructure
whilst helping the Western Balkan countries implement EU land transport
standards. The Commission has also reviewed the EU’s Trans-European Networks in
the field of transport (TEN-T) and energy (TEN-E) with a view to improving
connections with the countries covered by the enlargement and neighbourhood
policies.

The Western
Balkans Investment Framework (WBIF) plays an increasingly important role
helping prepare and support those investments most needed for boosting growth
and jobs. Under the WBIF, the Commission, bilateral donors and international
financial institutions are supporting 4 billion euros worth of investments per
year in transport, energy, the environment, climate change, supporting a
resource efficient economy, the social sector and private sector / SME development,
where the Commission is co-financing a Western Balkan SME platform aimed at
improving access to finance for SMEs through guarantees and venture capital.
The Commission is encouraging the countries to set up national investment
committees or similar coordination mechanisms that would lead to single sector
project pipelines.

Developing
a single project pipeline in Serbia:

Serbia is establishing a list of priority
infrastructure projects of national and EU-strategic relevance in the sectors
of energy, transport, environment and business infrastructure. These priorities
would constitute projects politically endorsed to be implemented up to and
beyond accession. The list is being developed with a coherent and objective
selection methodology, through an IPA-funded project. Projects are being
carefully assessed in terms of the remaining preparatory/administrative steps
and detailed institutional responsibilities attributed for all steps concerned.
Once politically endorsed by government, all the above elements, missing in the
past, can lead to better prioritisation of project financing as well as better
coordination among IFIs and international organisations interested in providing
funds. The aim is that only projects in the single project
pipeline
will be funded by IPA and IFIs.

Ø Ensuring
sustainability of investments and effective disaster risk management

The Western
Balkan countries are exposed to a wide range of disasters. The severe floods
which hit both Bosnia and Herzegovina and Serbia in May caused not only several
dozen casualties but also had a considerable socio-economic impact. Total
damage is estimated at around € 2.04 billion in Bosnia and Herzegovina
(the equivalent of nearly 15 % of GDP) and € 1.52 billion in Serbia.
The floods have also had a significant impact on growth prospects of both
countries, negatively affecting their long-term sustainable development. The
floods underlined the importance of sustainable investments in disaster risk
management and of effectively integrating DRM policy into these countries’
overall economic policies.

c) 
The rule of law and fundamental rights

i)    Rule
of law

The rule of law
is a fundamental value on which the EU is founded and is at the heart of
the accession process. Countries aspiring to join the Union need to establish
and promote from an early stage the proper functioning of the core institutions
necessary for securing the rule of law. Rule of law is crucial for a stable
business environment, providing legal certainty for economic operators,
supporting consumers and stimulating investment, jobs and growth. There have
been some positive developments over the past year in this field in the
enlargement countries. The opening of chapters 23 and 24 provides an important
framework for Montenegro to implement its comprehensive action plans covering a
wide range of rule of law issues. Serbia is well advanced in developing similar
action plans in the run up to starting its accession negotiations in these
chapters. In Albania, important efforts have been made to tackle organised
crime.

Strengthening
the rule of law is a key challenge for most of the countries in the enlargement
process, in particular in terms of improving the functioning and independence
of the judiciary and fighting corruption and organised crime. This will require
strong political will, moving beyond declarations to tangible results.
Countries need to build up credible track records of investigations,
prosecutions and final convictions in cases of organised crime and corruption,
with adequate sentencing and confiscation of assets.

In most cases,
far-reaching judicial reforms need to be undertaken with the aim
of ensuring independent and efficient judicial systems capable of ensuring fair
trials, where judges are appointed and promoted on merit and where they are
impartial and accountable. Judicial reform strategies are in place in most
countries. However, implementation is at an early stage and numerous challenges
remain. Independence of state judicial councils needs to be ensured, more sound
procedures for the appointment of judges and prosecutors put in place and
judicial independence needs to be safeguarded whilst ensuring accountability.
Quality and efficiency of justice is often lacking, with excessive case
backlogs in most countries and difficulties enforcing court decisions. A change
in judicial culture is needed towards an increased focus on delivering a
service for citizens.

Training
judicial officials in the former Yugoslav Republic of Macedonia:

The Academy for Judges and Prosecutors was
established in 2006 and became operational in 2007. It provides pre-service
training for future judges and prosecutors through a 2-year full-time
theoretical and practical training programme, as well as continuous in-service
training for judges, prosecutors, court staff and civil servants throughout
their careers. Training is largely provided by practitioners, such as senior
judges. 80 candidate judges and prosecutors have already graduated from the
pre-service training programme and last year the Academy reached over 7 300
participants with over 270 in-service training events. A decentralised system
also caters for participants outside the capital, as do the e-learning modules
available through the Academy’s web portal. Contacts with international
judicial organisations are also being fostered, including internships abroad.

Corruption
remains a serious problem in most enlargement countries. In areas such as
public procurement and in privatisation, corrupt practices continue to divert
scarce resources from national budgets, negatively affecting the business and
investment climate, which needs legal certainty to thrive. Corruption also
affects citizens directly when accessing certain public services such as
education and health services. Tools to effectively prevent corruption remain
under-used. There is a need for more proactive, well-coordinated and effective
law enforcement to ensure corruption cases, including at high level, are
properly investigated, prosecuted and sanctioned. A sustained track record of
substantial results in this field will be required.

Countries must
ensure a strong framework for the prevention of corruption, with further
efforts needed as regards the financing of political parties and election
campaigns, the management of conflicts of interest, transparency in the use of
public funds, access to information and the seizure and confiscation of assets.
Public administration reform and public financial management will be crucial in
this regard. Improvements in data collection and accessibility are needed to
improve transparency and help monitor the implementation of anti-corruption
policies.

The fight
against organised crime remains a significant issue in most
enlargement countries. Progress is being made, but much more needs to be done
to provide law enforcement bodies and prosecution services with effective legal
and investigative tools to properly fight and sanction organised crime and to
ensure proactive investigations. Fighting organised crime and corruption is
fundamental to countering criminal infiltration of the political, legal and
economic systems. Law enforcement bodies, prosecution services and the
judiciary need to be made more resilient to corruption and more controls put in
place to detect apparently legal businesses providing a front for criminal
activities. The
capacity
to conduct complex financial investigations as well as to tackle money
laundering needs to substantially improve and new threats such as cybercrime
need to be addressed. Proceeds of crime need to be effectively confiscated, a
system of extended confiscation of assets introduced and consideration given to
criminalising illicit enrichment to address the phenomenon of unexplained
wealth.

The cross-border
nature of many criminal activities and organised crime groups requires enhanced
regional and international cooperation, with improved responses to Member
States requests for police and judicial cooperation. Further operational
cooperation with the relevant European agencies, in particular Europol,
Eurojust and Frontex is also being pursued. Operational
agreements with Europol entered into force with Serbia and Albania and are at
an advanced state of preparation with Montenegro. The Commission
continues to support a regional prosecutors’ network and coordinated witness
protection systems in the region.

Developing
a strategic analysis of the organised crime situation in Montenegro:

Any country wanting to successfully fight organised
crime is to have a coherent, overarching strategic assessment of organised
crime on its territory. This is necessary for all stakeholders, even beyond the
law enforcement community to understand the threats the country is facing and
to manage trends. Montenegro published in spring 2014 its Serious and Organised
threat Assessment providing an overview of crime threats in the region and the
country affecting Montenegro’s security situation. The analysis now serves to
identify common priorities for law enforcement bodies allowing them to prepare
appropriate responses and implement the concept of ‘intelligence-led policing’.

The Commission
continues to attach a high priority to all aspects of rule of law in the
enlargement countries. In the accession negotiations, a new approach is being
implemented in the chapters covering judiciary and fundamental rights and
justice, freedom and security. This requires solid track records of reform
implementation to be developed throughout the process of preparing for
accession. The EU has set interim benchmarks in the accession negotiations for
the first time, with Montenegro in December 2013. Serbia has been provided with
substantial guidance for the comprehensive action plans it is preparing as a
basis for opening negotiations on rule of law issues. This guidance and
benchmarks will set the tone for future negotiations and work with other
enlargement countries. Rule of law issues are now being addressed at an early stage
of the accession process with all enlargement countries, and progress in this
field is an important consideration when deciding on each stage of the EU
accession process.

The
new approach to chapters 23 /24 in a nutshell

Covering negotiating chapters 23 ‘judiciary
and fundamental rights’ and 24 ‘justice, freedom and security’, the new
approach provides a more structured framework for negotiations, that takes into
account the time needed for reforms to be properly implemented:

►    Ch. 23/24 to be opened
early in the process and closed at the end to allow maximum time for
solid track records to develop with the aim of irreversibility of reforms.

►    EU to provide
substantial guidance as basis for comprehensive reform action plans, which
are required as opening benchmarks and serve as a
catalyst for reforms.

►    Introduction of ‘interim
benchmarks’ to further guide the reform process and keep the reforms on
track.

►    Closing benchmarks
only set once substantial progress made across the board, including on track
records of implementation on the ground.

►    Safeguards and
corrective measures, for example the updating of benchmarks and to ensure
an overall balance in the progress of negotiations across all chapters, a
mechanism to stop negotiations on other chapters if progress on chapters 23/24
lags behind.

►    Greater transparency
and inclusiveness of the process, with wide stakeholder consultation
expected on the reforms, to ensure maximum support for their implementation.

More broadly,
the Commission is using all available instruments to strengthen the rule of
law, including through its regular monitoring, in particular through the joint
bodies under the Stabilisation and Association Agreements, assessment missions
and structured dialogues; through its reporting, especially the progress
reports; through financial assistance, with a major focus on rule of law under
IPA II; through institution building, Taiex, twinning, and peer reviews, which
bring judges, prosecutors and other experts in law enforcement, border
management and migration from the Member States into direct contact with their
counterparts. A working group on chapter 23 has been set up under the positive
agenda with Turkey. To better tackle transnational crime, the Commission is encouraging
intensified judicial and police cooperation within the region, with EU Member
States as well as with Europol, Eurojust and Frontex and increasingly also the
European Asylum Support Office. In order to develop adequate measures to
address the phenomenon of foreign fighters, the enlargement countries will need
to step up their capacity to prevent radicalisation, including through exchange
of best practice, and increased cooperation with the Member States. The visa
liberalisation process, with its specific conditions for reform, has helped the
countries to better focus their efforts. The countries need to step up efforts
to consolidate those reforms. The visa-exempt countries need to undertake
immediate actions to address any abuse of the liberalised visa regime.
Consolidated efforts are needed in the areas of migration and border
management. Outstanding issues in these fields will continue to be addressed
in the appropriate fora, such as in the SAA framework, and including in chapter
24 on justice, freedom and security.

ii)   Fundamental rights

The Commission
is carefully monitoring the situation as regards civil, political, social and
economic rights, as well as the rights of persons belonging to minorities in
the enlargement countries. Fundamental rights are largely enshrined in law but
more needs to be done to ensure they are fully respected in practice. Freedom
of expression and media remains a particular concern. There is a need to better
protect the rights of persons belonging to minorities and to tackle
discrimination and hostility towards vulnerable groups, including on grounds of
sexual orientation. Further work is also required to promote the rights of
women, including
tackling domestic violence. Improvements are needed with respect to the rights
of the child, Further efforts are needed to support people with disabilities.
Challenges remain with respect to other fundamental rights such as the right to
property. Often, more effective measures are needed to facilitate access to
justice.

The countries need
to put in place a more robust institutional framework for the protection of
fundamental rights. Human rights institutions, including Ombudsmen, are in
place but need to be accorded a stronger role, commensurate with the
seriousness of the issues at stake. Too often recommendations of such
institutions go unheeded, with inadequate follow-up by state bodies. A culture
of acceptance of the work of non-governmental organisations (NGOs) and human
rights defenders also needs to be nurtured. In order to better integrate the
enlargement countries into EU frameworks and support the spread of best
practice, the Commission strongly encourages the candidate countries to
continue their preparations aimed at participation as observers in the work of
the EU’s Fundamental Rights Agency.

Guaranteeing
fundamental rights by the Constitutional Court in Turkey:

Since 2011, any individual who claims that any of
his or her fundamental rights and freedoms guaranteed by the Constitution has
been violated by the public authorities can apply to the Constitutional Court,
in principle after exhaustion of ordinary legal remedies. It is on the basis of
this procedure that the Turkish Constitutional Court took, in 2014, decisions
that

•     protect freedom of
expression and of the internet.

•     safeguard the right to
liberty and security, and the right to a fair trial and open the way for
re-trials in a number of high-profile cases that polarised Turkey.

•     recognise hate speech on
the grounds of sexual orientation as a criminal offence.

Ø Freedom
of expression and media

The
legal framework for freedom of expression and the media is largely in place in
the enlargement countries, with by and large pluralist media landscapes.
However, the situation concerning freedom of expression and media in practice
has deteriorated in some countries in the past year. Many important challenges
need to be urgently addressed, Government interference with media freedom remains
a serious concern. More efforts are needed to ensure the political and
financial independence of public service broadcasters, to strengthen regulatory
agencies and foster functional media self-regulation. There is also a need to
tackle informal economic pressure on the media, including through transparency
of media ownership, preventing its excessive concentration and transparent
rules on procurement of government advertising. In some countries, a climate of
fear and censorship is stoked by continuing violence and intimidation against
journalists, with little success by the authorities in identifying and properly
sanctioning perpetrators. Sometime governments themselves contribute to an
atmosphere which demonises as traitors journalists critical of government
policy, leading to self-censorship. Although defamation has been
decriminalised, prosecutions of journalists continue. There is a need to
develop and train the judiciary to prevent abuse of state power.

The
Commission continues to prioritise work on freedom of expression and the media
in the EU accession process. The Commission will explore the possibility of
holding in 2015, together with the European Parliament, the third edition of
the Speak-Up! conference, bringing together key stakeholders from the media,
civil society and national authorities. Later this year, the Commission will
award for the first time a prize for investigative journalism.

Ø Protection
of minorities, including Roma

Overall, sound
and well elaborated legal frameworks are in place to provide for the protection
of minorities. Implementation in practice is often complicated, however,
in particular where there are links to recent conflicts. More needs to be done
to ensure the proper implementation of legal commitments and better address the
difficulties facing ethnic minorities. Issues such as use of minority
languages, access to education, and political representation often require
greater attention. A general culture of acceptance of minorities needs to be
encouraged and societal hostility countered, through education, broad public
debates and awareness raising. There is a need for a zero-tolerance, proactive
approach to cases of ethnic-based hate speech, discrimination, violence and
intimidation. It is important to consolidate a coherent framework on combating
certain forms and expressions of racism and xenophobia in areas like
audiovisual media, sports, politics, education and the internet.

Across the
Western Balkans and Turkey, the situation of most Roma communities remains a
matter of serious concern. Roma are very often the victims of racism,
discrimination and social exclusion and live in deep poverty, lacking
sufficient access to healthcare, education and training, housing and
employment. The lack of civil documentation is also a concern. The Commission
held a high-level Roma Summit in April 2014 to draw attention to the challenges
facing Roma across Europe, including in the enlargement countries. This
underlined the particular role of local authorities in ensuring the social
inclusion of Roma. In 2014, the Commission established an award for Roma
inclusion to recognise the invaluable contribution of NGOs to Roma integration.

The Commission
is working closely with each of the enlargement countries to ensure
adequate implementation, follow-up and monitoring of national Roma strategies. Financial
support through IPA is also being increased and better targeted to support
sustainable progress in the five priority areas of education,
employment, health, housing and civil documentation. The Commission
intends to enhance strategic cooperation with international organisations and
other donors. Roma inclusion has to become a national priority backed by strong
political will at all levels, with all stake holders taking their
responsibility.

Supporting
early years education — Roma teaching assistants in Serbia:

In order to increase the enrolment of Roma children
in the education system and promote completion of the primary school cycle, a
network of over 170 pedagogical assistants has been in place since 2008. The
assistants provide support to pupils from vulnerable groups, many of whom are
Roma, organise lessons and maintain contact with parents. This initiative,
which is now firmly enshrined in the Serbian education system, has led to a
significant increase in enrolment rates for lower grades as well as for the
pre-school programmes.

Ø Sexual
orientation and gender identity

Homophobia,
discrimination and hate crimes, including violence and intimidation on the
basis of sexual orientation and gender identity are still widespread in the
Western Balkans and Turkey. There is an urgent need for anti-discrimination
legislation to be extended to include sexual orientation and gender identity
within its scope in Turkey and the former Yugoslav Republic of Macedonia. Hate
crime legislation still needs to be introduced in these two countries as well
as Bosnia-Herzegovina and Kosovo. Training of law enforcement, ombudsman
institutions, judges and media professionals is needed to raise awareness of
new legislation, to ensure proper implementation and contribute to increasing
understanding.

A zero-tolerance
approach to hate speech, violence and intimidation is needed as is strong
leadership from the authorities to bring about a change in the frequently
hostile societal attitudes towards lesbian, gay, bisexual,
transgender and intersex (LGBTI) people. Countries need to take
measures to counter stereotypes and misinformation, including in the education
system. Religious or cultural values cannot be invoked to justify any form of
discrimination. Freedom of assembly and expression should be protected,
including through appropriate handling of pride parades.

The
Commission will organise a high-level conference in
late autumn together with the European Parliament and the Italian Presidency of
the Council to
take stock of the state of play and progress achieved on LGBTI issues and to
share best practice.

Improving
police response to violence against LGBTI persons in
Bosnia and Herzegovina:

Incidents of threats and violence against persons on
the basis of their sexual orientation have typically been significantly underreported
across the region. This is due partly to indifference and even hostility on the
part of the police and society at large and a lack of confidence in the
authorities’ response. The police in Sarajevo have appointed specially trained
liaison officers for handling cases of homophobic threats and attacks. This
initiative is the result of good cooperation between police and NGOs, and has
raised awareness in the police of the need to tackle this phenomenon more
seriously and react appropriately to all cases of hate crimes.

Ø Women’s
rights

More needs to be
done to support women’s rights and to ensure gender equality. Discrimination in
employment, as well as low participation rates of women in the workforce need
to be addressed. Stereotypes and traditional gender roles persist, in some
cases to such an extent that they seriously limit the ability of women to
assert their rights, particularly in Turkey. In Kosovo, serious obstacles
prevent women realising their right to inherit land. Most countries of the region
have ratified the Council of Europe Convention on preventing and combating
violence against women and domestic violence, which entered into force this
year. Implementation is key, as violence against women and providing
support to victims remains a challenge in all countries. In
Turkey, domestic violence, ‘honour’ based violence and oppression and the issue
of early and forced marriages remain a serious concern. The convention
establishes a series of offences characterised as violence against women which
need to be criminalised. These include psychological, physical and sexual
violence, including rape, forced marriage, and stalking.

Comprehensive
gender equality programme in Montenegro:

Policy and legislative developments in the last few
years have created a new ground to address women’s access to human rights and
their opportunity to contribute to political, economic and social development.
To ensure that laws and policies are implemented, Montenegro has initiated a
comprehensive gender programme to improve women’s personal integrity, economic
advancement and political representation. It has led to the creation of
multidisciplinary teams for fighting violence against women and contributed to
raising women’s participation in the parliament.

Ø Rights
of the child

More needs to be
done to protect the rights of the child, especially to ensure protection from
all forms of violence, to improve access to justice and juvenile justice
systems and to promote community- and family-based alternatives to the
institutionalisation of children without parental care (deinstitutionalisation).
Most countries of the region have now established legal frameworks and action
plans, but implementation is lagging behind.

III. 
Regional
and bilateral Issues and overcoming the legacy of the past

Good neighbourly
relations and regional cooperation are essential elements of the Stabilisation
and Association Process.

Good neighbourly
relations
have been strengthened through intensified cooperation and contacts at
bilateral level, also in sensitive areas such as war crimes, refugee return,
including through implementation of the regional housing progamme under the
Sarajevo process[4],
with housing construction now underway, and on organised crime and police
cooperation. The progress made needs to be consolidated. The floods which
severely affected Bosnia and Herzegovina and Serbia in May led not only to a
strong EU response underlining EU solidarity and the benefits of closer
integration, but also to good cooperation between these two countries and across
the region. Strong solidarity was shown beyond national and ethnic lines,
especially — but not only — at grass roots level. Political leaders should
grasp the opportunity to build on this good-will to focus on further
cooperation on common challenges on the EU path.

Further efforts
to overcome bilateral disputes among enlargement countries and
with Member States are needed. Many unresolved issues continue to burden
bilateral relations in the region, especially those stemming from the break-up
of the former Yugoslavia such as inter-ethnic and status disputes, the
situation of minorities, accountability for war crimes, missing persons and
border demarcation. Fundamentally opposed views of recent history also burden
relations. Initial steps supporting the truth and reconciliation initiative
RECOM should be followed up. Reconciliation is essential to promote stability
and support the creation of an environment in south-east Europe conducive to
overcoming the legacy of the past, thereby minimising the risk of open
bilateral issues being politically instrumentalised.

Bilateral issues
need to be addressed by the parties concerned as early as possible and should
not hold up the accession process, which should be based on established
conditionality. The Commission urges parties to make every effort towards
solving outstanding disputes in line with established principles and means,
including referring issues as appropriate to the International Court of Justice
or other existing or ad hoc dispute settlement bodies. The context of accession
negotiations can generate political impetus for the resolution of disputes. The
process of normalisation between Serbia and Kosovo needs to continue and the
Brussels Agreement[5]
implemented. The EU has integrated the requirement for normalisation of
relations into the negotiating framework with Serbia and the SAA with Kosovo.
As regards the former Yugoslav Republic of Macedonia, maintaining good
neighbourly relations remains essential, including a negotiated and mutually
acceptable solution to the name issue, under the auspices of the UN, which
needs to be found without further delay. The Commission will continue to offer
political support and facilitation to all countries concerned to find solutions
to bilateral issues as early as possible and continue to actively support the
efforts in other fora to find solutions.

Good neighbourly
relations continue to be reinforced through various regional cooperation
initiatives. The Commission fully supports the work of the South-East European
Cooperation Process (SEECP) and the Regional Cooperation Council, including the
Regional 2020 strategy. The Commission welcomes the
establishment of the SEECP Regional Parliamentary Assembly in May as well as
the recently launched Western Balkans Six enhanced cooperation under the
Stabilisation and Association Process. This initiative has seen important
contacts recently between ministers of foreign affairs and of finance from the
region to discuss common challenges, in particular in the field of economic
governance. Cooperation has continued in other regional fora such as the
Central European Free Trade Area (CEFTA), the Energy Community and the Regional
School of Public Administration. It is important that these initiatives are
complementary, inclusive and regionally-owned and driven. The
Commission welcomes the Berlin Summit in August, which demonstrated strong
political support for the European perspective of the Western Balkans. Further
annual summits are foreseen, with Austria as the next host. The ‘Berlin process’
can be instrumental for encouraging reforms and agreeing realistic priorities
for core connectivity investments. It can also act as a spur to help resolve
outstanding bilateral issues. The Commission stands ready to support follow-up
to this initiative.

***

IV. 
Conclusions
and recommendations

Based on the
above analysis and the assessments in the country summaries in annex, the
Commission puts forward the following conclusions and recommendations:

I

1. 
Over
the past five years, the Commission has strengthened the credibility of
enlargement policy and enhanced its transformative power by ensuring a stronger
focus on addressing fundamental reforms early in the enlargement process. The
Commission has put particular emphasis on the three pillars of i) rule
of law, ii) economic governance and iii) public administration reform.

2. 
In
2012 the Commission introduced a new approach to rule of law. In 2013, the
Commission set out a framework for strengthening economic governance, drawing
on the experience of the European Semester. This year, the Commission sets out
new ideas to support public administration reform in the enlargement countries.
The
three pillars of the reinvigorated enlargement process are interlinked and progress
in these areas will be key to determining when countries will be fully ready to
join the EU.

3. 
The
EU’s enlargement
policy continues to contribute to mutual benefits of peace, security and
prosperity in Europe. It reinforces the EU’s political and economic strength
and has a powerful transformative effect on the countries concerned. A
well prepared accession process ensures enlargement is not at the expense of
the effectiveness of the Union.

4. 
The
tenth anniversary in May of the historic accession of ten Member States
in 2004 is a reminder of the progress achieved. As the EU expands so do
opportunities for our companies, investors, consumers, tourists, students and
property owners. Accession benefited both those countries joining the EU and
the established member states. Trade and investment have increased. The quality
of life of citizens has improved as EU environmental, consumer and other standards
apply more widely.

5. 
For
the countries of the Western Balkans, the clear perspective of EU membership
granted by the EU’s Member States is a key stabilising factor. It supports
progress towards fulfilment of the necessary conditions, including those of the
Stabilisation and Association Process. Good neighbourly relations and inclusive
regional cooperation are essential. Continuous efforts to tackle bilateral issues
and overcome the legacy of the past are crucial in view of the history of this region
so recently riven by conflict.

6. 
Enlargement
has become a powerful instrument of the Union’s external policy. Developments
in the EU’s neighbourhood underline the importance of enlargement policy as a
tool to further deepen cooperation on key foreign policy issues. Bilateral
foreign policy dialogue should be enhanced with each of the enlargement
countries. Chapter 31: Foreign Security and Defence Policy should be addressed
early with the negotiating countries. The Commission underlines the importance
of enlargement countries progressively aligning with the EU’s foreign policy
positions. It also underlines the importance of the common security and defence
policy, including, for example, participation in the European Defence Agency’s
programmes.

7. 
The
accession
process is rigorous, built on strict but fair conditionality,
established
criteria and
the principle of own merits. This is crucial for the credibility of
enlargement policy, for providing incentives to enlargement countries to pursue
far-reaching
reforms and for ensuring the support of EU citizens. For their part, Member
States, together with the EU institutions, should lead an informed debate on
the political, economic and social impact of enlargement policy.

8. 
As
regards the first pillar, strengthening the rule of law is
central to the reinvigorated accession
process. Judicial reform needs to be pursued with vigour to ensure an
independent and impartial judiciary delivers justice effectively. Countries
need to build up credible track records of investigations, prosecutions and
convictions in cases of organised crime and corruption. Sentencing should be
dissuasive, and assets acquired through criminal means should be confiscated.
Rule of law supports the business and investment environment, providing legal
certainty and contributing to competitiveness, job creation and growth.

9. 
The
Commission continues to implement the new approach to the rule of law endorsed
by the Council in December 2011. Tackling rule of law early in the accession process
maximises the time countries have to develop solid track records of reform
implementation. This helps ensure reforms are deeply rooted and irreversible. In
line with the new approach, the Commission is determined to ensure an
overall balance in negotiations. Progress under chapters 23: judiciary
and fundamental rights and 24: justice freedom and security will need to be
made in parallel with progress in negotiations overall. The Commission recalls
the existence of the ‘overall balance’ clause of the negotiating frameworks and
the possibility of stopping negotiations on other
chapters if progress on rule of law issues lags behind.

10. 
Fundamental
rights
are largely enshrined in the legal framework of the enlargement countries but
more needs to be done to ensure these are fully respected in practice. Freedom
of expression and media remains a particular concern. There is a need to better
protect the rights of persons belonging to minorities. Discrimination and
hostility towards vulnerable groups, including on grounds of sexual orientation,
remains an important concern. Further work is required to promote the rights of
women, including tackling domestic violence, and of children and people with
disabilities. There is a need to better integrate the enlargement countries
into EU frameworks and support the spread of best practice. To this end, the
Commission strongly encourages the candidate countries to continue their
preparations for participation as observers in the work of the EU’s Fundamental
Rights Agency.

11. 
As
regards the second pillar, strengthening economic governance and competitiveness
in the enlargement countries is crucial for meeting the economic criteria for
EU membership. Reforms should be intensified to achieve sustainable growth,
improve the business environment and boost investment. High unemployment needs
to be tackled, particularly among the young. Supporting economic development should
also mitigate migratory pressure on the EU. The possible need for and nature of
transitional measures and/or a safeguard mechanism on the free movement of
workers will be addressed in the course of accession negotiations on future
enlargement, taking into account a future impact assessment.

12. 
Drawing
on the experience of the European Semester and strengthened economic governance
in the EU, the Commission has launched improved processes of cooperation with
the enlargement countries. For the Western Balkans, the Commission foresees the
preparation of National Economic Reform Programmes comprising two parts. The
first part will consist of an enhanced version of the existing Pre-Accession
Economic Programmes for candidate countries and Economic and Fiscal Programmes
for potential candidates, extended to also include Kosovo. This will set out a
medium-term macroeconomic and fiscal policy framework, with increased focus on
assessing external sustainability and structural obstacles to growth. Part two
will cover structural reforms which are sectoral in nature and of most concern
for improved competitiveness and growth, including infrastructure investment
needs. To strengthen surveillance, the process of evaluation will continue to result
in more targeted policy guidance for each country. For Turkey, a
high-level economic dialogue will be established.

13. 
As
regards the third pillar, public administration reform (PAR) is a
priority in all countries. Public service remains overly politicised. Transparency,
accountability, professionalism and effectiveness of public administration need
to be enhanced. A greater focus is required on the needs of citizens and
business. Public financial management also needs more attention. The
Commission will better integrate public administration reform into the
enlargement process. ‘Special groups on PAR’ have been set up or are in the
process of being established with the enlargement countries. These groups will
become the key platform for taking forward work on PAR. There should be a more
structured, political discussion on key issues in the Association
Council/Committee. Accession negotiations should also be used to encourage the
necessary reform. Key issues should be addressed through relevant chapters –
notably public procurement, financial control, judiciary and fundamental
rights, taxation and economic and monetary policy, - and in the context of
Inter-governmental conferences. The special groups will also be a forum for addressing
horizontal PAR issues from the relevant negotiating chapters, monitoring
progress and ensuring consistency. The results will feed back into chapter
negotiations.

14. 
To
support the reform process, strengthening the functioning and independence of
key democratic institutions in the enlargement countries is essential. This
includes ensuring constructive and sustainable dialogue across the political
spectrum, notably within the parliament. More also needs to be done to foster
an enabling environment for civil society organisations. A strong civil society
enhances political accountability and promotes deeper understanding of
accession related reforms.

15. 
Good
neighbourly relations are an essential element of the
Stabilisation and Association Process. Continued efforts are needed to overcome
the legacy of the past, foster reconciliation and tackle bilateral disputes among
enlargement countries and with Member States. Bilateral issues need to
be addressed by the parties concerned as early as possible and should not hold
up the accession process, which should be based on established conditionality.

16. 
Regional
cooperation has been further strengthened over the past year. The
Commission fully supports the work of the South-East European Cooperation
Process (SEECP) and Regional Cooperation Council, including the Regional 2020
strategy. The increasing inclusion of Kosovo in regional initiatives has been a
positive development. The Commission welcomes the launch of the Western Balkans
Six enhanced cooperation under the Stabilisation and Association Process. These
developments strengthen the multi-lateral dimension of enlargement policy,
support inclusive cooperation and sharing of best practice on economic
governance and promote connectivity within the region and with the EU. The
Commission also welcomes the Berlin Summit in August, which demonstrated strong
political support for the European perspective of the Western Balkans. Further
annual summits are foreseen, with Austria as the next host. The ‘Berlin process’
can be instrumental for encouraging reforms and agreeing realistic priorities
for core connectivity investments. It can also act as a spur to help resolve
outstanding bilateral issues. The Commission stands ready to support follow-up
to this initiative.

17. 
2014
has seen the launch of the new Instrument for Pre-Accession Assistance.
Through IPA II, the EU will provide €11.7 billion for the period 2014-2020
to support the enlargement countries in their preparation for accession as well
as regional and cross-border cooperation. IPA II increases focus on priorities
for EU accession in the areas of democracy and rule of law as well as
competitiveness and growth. IPA II also introduces a sector approach,
incentives for delivery on results, increased budget support and prioritisation
of projects. A coordinated approach is required for the major investments along
the main infrastructure corridors. Coordination with international financial
institutions is being strengthened. The Western Balkans Investment Framework
will continue to support investments boosting jobs and growth and promoting
connectivity in the region.

II

18. 
Montenegro: Further steps
have been taken in the accession negotiations. The analytical examination of
the EU acquis (screening) was completed in May 2014. In December
negotiations were opened on chapters 23 – Judiciary and fundamental rights and 24
– Justice, freedom and security. Based on action plans adopted by
Montenegro, the EU established a comprehensive set of 84 interim benchmarks for
chapters 23 and 24. These benchmarks provide clear guidance for future reforms.
In total negotiations have been opened on twelve chapters and provisionally
closed on two.

19. 
Implementation
of the action plans has started. Following alignment of the relevant
legislation with the constitutional reforms of July 2013, a number of key
judicial and prosecutorial officials have been elected and appointed. After
several attempts, the parliament finally appointed a new Supreme State
Prosecutor in October 2014. The efficiency of the judiciary increased. The legislative
framework for the protection of fundamental rights, including the law on
Ombudsman, was strengthened.

20. 
Delays
have been noted however on a number of measures, especially on legislative
reforms, notably as regards anti-corruption. Legislative measures adopted have
not yielded results in practice. Montenegro should rapidly ensure adoption of
an adequate law on political party financing. A credible track record of
investigations, prosecutions and final convictions in corruption cases,
including high-level corruption, needs to be developed. The systematic use of
the instruments of seizure and confiscation of assets should be ensured. Serious
concerns remain with respect to freedom of expression and the media. Work
should be accelerated investigating cases of violence against journalists.
Constructive political dialogue needs to be established and trust restored in
the electoral process and in state institutions. Strengthening administrative
capacities on EU-integration issues will be essential to maintain momentum on
the EU path. Depoliticisation of the civil service and increased professionalism
is also required. Economic reform should be pursued, not least to tackle high
unemployment, and the business environment improved. A sustainable and
SAA-compatible solution for the aluminium producer KAP is urgently required.

21. 
Strong
political commitment is essential for the deep and lasting political reforms
necessary to strengthen the rule of law. Montenegro is the first country to
open chapters 23 and 24 under the new approach to rule of law in the accession
negotiations. The Commission recalls the existence of the ‘overall balance’
clause of the negotiating framework. Progress in meeting the interim benchmarks
on the rule of law chapters and the relevant identified shortcomings above, demonstrated
by tangible results, will impact upon the pace of accession negotiations overall,
including the agendas of future IGCs.

22. 
Serbia: EU accession
negotiations with Serbia are now underway. The decision of the European Council
to open negotiations was reached due to Serbia’s progress in the reforms and its
continued commitment to the normalisation of its relations with Kosovo. The
first inter-governmental conference on the negotiations took place in January
2014. The analytical examination of the EU acquis (screening) is proceeding according
to plan. The
severe floods which hit the country in May have had a considerable
socio-economic impact. The EU provided immediate and substantial rescue and
relief efforts and organised a donors’ conference in July. Significant pledges
were made from the international community for the recovery and reconstruction
phase.

23. 
Serbia
has made some progress in public administration reform. It adopted a
comprehensive strategy and strengthened coordination and planning. As regards
the judiciary, important legislation as well appraisal rules for judges and
prosecutors were adopted. An important number of Court Presidents have been
appointed on a permanent basis. There is strong political impetus to fight
corruption. Several investigations into high-level cases have been conducted and
efforts made to improve coordination. Serbia actively participated in regional
law enforcement cooperation.

24. 
However,
continued efforts are needed to ensure an effective, independent judiciary. Key
pieces of legislation remain to be adopted, such as the law on free legal aid,
the law on whistle-blowers, and the law on conflicts of interest. Corruption
remains prevalent in many areas. Serbia needs to build up a track record of concrete
results in the fight against corruption and organised crime. Fundamental rights
need to be fully respected in practice, including protection of the most
vulnerable groups. There are concerns about deteriorating conditions for the full
exercise of freedom of expression. Weaknesses in public administration need to
be addressed. Findings of independent regulatory bodies need to be better
followed up. Economic reforms are also essential to generate growth and tackle
high unemployment.

25. 
With
its strong mandate, the new government should seize the opportunity to pursue
reforms with vigour. Serbia faces many challenges ahead. Serbia needs to foster
proactively the inclusiveness and transparency of the accession process. To
support the reform process, Serbia should improve planning, coordination and
monitoring of implementation of new legislation and policies. In line with the
new approach to rule of law issues, opening benchmarks have been set under
chapters 23 and 24. These require Serbia to present comprehensive action
plans. In order to ensure an overall balance in negotiations, progress under
these chapters will need to be made in parallel with progress in negotiations
overall.

26. 
Serbia
needs to maintain its commitment to regional cooperation and an active and
constructive engagement in the normalisation process with Kosovo, which
has seen significant progress. Serbia should continue to ensure
the implementation of the agreements reached in the dialogue. The Commission
recalls that, as is the case for rule of law chapters, the negotiating
framework requires progress in the process of normalising relations with Kosovo
under chapter 35 to be made in parallel with progress in negotiations overall.
Chapter 35 should be opened early in the negotiations. This will provide a
solid framework for monitoring implementation of agreements reached.

27. 
The former Yugoslav Republic of Macedonia: The
EU accession process for the former Yugoslav Republic of Macedonia is at an
impasse. Failure to act on the Commission’s recommendation to the Council means
that accession negotiations have still not been opened. At the same time, the
government’s failure to deliver sufficiently on a number of key issues damaged
the sustainability of reforms, with backsliding evident in some areas.

28. 
Some
further progress has been made as regards reform of the public administration,
as well as active regional and international police cooperation. The country
maintains a high level of alignment with the acquis relative to where it is in
the accession process. The EU agenda remains the country’s strategic priority.

29. 
However,
over the past year, there have been serious concerns about increasing politicisation
of state institutions and government control over media, including in the
context of elections as reported by OSCE/ODIHR. Trust in state institutions is
being progressively eroded. There are growing concerns about selective justice.
The situation on media freedom continued to deteriorate. Recent political
crises between government and opposition parties showed that party interests
are increasingly prevailing over national interests. It is the responsibility
of both government and opposition to ensure that political debate takes place
primarily in parliament and to contribute to creating the conditions for its
proper functioning. The government needs to ensure that the opposition has the
possibility to fully perform its democratic control function. At the same time,
the opposition also needs to engage constructively in the democratic processes.
No meeting of the High Level Accession Dialogue was held over the past year. As
regards the inter-ethnic situation, greater trust between the communities needs
to be built. The review of the Ohrid Framework Agreement still needs to be
completed and its recommendations implemented.

30. 
It
remains essential that decisive steps are taken towards resolving the ‘name
issue’ with Greece. The failure of the parties to this dispute to reach a
compromise after 19 years of UN-mediated talks is having a direct and adverse
impact on the country’s European aspirations. Resolute action is required, as
well as proactive support from EU leaders. The Commission recalls its view
that, if the screening and the Council discussions on the negotiating framework
were under way, the necessary momentum could have been created which would have
supported finding a negotiated and mutually accepted solution to the name issue
even before negotiating chapters were opened.

31. 
Overall,
given the cumulative progress the country has achieved, the Commission considers
that the political criteria continue to be sufficiently met and maintains its
recommendation to open accession negotiations but regrets the backward steps of
the past year. The Commission urges the authorities to take decisive action to
address concerns about increased politicisation and growing shortcomings with
regard to the independence of the judiciary and freedom of expression so that
its recommendation can be sustained in future years. The Commission remains
committed to assisting the country’s efforts, including through an inclusive High
Level Accession Dialogue process, in addressing all EU-related reforms so that the
full potential of relations can be achieved.

32. 
Albania: The decision
of the European Council of June 2014 to grant Albania candidate status is
recognition for the reform steps undertaken. It is also an encouragement to
step up the pace of reforms. In November 2013, the Commission launched a High
Level Dialogue with Albania to help the country to maintain focus on its EU
integration process and to monitor reform progress under the key priorities identified
for the opening of accession negotiations. In May 2014 Albania adopted a roadmap
laying down and structuring its planned reforms under the key priorities.

33. 
Albania
has made progress over the past year. Further steps were taken towards the
reform of the judiciary. The government has shown political will to act
decisively in the prevention and fight against corruption. The legislative
framework was strengthened and policy coordination and monitoring at central
level improved. The fight against organised crime shows a positive trend in a
number of areas, with an intensification of law enforcement activities, notably
on drug seizures and drug-related crimes, and on economic crime and trafficking
of human beings. Some steps were taken to improve the legal recognition of the
rights of lesbian, gay, bisexual, transgender and intersex persons.

34. 
However,
many shortcomings remain, in particular in the rule of law field. Much work
lies ahead. Fighting corruption and organised crime are significant challenges.
Albania will need to undertake substantial and sustained efforts to address the
implementation of the key priorities identified for the opening of accession
negotiations. Albania will need to act decisively to: continue the
reform of the public administration with a view to enhancing its professionalism
and depoliticisation; pursue a comprehensive reform of the judiciary to
reinforce its independence, efficiency and accountability through an inclusive
process and in close consultation with the Venice Commission; intensify its
anti-corruption efforts and take further determined steps in the fight against
organised crime, with a view to establishing a solid track record of proactive
investigations, prosecutions and convictions in both areas; and take effective
measures to reinforce the protection of human rights, including of Roma, and
anti-discrimination policies, as well as implement property rights. As regards
freedom of expression and media, the government failed to act on the identified
priorities. All statutory functions of the Audiovisual Media Authority need to
be restored and its independence guaranteed in practice. Albania should pursue economic
reforms aimed at increasing competitiveness and tackling high unemployment, as
well as address the high level of informality in the economy and improve the
business environment.

35. 
It
is crucial that the reform process is accompanied by a constructive and
sustainable political dialogue between government and opposition. It is the
responsibility of both government and opposition to ensure that political
debate takes place primarily in parliament and to contribute to creating the
conditions for its proper functioning. The government needs to ensure that the
opposition has the possibility to fully perform its democratic control function.
At the same time, the opposition also needs to engage constructively in the
democratic processes. Compromise-based and constructive work in parliament is
vital for the sustainability of reforms. The establishment of a National
Council for European Integration, uniting all stakeholders, will further help
to enhance the inclusiveness of the reform process. It is also key for
consensus on the relevant reforms across Albanian society.

36. 
Bosnia and Herzegovina: The
country remains at a standstill in the European integration process. There
remains a lack of collective political will on the part of the political
leaders to address the reforms necessary for progress on the EU path. There has
been very limited
progress on political and economic issues and on moving towards European
standards. The severe floods which hit the country in May have had a
considerable socio-economic impact. The EU provided immediate and substantial
rescue and relief efforts and organised a donors’ conference in July.
Significant pledges were made from the international community for the recovery
and reconstruction phase.

37. 
Widespread,
citizen-led protests in early 2014 underlined the fragility of the
socio-economic situation. The Commission has launched three initiatives to
shift the focus towards reforms and issues of direct concern to citizens. It has
expanded the EU- Bosnia and
Herzegovina Structured Dialogue on Justice to additional rule of law matters,
in particular the fight against corruption. It has set up a joint EU- Bosnia
and Herzegovina Working Group to accelerate the implementation of EU funded
projects. It has focused on strengthening economic governance. This included
development of a ‘Compact for Growth and Jobs’ together with key actors
including international financial institutions. The Compact will be the
yardstick for the necessary economic reform over the coming months. It will
also be the basis for the National Economic Reform Programme which the
Commission expects the country to develop by end-January 2015.

38. 
The
lack of any effective coordination mechanism on EU issues continues to
negatively affect the country’s interaction with the EU. Political tensions
within the Council of Ministers related to the division of competences across
different levels of government have continued. This has been compounded by the
complexity of the institutional arrangements in the country. This has prevented
the conduct of three out of the last six subcommittee meetings under the
Interim Agreement. Bosnia and Herzegovina also still refuses to adapt this
Agreement to take into account its traditional trade with Croatia before it
joined the EU. The Commission has undertaken steps to suspend Bosnia and
Herzegovina from certain trade benefits if the adaptation process is not
finalised by the end of 2015. The Stabilisation and Association Agreement (SAA)
signed in 2008 and ratified in 2011 has not yet entered into force as Bosnia
and Herzegovina has not yet fulfilled the conditions

39. 
The
political actors involved have been unable to agree countrywide strategies
required for Instrument for Pre-Accession Assistance in sectors such as energy,
transport and environment. This has led to a substantial reduction of funding
in these areas and a refocusing on assistance that benefits citizens directly. Reaching
the necessary agreement will open the way for Bosnia and Herzegovina to benefit
fully from the funding available.

40. 
Despite
intensive facilitation efforts of the Commission to resolve remaining
blockages, the Sejdić-Finci ruling of the European Court of Human
Rights has not been implemented. The ruling continues to be instrumentalised
for narrow party political and ethnic interests and the solution to it linked
to other issues.

41. 
For
Bosnia and Herzegovina to progress on the EU path it is important that all
levels of government are rapidly formed after the elections and that concrete
reform steps are taken swiftly. The political leadership owes it to Bosnia and
Herzegovina’s citizens to provide the country with a clear direction. The
efficiency and functioning of the political institutions at all levels of
government need to improve. This applies in particular to the interaction
between different levels of government. This requires setting up a
well-functioning coordination mechanism on EU matters. Public administration
also needs strengthening across the board.

42. 
Kosovo: Completion of
the negotiation of a Stabilisation and Association Agreement with Kosovo
and its initialling in July is a milestone on Kosovo’s European integration
path. It will be the first comprehensive agreement between the EU and Kosovo.
The SAA provides for enhanced political dialogue, closer trade integration,
including opening EU markets to Kosovo’s industrial and agricultural products,
and new forms of cooperation. The Commission now looks forward to its signature
and conclusion. Following the elections in June, there has been an increasingly
polarised political environment and Kosovo has come to a situation of political
deadlock, delaying certain key reforms.

43. 
Kosovo
has made progress in its visa liberalisation dialogue. Good cooperation with
the EU rule of law mission, EULEX, has continued. Kosovo authorities have made
a substantial political commitment to renew the mission’s mandate whilst taking
up more responsibilities, and agreed to establish a specialist court to hear
cases arising out of the investigation led by the Special Investigative Task
Force. To complete this process, Kosovo needs to adopt the necessary legislative
changes including to its constitution. Kosovo should cooperate with the planned
court and deal with the past.

44. 
Kosovo
faces numerous challenges. The rule of law in Kosovo, including judicial
independence, and limited results in the fight against organised crime and
corruption remains a major concern. More needs to be done to address
shortcomings raised in the visa dialogue, including mitigating the security and
migratory risks of potential visa liberalisation. The need for structural
economic reforms addressing the high level of unemployment is becoming urgent.
Important reforms such as electoral reform and public administration reforms
need to be undertaken as a priority and the protection of minorities addressed.

45. 
Kosovo
needs to actively work on its EU reform agenda and the priorities
highlighted in the 2012 Feasibility Study and most recent Progress Reports.
Under the SAA, Kosovo has committed to comprehensive reform and legislative
alignment with the EU acquis, including in sectors such as the rule of
law, public administration, economy, competition and trade. Kosovo should focus
on preparing the smooth implementation of the SAA including the necessary
structures. The Commission stands ready to support Kosovo as it moves to this
important new stage in its relations with the EU and step up its dialogue with
the National Council on European Integration.

46. 
Kosovo’s
progress towards its European future has been possible due to the progress made
by Kosovo in the reforms and its continued commitment to the normalisation of
its relations with Serbia, which has seen significant progress. In this regard,
the new government in Kosovo will need to maintain the commitment to regional
cooperation and an active and constructive engagement in the normalisation
process with Serbia. Kosovo should continue to ensure the implementation of the
agreements reached in the dialogue.

47. 
The
situation in northern Kosovo remains tense. All actors should cooperate with
EULEX, and refrain from taking unilateral steps. EULEX should be fully
supported to carry out its mandate in north Kosovo. Further efforts should be
made to allow the four northern municipalities to function under Kosovo’s legal
framework.

48. 
Turkey: Turkey is a
candidate country and a strategic partner for the European Union. Its dynamic
economy provides a valuable contribution to the prosperity of the European
continent. The very serious developments in the region, in particular in Syria
and Iraq, render cooperation on foreign policy issues even more crucial. Turkey’s
strategic location also underlines the importance of further cooperation in the
areas of migration policy and energy security. The value of such cooperation is
even clearer in light of the considerable challenges posed by recent developments
in our joint neighbourhood, including the Ukraine crisis.

49. 
Active
and credible accession negotiations provide the most suitable framework for exploiting
the full potential of EU-Turkey relations. Given its unrivalled scope and
depth, the accession process, which no alternative can replace, promotes
EU-related reforms and provides an important basis for intensifying dialogue on
foreign policy and security issues and for strengthening economic
competitiveness and trade opportunities. It also helps increase cooperation in
the field of energy and on justice and home affairs, including visa/migration
policy/readmission. Accession negotiations need to regain momentum, respecting
the EU’s commitments and the established conditionality. The EU should remain
an important anchor for Turkey’s economic and political reforms. In this
regard, it is in the interest of both Turkey and the EU that the opening
benchmarks for chapter 23: Judiciary and Fundamental rights and 24: Justice,
Freedom and security are defined as soon as possible, leading to opening of
negotiations under these two chapters. Turkey can accelerate the pace of
negotiations by advancing in the fulfilment of the benchmarks, meeting the requirements
of the negotiating framework and by respecting its contractual obligations
towards the EU. This could provide a significant boost to the negotiation
process. In the meantime, cooperation between the EU and Turkey should develop
in all crucial areas, notably those already identified in the positive agenda.

50. 
Turkey
plays an important regional role and is actively involved in its wider
neighbourhood. In this regard, further development of dialogue and cooperation
on foreign policy issues of common interest is needed. Turkey’s continuing
participation in CSDP missions and operations, and its recent offer to
contribute to EUFOR CAR and to EUBAM Libya, are welcome. Turkey’s role on
Syria, especially with regard to the very important humanitarian support
provided to Syrians fleeing violence across the border, is key. The EU has pledged
to continue to support the governments and host communities of Syria’s neighbours
so they can deal effectively with the increasing flow of refugees and build up
their resilience. Turkey has made clear its readiness to play an active role in
the coalition against ISIL. The political dialogue should be used to develop
closer cooperation against ISIL and its funding networks. The active
counter-terrorism dialogue between the EU and Turkey is welcome and should be
further strengthened, particularly in the area of ‘foreign fighters’. This
cooperation will be further enhanced by the adoption by Turkey of further
relevant counter-terrorism legislation. The EU continues to encourage Turkey to
develop its foreign policy as a complement to and in coordination with the EU,
and to progressively align with EU policies and positions.

51. 
Implementation
of reforms adopted in previous years, in particular measures announced in the
September 2013 democratisation package, has continued. The Constitutional Court
has taken a number of important decisions which has illustrated the resilience
of the country’s constitutional system. The EU-Turkey readmission
agreement was signed in December 2013, in parallel with the launching of the
visa liberalisation dialogue, and entered into force on 1 October 2014, creating
new momentum in EU-Turkey relations. There have been renewed efforts towards a
peaceful settlement of the Kurdish issue, notably the adoption of legislation
aimed at ‘bringing a stronger legal foundation to the process’. This process is
of historical significance for Turkey and should be pursued in good faith on
all sides.

52. 
The
response of the government following allegations of corruption in December 2013
has given rise to serious concerns regarding the independence of the judiciary
and separation of powers. The widespread reassignments and dismissals of police
officers, judges and prosecutors, despite the government’s claim that these
were not linked to the anti-corruption case, have impacted on the effective
functioning of the relevant institutions, and raise questions as to the way
procedures were used to formalise these. It is crucial that the investigations
into corruption allegations are properly conducted in full transparency and the
operational capabilities of the judiciary and the police are assured. Attempts
to ban social media, later overturned by the Constitutional Court, and
pressures on the press leading to a widespread self-censorship, reflect a
restrictive approach to freedom of expression. The approach taken in the area
of freedom of assembly remains restrictive. Turkish legislation and its implementation
concerning the right to assembly and intervention by law enforcement officers will
need to be brought in line with European standards.

53. 
In
this context, priorities for Turkey will be to promote dialogue
across the political spectrum and society more broadly, to reinvigorate its
rule of law reform efforts and to pay particular attention to the respect of
fundamental rights in law and in practice. Opening negotiations on chapter 23
and 24 would provide Turkey with a comprehensive roadmap for reforms in this
essential area. Turkey is invited to engage more systematically with the
Commission and other relevant bodies such as the Council of Europe, including
the Venice Commission. In general, more attention should be given to the
effective implementation of existing legislation. The Ministry for European
Affairs has a crucial role to play in ensuring the coordination and
compatibility of the new legislation with EU laws. The Commission looks forward
to the concrete follow-up by Turkey of its recently adopted EU strategy, which
aims to reinvigorate Turkey’s accession process.

54. 
The
Positive Agenda, launched in 2012, continues to support and complement
accession negotiations with Turkey through enhanced cooperation in a number of
areas of joint interest. More high-level contacts between Turkey, the EU and
its Member States would further strengthen cooperation. Challenges in the area
of justice and home affairs, notably in the field of migration, need to be
addressed by enhanced joint efforts. The EU expects the full and effective
implementation of Turkey’s obligations under the readmission agreement
vis-à-vis all Member States.

55. 
With
its large, dynamic economy, Turkey is also an important trading partner for the
EU and a valuable component of EU competitiveness through the Customs Union. It
is time to work towards unleashing the full potential of the Customs Union. The
EU should engage with Turkey on broadening and modernising mutual trade
relations for the benefit of both sides. A number of issues related to the
functioning of the Customs Union, on the basis of the evaluation completed in
2014, should also be addressed. It is also crucial to develop an active and
far-reaching economic dialogue. Further strengthening of EU-Turkey energy
cooperation and progress in the accession negotiations would facilitate the
interconnection and integration of energy markets. Economic cooperation would
be greatly enhanced by the opening of negotiations of Chapter 5 (public
procurement), Chapter 8 (Competition) and Chapter 19 (Employment and Social
policy), as soon as the necessary benchmarks are met by Turkey.

56. 
The
Commission stresses all the sovereign rights of EU Member States. This includes,
inter alia, the right to enter into bilateral agreements and to explore and exploit
natural resources in accordance with the EU acquis and international law,
including the UN Convention on the Law of the Sea. In line with the repeated
Council and Commission positions from previous years, it is now urgent that
Turkey fulfils its obligation of fully implementing the Additional Protocol and
makes progress towards normalisation of relations with the Republic of Cyprus.
This could provide new momentum to the accession process, allowing in
particular progress to be made on the eight chapters covered by the Council
conclusions of December 2006. The Commission also urges the avoidance of any
kind of threat, source of friction or provocative action that could damage good
neighbourly relations and the peaceful settlement of disputes. The Commission
welcomes the support of Turkey to the resumption of the fully-fledged
settlement talks in Cyprus. It is now important that such support is followed
up through constructive statements and concrete action.

57. 
As
regards the Cyprus issue, the Commission welcomes the resumption of
fully-fledged settlement talks between the Greek Cypriot and Turkish Cypriot
community leaders under UN auspices and the appointment of Mr Espen Barth Eide
as the Special Advisor to the UN Secretary-General on Cyprus. The Commission
expects both sides to soon enter substantial structured negotiations that will
pave the way to an agreement on a comprehensive solution of the Cyprus problem to
the benefit of all. The Commission encourages steps that contribute to a
positive climate between communities and which benefit Cypriots in their daily
lives and welcomes civil society initiatives to this end. The EU has declared
its readiness to accommodate the terms of a settlement in line with the
principles on which the Union is founded. Statements that are not conducive to
creating a positive atmosphere in the context of the ongoing settlement talks
should be avoided.

58. 
Iceland:
following a decision of the Icelandic government, accession negotiations have
been on hold since May 2013. Given the government position, the Commission
proceeded with the phasing-out of IPA pre-accession assistance with Iceland.
Iceland remains an important partner for the EU through its participation in
the European Economic Area agreement, its membership of the Schengen area as
well as through co-operation on Arctic matters.

ANNEX

Summary
of findings of the progress reports on Montenegro, Serbia, the former Yugoslav
Republic of Macedonia, Albania, Bosnia and Herzegovina, Kosovo and Turkey

Montenegro

Montenegro
continues to sufficiently meet the political criteria. The government
has remained focused on EU integration. The structures for the accession
negotiations were further strengthened. The adoption of the 2014-15 Action Plan
for the implementation of the public administration reform strategy and the
establishment of a new special group on public administration reform within the
framework of the Stabilisation and Association Agreement (SAA), should support
progress in this area. Public administration needs to be further
rationalised, transparency increased to limit the scope for corruption and the
strengthening of administrative capacity in the area of European integration
ensured. Serious efforts are needed to address the high level of politicisation
in the civil service and to ensure merit-based recruitment and promotion.
Increasing professionalism and efficiency is important, not least to equip the
administration for the challenges of the accession negotiations and of
implementing the acquis. On public financial management, the capacity
for financial forecasting needs to be strengthened and the compliance with
European standards reinforced.

Allegations
of wrongdoing marred the electoral rounds held in a number of municipalities in
early 2014. Where appropriate, these should be investigated and, where
necessary, prosecuted by the competent authorities. Due to the polarised
political climate, the formation of the new administrations in certain
municipalities after the elections was a difficult process. New electoral
legislation was adopted in February and March. It fulfils several outstanding
OSCE/ODIHR recommendations, while some issues remain to be addressed in line
with European standards and best practices. The adoption of amendments to the
law on political party financing was marked by controversy, with the main
governing party voting against. Following a constitutional court ruling in
June, a significant part of the amendments to the law on political party
financing were deemed unconstitutional. Montenegro needs to rapidly bring its
legislative framework in this area fully in line with European standards and
best practice, as well as provide an initial track record on the correct
implementation of the law, including application of deterrent sanctions where
required. The
judicial follow-up to the alleged abuse of public funds for party political
purposes remains to be completed and political responsibility ensured.

In the area of
judicial reform, implementation of measures in accordance with the timelines
foreseen in the Action Plan is ongoing. Following alignment of relevant
legislation with the constitutional reforms of July 2013, several judicial and
prosecutorial officials have been elected. After several attempts, the
parliament finally appointed a new Supreme State Prosecutor in October 2014.
Reforms introducing a single countrywide recruitment system for judges and
prosecutors, an objective and merit-based promotion system as well as an
improved disciplinary system need to be completed. While the efficiency of
courts has overall increased, efforts to further enhance the efficiency of the
judiciary should continue.

The impact of
anti-corruption measures has so far been limited. Already prior to the start of
operation of the new anti-corruption agency, existing institutions in the area
of prevention of corruption need to be strengthened to take a more proactive
approach. Corruption remains prevalent in many areas and continues to be a
serious problem. A credible track record of investigations, prosecutions and final
convictions in corruption cases, including high-level corruption, needs to be
developed. The systematic use of the instruments of seizure and confiscation of
assets should be ensured. While the track record has continued to develop in
the area of the fight against drugs and new cases were launched on migrants’
smuggling, difficulties remain in addressing other forms of organised crime,
including trafficking in human beings, cybercrime and anti-money laundering.
The number of final convictions, for both corruption and organised crime, is
limited, with cases often referred to retrial based on procedural
infringements. Fighting organised crime and corruption is
fundamental to countering criminal infiltration of the political, legal and
economic systems.

The legal and
institutional framework for the observance of human rights is in place and the
main elements of international human rights laws have been incorporated into
the legal system. The capacity of the institutions in charge of protection and
enforcement of human rights require strengthening, including for the judiciary
and police. Vulnerable groups, for example the Roma and disabled persons, are
most affected by shortcomings in this area.

Serious concerns
remain with respect to freedom of expression, which has been undermined by
cases of violence against journalists, and attacks on media property. Old
and recent cases of threats and violence against journalists remain to be
thoroughly investigated and prosecuted, to identify not only the material perpetrators
but also those behind the attacks. Older cases in particular need to
be addressed as a matter of urgency to avoid them being time-barred. A
Commission for monitoring the activities of the competent authorities in the
investigation of old and recent cases of threats and violence against
journalists was established in December. Its recommendations need to be fully
followed up by the authorities. The government should continue publicly
promoting and supporting media freedom, avoiding any statements that may be
understood as intimidation. Self-regulatory bodies responsible for maintaining
and promoting professional and ethical standards are weak.

The Montenegrin
authorities took further steps to strengthen the protection of the rights of
lesbian, gay, bisexual, transgender and intersex (LGBTI) persons. The first
pride parade in Podgorica took place in October 2013, supported adequately by
the authorities. However, attacks against LGBTI persons continued
and related criminal convictions remain few. Hostility against them remains
widespread in society.

Some progress
was made regarding the situation of the Roma, especially concerning school
attendance; nevertheless,
drop-out rates and the low share of female Roma students among the total
population of Roma students is a cause of concern. Discrimination
against the Roma and their political underrepresentation needs to be addressed.

Montenegro
continues to maintain good bilateral relations with the other enlargement
countries and neighbouring EU Member States and is strongly
involved in developing regional cooperation. A border agreement was initialled
with Bosnia and Herzegovina.

Montenegro still
maintains the 2007 bilateral immunity agreement with the United States,
granting exemptions from the jurisdiction of the International Criminal Court.
Montenegro needs to align with the EU position in the framework of accession
negotiations

As regards the economic
criteria, Montenegro
undertook some further steps towards a functioning market economy. The country
should be able to cope with competitive pressures and market forces within the
Union over the medium term, provided that it continues to address current
weaknesses through appropriate structural reforms.

The economy
recovered in 2013 from a double-dip recession, but the recovery remains fragile
due to weak domestic demand, a narrow production base, and a high dependence on
the external environment. The current account deficit somewhat narrowed but
external imbalances remain high. Substantial and persistent budget deficits
point to the need for fiscal consolidation measures to ensure a reduction of
public debt. In spite of marginal improvements, the labour market conditions
remain precarious in view of very high unemployment rates, especially among the
youth and the long-term unemployed.

Montenegro
should increase workers mobility and strengthen the effectiveness of active
labour market policies, as well as enhance the quality of education, including
vocational education and training. To support private-sector development,
measures should be taken to further simplify the regulatory and legal
environment, including strengthening contract enforcement, reducing
administrative costs and barriers, and facilitating privatisation procedures.
The unsettled situation of the aluminium conglomerate KAP calls for a
sustainable solution, implemented in compliance with SAA rules, in order to
avoid a new round of contingent liabilities.

As
regards the ability to take on the obligations of membership, Montenegro
is at varying degrees of alignment. As a result of the screening process, the
Commission assessed that, in twenty chapters, Montenegro was sufficiently
advanced for negotiations on these chapters to be opened without setting
opening benchmarks. Of these chapters, ten have already been opened, with
interim or closing benchmarks set and two have been provisionally closed. In
addition to the rule of law chapters, opening benchmarks were set in eleven
chapters[6]. The
fulfilment of the opening benchmarks, as well as the interim benchmarks set for
the rule of law chapters and the closing benchmarks, set for eight other
chapters[7],
should guide Montenegro on its integration path.

Overall,
Montenegro is advanced it its alignment in some chapters of the acquis,
including intellectual property law, science and research, education and
culture, consumer and health protection, and foreign, security
and defence policy. Montenegro generally aligned itself with and implemented
restrictive measures introduced by Council decisions, including EU restrictive
measures in the context of Russia’s illegal annexation of Crimea and events in
eastern Ukraine.

Aligning
with the acquis and strengthening the necessary administrative capacity
remains a substantial challenge for Montenegro. The Montenegrin administration
will need to focus on addressing the outstanding opening benchmarks set. Particular
priority should be given to ensuring compliance with SAA state aid
rules in the case of KAP. The
administrative capacity in all areas of environment and climate change has to
be strengthened at both central and local level to ensure
alignment with and implementation of environment and climate acquis.

Serbia

Serbia continues
to sufficiently meet the political criteria. Early parliamentary
elections in March confirmed the European integration aspirations of the
country. EU accession remains the main goal of the new government. It can count
on an unprecedented two thirds majority in parliament to conduct the key
priority reforms needed to drive the country on its European path. The Serbian
government set itself ambitious economic goals in this respect. Constitutional
reforms early on in the new legislature would represent a decisive progress in
the accession negotiations. Attention should be paid to continuing improving
inclusiveness and transparency of the reform process. Urgent parliamentary
procedure should be limited to cases where it is strictly necessary. The role
of independent regulatory bodies should be continuously acknowledged and their
recommendations followed up. A National Convention on the European
Union was set up as a platform for cooperation with civil society in the
accession negotiation process in June, which should materialise in increased
consultation of civil society throughout, especially at times of particular
economic and social challenges for Serbian citizens.

Serbia is
progressing in reforming its public administration. It adopted a comprehensive
strategy and strengthened coordination and planning of public policies with the
setting up of a new Secretariat for Public policies. A sound and comprehensive
reform, underpinned by proper analysis and performance management tools, is
however still needed.

First
steps were taken in the implementation of the national strategies on judicial
reform and the fight against corruption adopted last year. Serbia
has taken stock of the significant challenges its judiciary is facing.
Intensive legislative activities took place. Appraisal rules
for judges and prosecutors were adopted. An important number of Court
Presidents have been appointed on a permanent basis. The first generation of
public notaries took office. Key pieces of
legislation remain however to be adopted, such as the law on free legal aid.
The assessment of the implementation of the laws recently adopted is pending.
Progress is needed to ensure an effective independent judiciary. The
recruitment and appointment of magistrates remain governed by unclear criteria.
The generalisation of the adversarial system and modification of the court
networks have not yet had a noticeable impact on the efficiency and quality of
the judiciary.

There
is a strong political impetus to fight corruption. Several investigations into high-level
cases have been conducted and efforts have been made to improve coordination
and institutional leadership in this area. However, corruption remains
prevalent in many areas and
remains a serious problem. The ratio of convictions to indictments is low.
Whistle-blowing protection mechanisms have yet to be established. Effective
prevention and repression mechanisms remain to be built. The Anti-Corruption
Agency and Council’s role need to be supported at the highest level and their
recommendations and proposals properly followed up. Effective alternatives to
the excessive recourse to incriminations under the offence of abuse of position
in the private sector need to be found.

Serbia
actively participated in regional law enforcement cooperation, which yielded
concrete results in the fight against organised crime, leading in particular to
a high-profile arrest in connection with organised crime groups. A strategic
threat assessment on organised crime is needed, with a view to develop
strategic planning and analysis and subsequently appropriate law enforcement
responses, including through the concept of intelligence-led policing. Credible
track records of investigations, prosecutions and final convictions need to be
developed in corruption and organised crime
cases, including high-level ones. Fighting
organised crime and corruption is fundamental to countering criminal
infiltration of the political, legal and economic systems.

Looking
ahead, the adoption of credible and comprehensive action plans for chapters 23
and 24, in line with the new approach, will be a crucial milestone for Serbia.

The
legal framework for the protection of minorities is broadly in place but its
consistent implementation across the country needs to be ensured, notably in
the areas of education, use of languages, and access to the media and to
religious services in minority languages. The positive measures taken to
improve the situation of the Roma need to be stepped up, particularly when it
comes to education, housing and employment. Further sustained efforts are
needed to improve the situation of refugees and displaced persons.

The
Pride Parade, which took place in Belgrade on 28 September without major
incident, is an important milestone towards the effective exercise of human
rights in general and lesbian, gay, bisexual, transgender and
intersex
(LGBTI) rights in particular. Serbia took an important step towards
implementing the 2011 media strategy by adopting in August a package of media
legislation, which is designed to enhance transparency of media ownership and
funding and to align legislation and practice with the EU framework. However, there
are concerns about deteriorating conditions for the full exercise of freedom of
expression. The authorities hold a crucial responsibility in actively
contributing to the unimpeded exercise of freedom of expression, including by
showing appropriate support to independent bodies, human rights defenders and
independent journalists. The promotion of all fundamental rights and the
implementation of the anti-discrimination strategy will require an even more
dedicated and proactive approach.

Serbia
continued to adopt a constructive approach in regional cooperation and made
significant improvements when it comes to relations with some of its
neighbours.

Regarding
the normalisation of relations with Kosovo, Serbia has remained engaged
in the dialogue and overall committed to the implementation of the April 2013 First agreement of principles governing the normalisation of
relations
and other agreements reached in the dialogue. This has led to a number of
irreversible changes on the ground, with local and parliamentary elections held
Kosovo wide for the first time and the dismantling of the Serbian police and
justice structures substantially advanced. A permanent solution for Kosovo’s
inclusion in the South-East European Cooperation Process (SEECP) was endorsed.
While there have been no high-level meetings since early elections were called
in Kosovo, work has continued at technical level, leading to progress in the
areas of customs collection, IBM, energy and telecoms.

However,
progress in the dialogue implementation has generally slowed down. Early
general elections were held in both Serbia and Kosovo. It is important that the
high-level dialogue resumes. It is also essential that both sides continue to
engage fully in the implementation in good faith of all existing agreements.
Further progress should gradually lead to the comprehensive normalisation of
relations between Serbia and Kosovo, in the form of a legally binding agreement
by the end of Serbia’s accession negotiations, with the prospect of both Serbia
and Kosovo being able to fully exercise their rights and fulfil their
responsibilities.

As regards the economic
criteria, Serbia has made limited progress towards establishing a
functioning market economy. A wide range of structural reforms needs to be
implemented so as to cope in the medium-term with the competitive pressures and
market forces within the Union.

The economy
contracted in the first half of the year, also impacted by heavy floods. The
government has made a serious start on its ambitious programme of economic and
structural reforms with the adoption of a first set of important laws on
labour, privatisation, and bankruptcy. Despite a series of new measures, fiscal
imbalances remain very high and government debt continued to increase. However,
growing exports contributed to narrowing of external imbalances. Inflation hit
historically low levels, under the targeted band of the central bank.
Unemployment remained very high.

Significant
efforts to reduce government expenditure and implement the adopted structural
reforms are required, in order to restore fiscal sustainability and ultimately
support growth. Reducing the heavy state influence in the economy requires
tackling inefficiencies in the large public sector, advancing privatisation in
line with the schedule, streamlining state aid, and improving corporate
governance of public companies. Tax collection needs to be improved, also by
tackling the large informal sector. The business environment suffers from
excessive red tape, slow market entry and exit, many obstacles to investment,
such as the weak legal system and slow contract enforcement. The high share of
non-performing loans needs to be effectively addressed to improve bank lending.
Upgrading the physical infrastructure, especially after the damage incurred by
the floods, requires persistent efforts and creation of additional fiscal
space. The education system needs to be made
more efficient in view of falling numbers of pupils and the skills mismatch in
the labour market.

As regards its ability
to take on the obligations of membership, Serbia has continued aligning its
legislation to the requirements of the EU legislation in many fields. It continued
to implement its obligations under the Stabilisation and Association Agreement
(SAA) smoothly. Good progress can be reported in information society
and media with the adoption of the package of three laws
implementing the 2011 media strategy thus further aligning Serbia’s legal
framework with the acquis. Legislation on rail, air and road
transport was also further aligned. The release of the results of the
population and agriculture censuses continued. The new public
administration reform strategy from January 2014 includes public internal
financial control among the reform priorities.

In the field of
foreign and security policy, Serbia’s alignment with EU declarations and
Council decisions should be improved so that Serbia fulfils the requirement
under the negotiating framework to progressively align its policies and
decisions in this area with the ones adopted by the European Union and its
Member States in the period up to accession. Serbia needs to urgently elaborate
and implement reliable and robust monitoring and supervision mechanisms for acquis
alignment across the board. Significant efforts are also needed not only to
enhance and fully enforce the overall legal framework but also, and most
importantly, to back these reforms with appropriate financial and human
resources. There is also a lack of institutional coordination and leadership in
some key acquis areas and the need to safeguard the independence of
regulatory bodies. The legislation on state aid control must be aligned
with the acquis and effectively applied to all undertakings, including
those in the process of restructuring and privatisation.
Further efforts are needed to streamline the asylum procedure in line with EU
standards and permanent accommodation facilities need to be urgently upgraded.
Serbia needs to step up its efforts towards alignment in the field of energy,
including when it comes to the South Stream gas pipeline. It needs to
achieve unbundling in the gas sector and the restructuring of the public gas
company Srbijagas as a matter of priority. Further alignment in the
areas of taxation, environment, climate change, genetically modified organisms
is also needed, together with substantial strengthening of the overall health
and social protection system.

The
former Yugoslav Republic of Macedonia

Overall, the
country continues to sufficiently meet the political criteria. The
country has completed the bulk of its reforms as regards the judicial system
and the public administration and has made progress since becoming a candidate
country in 2005. The level of legislative alignment is high in relation to
where the country stands in the accession process. However, serious challenges
persist, and in some areas have increased. These relate, in particular, to the
increasingly divisive political culture, serious concerns about increasing
politicisation and government control over state institutions and media, and a
still fragile inter-ethnic situation.

The presidential
and early parliamentary elections of April 2014 were assessed by the OSCE/ODIHR
as efficiently administered, but affected by lack of separation between state
and party activities and biased media reporting. Concerns about
the blurring of state and governing parties are eroding trust in the public
institutions.
Lack of dialogue and persisting divisions between the parties led to a renewed
political crisis, arising out of allegations in relation to the elections,
which saw the main opposition party absent itself from parliament. The main
political parties make insufficient efforts to engage in constructive politics
in the interest of the entire electorate and the country as a whole. Government
and opposition should take steps to restore political dialogue in parliament. The
government needs to ensure that the opposition has the possibility to fully
perform its democratic control function. At the same time, the opposition also
needs to engage constructively in the democratic processes.

Politicisation
of the public administration, at both central and local level, is a serious
concern. The principles of transparency, accountability, and merit are not yet
fully applied. OSCE/ODIHR furthermore reported on credible allegations of
pressure having been exerted on public sector employees during the April 2014
elections. These issues should be addressed, including through the new
legislative framework.

The independence
and competence of courts also needs to be further enhanced and more focus
placed on the quality of justice provided to the citizen. The country’s high
level of legislative and technical advancement in this area is overshadowed by growing
concerns about selectivity of justice. Track records are being developed, but
corruption remains prevalent in many areas and continues to be a serious
problem. The anti-corruption framework needs to be more effectively
implemented.

Further
improvements were made in the areas of police cooperation and combating
organised crime and human trafficking. Efforts should continue to build up a
track record of investigations, prosecutions and convictions in organised crime
and corruption cases. Fighting organised crime and corruption is fundamental to
countering criminal infiltration of the political, legal and economic systems.

The overall
framework for the protection of fundamental rights is in place but more focus
needs to be placed on its effective implementation. Continued efforts are
needed to address concerns about prejudice and discrimination against the Roma
population and to counteract intolerance against lesbian, gay, bisexual,
transgender and intersex (LGBTI) persons.

The situation on
media freedom continued to deteriorate. Government influence on media output is
exercised through, inter alia, state-financed advertising. There is a
scarcity of truly independent reporting and lack of accurate and objective
information being made available through mainstream media to the public, and a
lack of informed public debate.

As regards
inter-ethnic relations, the Ohrid Framework Agreement, which brought an end to
the 2001 conflict, provides the framework for guaranteeing the multi-ethnic
character of the society. However, a lack of trust between the communities
prevails. Tensions can be easily sparked by events or incidents. A more
proactive and joint approach to promoting an inclusive multi-ethnic society is
needed. The review of the Ohrid Framework Agreement still needs to be completed
and its recommendations implemented.

The country
generally maintains good relations with other enlargement countries and plays
an active role in regional cooperation. A constructive approach to relations
with neighbouring EU Member States remains important. Actions and statements
which negatively impact on good neighbourly relations should be avoided.

As regards the economic
criteria, the former Yugoslav Republic of Macedonia remains well advanced
and, in some areas, made some further progress in the establishment of a
functioning market economy. To cope with competitive pressures and market
forces within the Union in the medium-term, the country needs to address
important challenges through determined implementation of structural reforms.

The economic recovery
continued to progress, but it remains narrowly based on the external sector,
and has had limited impact on unemployment which remains high especially among
young people. Reforms addressing the structural rigidities of the labour market
have progressed only hesitantly. Financial stability was preserved and FDI
inflows increased. Fiscal discipline as well as transparency and quality of
government spending deteriorated.

Prospects for
growth and employment depend largely on the business environment of the
domestic private sector. To support this, there is a need to further facilitate
licensing procedures, also with a view to encouraging backward linkages between
domestic and foreign firms; to speed up market exit procedures; and, generally,
to ensure a level-playing field for all companies when enforcing business
regulation. Access
to finance will need to be improved, including by repairing the bank-lending
channel. A
better alignment of workers’ skills with labour demand needs to be tackled
through further reforms of the education system, including the implementation
of the vocation training strategy. Regarding public finances, the renewed
deterioration of fiscal discipline in 2013 and 2014 calls for improved budget
planning procedures and better consistency of annual budget execution with the
medium-term fiscal strategy. The quality of public spending should be improved,
by shifting the composition of capital expenditure towards growth-enhancing
investment.

The
former Yugoslav Republic of Macedonia has made further progress in improving
its ability to take on the obligations of membership. The country
continues to be engaged in the Stabilisation and Association Process and to
fulfil its commitments under the Stabilisation and Association Agreement.

The country has
wide-ranging cooperation with the EU across all areas of the acquis and
is at an advanced level of legislative alignment, at strategic and
institutional level. The country’s level of alignment is sufficient to move to
the next stage of the accession process. The focus should now be on
administrative capacity and effective implementation.

In the field of
the internal market, a good level of legislative alignment has already been
achieved for capital movements, postal services and company law. In the area of
justice and home affairs, the country is well advanced in its preparations on
visa policy, external borders and Schengen, as well as police cooperation. On
the other hand, further efforts are needed in particular on regional policy,
environment and climate change, social policy and education. Public internal
financial control also needs to be further strengthened and developed across
the public administration.

The Council has
not yet decided on the Commission’s 2009 proposal on passage to the second
stage of the Association, under Article 5 of the Stabilisation and Association
Agreement.

Albania

Albania has made
further progress towards fulfilling the political criteria. A High Level
Dialogue on the Key Priorities was launched and Joint Working Groups to
structure work on the required reforms were established. A National Council for
European Integration is yet to be established to foster inclusiveness and unite
all stakeholders around the reform process. A constructive and sustainable
political dialogue between government and opposition is vital for the
sustainability of reforms.

Parliament
consensually adopted a Resolution on European Integration. It endorsed
a number of legislative measures relevant to EU integration, mainly in the
areas of fight against corruption and organised crime and also voted on
appointments to the judiciary. Transparency of the legislative procedure was
improved.
However, a tense political climate impinged on parliamentary work, resulting in
the opposition often abstaining from and since July boycotting all
parliamentary work. Both government and opposition need to ensure
political debate takes place primarily in parliament. The government needs to
ensure that the opposition has the possibility to fully perform its democratic
control function. At the same time, the opposition also needs to engage
constructively in the democratic processes.

The reform of
the public administration moved forward, notably with the Civil Service Law coming
into effect, the adoption of relevant implementing legislation and steps to
improve recruitment procedures. Implementation needs to be pursued with a view
to strengthen the depoliticisation, accountability and professional standards
of public administration. The Code of Administrative Procedures needs to be
finalised and adopted in line with EU standards. Steps will need to be taken to
reinforce the independence and performance of independent institutions.

Albania
took further steps towards the reform of the judiciary by engaging with the
Venice Commission in view of enhancing the independence,
accountability and professionalism of the judicial system and by starting to
draft the 2014-2020 judicial reform strategy. Some steps were made to improve
the accountability and transparency of the judiciary, including through
legislative amendments regulating the immunities of judges and prosecutors.
Disciplinary proceedings against judges have led to a number of sanctions. The
Administrative Courts started to function, although they still need to be made
fully operational. Changes were introduced to the Law on the High Council of
Justice aimed at improving its functioning. However, concerns have been
expressed on their expeditious adoption without including and consulting all
relevant actors. Many shortcomings remain and there is an overall awareness
that deep reform of the judiciary is urgently needed. Further substantial
efforts to ensure the independence, efficiency and accountability of the
judiciary will need to be made, including through constitutional amendments.
Albania will need to vigorously pursue this process with the constructive
cooperation of all stakeholders, including through continued cooperation with
the Venice Commission. Determined action is needed to reinforce the
disciplinary system for judges, prosecutors and lawyers, as well as to further
improve the efficiency of courts.

The government has
shown political will to act decisively in the prevention and fight against
corruption. The legislative framework was strengthened and policy coordination
and monitoring at central level improved. A National Anti-Corruption
Coordinator was appointed and a network of anti-corruption focal points was
established in all line ministries. However, corruption is prevalent in many
areas, including the judiciary and law enforcement, and remains a particularly
serious problem. Albania needs to take measures to enforce the legislative
framework and adopt the 2014-20 anti-corruption strategy and action plans.
Inter-institutional cooperation needs to be enhanced and existing obstacles to
proactive investigations need to be removed. Albania will also need to further
develop the track record of investigations, prosecutions and convictions in
corruption cases, notably at high level.

The fight against
organised crime shows a positive trend in a number of areas, with an
intensification of law enforcement activities including on drug seizures and
drug-related crimes, economic crime, and trafficking of human beings. In
particular, the authorities have taken serious steps to fight cultivation and
trafficking of cannabis, which remains a serious concern, most notably through
a major police operation in the village of Lazarat and in the north of the
country. International cooperation has been strengthened. Efforts in fighting
organised crime need to be further stepped up, however. The cooperation between
law enforcement institutions should be further improved and legislative
barriers affecting the efficiency of investigations should be lifted. Albania
will need sustainable efforts, combined with proactive and systematic financial
investigations and consistent enforcement of legislation, to counter all kinds
of criminal activities including money laundering, and trafficking of human
beings and in drugs. Albania should continue acting decisively against cannabis
cultivation. Fighting organised
crime and corruption is fundamental for countering criminal infiltration of the
political, legal and economic system.

As regards
fundamental rights, freedom of assembly and association, as well as freedom of
thought, conscience and religion, continued to be generally respected.
Cooperation between the state authorities and civil society organisations
regarding the rights of lesbian, gay, bisexual, transgender and
intersex (LGBTI) persons was improved. The legal
framework for persons with disabilities was revised; its implementation needs
to be ensured. Gender-discriminatory legal provisions need to be removed, the institutional
capacity for child protection should be strengthened and
children’s forced labour should be addressed. An action plan on children’s
rights was adopted. Albania will need to focus on implementing measures
to enhance Roma inclusion and protect vulnerable groups. The protection of
property rights needs to be further strengthened, including through reviewing
the 2012 property reform strategy and strengthening security of legal ownership. As
regards freedom of expression and media, the government failed to act on the
identified priorities. All statutory functions of the Audiovisual Media
Authority need to be restored and its independence guaranteed in practice. The
unauthorised use of frequencies by several broadcasters remains a problem.

Albania’s
positive engagement in regional cooperation and good neighbourly relations remains
essential.

As
regards the economic criteria, Albania made some progress towards
becoming a functioning market economy. Albania should be able to cope with
competitive pressures and market forces within the Union in the medium term,
provided that it further accelerates structural reforms.

Albania
preserved macroeconomic stability, proceeded with arrears clearance and took
steps to improve tax administration and collection. However, economic growth
slowed further and the current account deficit remains large, reflecting weak
competitiveness. The budget deficit exceeded the target in 2013 and the high
level of public debt increased further restricting the fiscal room for
manoeuvre. Inflation remained low, which allowed monetary easing to continue,
but this did not translate into credit growth due to the high level of
non-performing loans in commercial banks. Unemployment is high and the informal
economy remains widespread.

Albania should
pursue fiscal consolidation efforts with a view to reducing public debt, while
at the same time preserving room for growth-friendly expenditure. The energy
sector should be reformed and pension and tax administration reforms to be
further implemented in order to lower the risks it poses to public finances.
Bank lending and credit growth need to be supported by the continued payment of
state arrears towards companies and by addressing non-performing loans.
Obstacles to private-sector development should be removed by improving the
business environment, which is characterised by deficiencies in the rule of
law, weaknesses in the regulatory framework and uncertainty over property
ownership. Creating favourable conditions for private investment, and in
particular foreign direct investment, is essential for diversifying the narrow
production base. Education and training should be further improved to address
skills mismatches in the labour market and increase employability.

The Stabilisation
and Association Agreement (SAA), which entered into force in April 2009,
continued to be overall smoothly implemented. Albania continued aligning its
legislation to the requirements of the EU in a number of areas, enhancing its ability
to take on the obligations of membership. A new National Plan for European
Integration for 2014-2020 was adopted. However, concrete improvements have been
moderate in most areas. Albania will need to make substantial efforts to
upgrade its preparations for implementing EU acquis. More efforts are
needed to ensure protection of intellectual property rights. The settlement of
the dispute between the government and the power distribution company CEZ
contributed to pave the way for further energy sector reforms. Stepping up efforts in this area, including
the diversification of energy sources and the functioning of the electricity
market, is vital for economic development. Albania will also need to reinforce
environmental protection, and address shortcomings noticed in the areas of
transport, food safety, and consumer and health protection. The administrative
capacity and professional standards of bodies charged with the implementation
of the acquis needs to be strengthened and the independence of
regulatory bodies safeguarded. Enhancing transparency and accountability, in
particular as regards public procurement and public finance management, remains
essential.

Bosnia and Herzegovina

Once
again the country has made very limited progress in addressing the political
criteria. There
has been no tangible progress in establishing functional and sustainable
institutions. Likewise, the Parliamentary Assembly of Bosnia and Herzegovina
has made very limited progress in adopting EU-related legislation. Disagreements along political and ethnic lines have
had a major negative effect on the work of the assemblies at the State level and
in the Federation.

Cooperation with
civil society at the State, Entity and cantonal levels remains weak. As
manifested in the social protests of early 2014, all governments should as a
matter of priority focus on addressing socio-economic needs of citizens, in
particular on tackling the very high youth unemployment and assisting those in
need, also following the heavy floods in May.

Given the
political climate, very limited progress has been made in reforming public
administration and improving its capacity to fulfil the requirements of EU
integration. The fragmentation of the legal administrative framework at
different levels of government remains an issue of serious concern, as it
highly affects the functionality of the public services system. A new public
administration reform strategy after 2014 needs to be developed. The necessary
reforms in public financial management need to be addressed in a comprehensive
manner.

The area of
judicial system reform saw little progress. The Structured Dialogue on Justice
remains an important platform to achieve consensus on judicial reforms and has
been further broadened to other rule of law related matters. The reform of the
State-level judiciary needs to be carried out as a matter of priority. The lack
of human resources at all levels to tackle the backlog of war crime cases has
been partly addressed, but sustainability still needs to be ensured with proper
planning and relevant allocations by competent domestic authorities. The
judiciary requires further reinforcement of disciplinary tools and adequate
regulations of the conflict of interest.

There was little
progress in advancing reforms to reduce corruption, which continues to affect
the entire public sector and remains most acute in the areas of service
delivery and access to employment. Political patronage networks are widespread
and influence all levels of government. Investigation and prosecution in high-profile
cases remain insufficient and the overall level of effective investigations,
prosecution and convictions is low. There is little political will to move
beyond rhetoric and tackle corruption, including investigations and convictions
in high-profile cases. There has been overall limited progress tackling
organised crime, which remains a serious concern despite some successful joint
operations, including through close coordination with neighbouring countries.
Fighting organised crime and corruption is fundamental to countering criminal
infiltration of the political, legal and economic systems.

The legal and
institutional framework for the observance of human rights is in place and the
main elements of international human rights laws have been incorporated into
the legal system. However, increased political and financial pressure on the
media and intimidation and threats against journalists and editors are of
serious concern. There needs to be more effort to make schools more
inclusive and to address the continuing existence of ‘two schools under one
roof’ in the Federation. Effective prevention and investigation
of cases of hate speech, violence and discrimination against lesbian,
gay, bisexual, transgender and intersex (LGBTI) persons
needs to be ensured. While very good progress was made in addressing the
housing needs of Roma, efforts in the areas of education, health and employment
need to be strengthened. As regards refugees and internally displaced persons,
effective implementation of the revised strategy needs to be ensured, in
particular its socio-economic aspects. Bosnia and
Herzegovina has continued to participate actively in regional cooperation and
to maintain good neighbourly relations.

As regards the economic
criteria, Bosnia and Herzegovina has made little progress towards becoming
a functioning market economy. Considerable steps would be needed to tackle
persistent structural weaknesses to be able to cope with competitive pressures
and market forces within the Union over the long term.

Economic growth
has modestly resumed and the current account deficit has narrowed amid
persisting external imbalances. The recovery remains fragile due to weak
domestic demand and a narrow production base. The heavy flooding in the spring
is expected to worsen the short-term economic and fiscal situation. Efforts
have been made to improve fiscal coordination in the Federation as well as the
collection of indirect taxes.

Bosnia and
Herzegovina should pursue further urgent measures to preserve fiscal
discipline. In addition, efforts
are required to address the significant state presence in the economy and to
reduce the level and improve the composition and the targeting of public
spending. Moreover, the inefficiency of public enterprises should also be
adequately tackled. Better coordination between and within the entities would
significantly facilitate and improve economic policy making. High
labour market imbalances as reflected by the persistently high
unemployment, notably among the youth, as well as the very low participation
rate, call for decisive steps to remove disincentives to work and to
improve the quality of education. Deficiencies in the legal and business
environment, notably lengthy contract enforcement and costly and
complex procedures of business entry and exit as well as the underdeveloped
infrastructure should be addressed to support private-sector development and
attract investment, especially foreign investment. In
this context, the informal sector also remains an important challenge. In
addition,
the high level of non-performing loans needs to be tackled.

Similar to last
year the lack of genuine political support for the EU agenda, the absence of a
functioning coordination mechanism on EU matters and internal disputes on
competencies have resulted in limited progress as regards approximation to
EU laws and standards. This concerns in particular the areas of movement of
persons and labour force, freedom to provide services and right of
establishment, the free movement of goods, consumer protection, employment and
social policies, education, culture and research, the area of industry and
SMEs, environment and climate fields and the area of transport. In a number of
areas further progress is hampered by a lack of countrywide strategies.

There
was little progress in the fields of agriculture and rural development, food
safety, veterinary, phytosanitary policy and fisheries. Lack of alignment with
EU requirements in this area continues to prevent
exports of goods of animal origin to the EU, a regrettable situation which
requires serious and well-coordinated efforts to be overcome. In the field of
taxation, Bosnia and Herzegovina adopted a small-brewery tax scheme that is
non-compliant with obligations under the Interim Agreement insofar as it
discriminates against beer imports. Not much progress was achieved in the
energy sector due to the complexity of the administrative structure, disputes
on competencies between State level and entities and lack of political will.
This has inter alia led to a serious and persistent breach of the
country’s obligations under the Energy Community Treaty in the gas field which
needs to be addressed urgently. Progress can be reported inter alia
in the internal market area with the adoption of the law on public procurement,
which enables the country to align with the EU Directives of 2004. Cooperation
between statistical bodies at entity and State level has improved particularly
in the context of the population and housing census.

Kosovo

With regard to
the political criteria, the past year saw Kosovo’s political agenda
dominated by local and general elections and their aftermath. The June general
elections were transparent and well-organised. Election day passed without
major incidents and voters cast their votes freely throughout Kosovo, including
in the four northern municipalities. The elections consolidated progress made in
the local elections of end-2013. In both cases, the electoral process improved.
There were fewer electoral fraud cases than in the 2010 elections, and they
were handled efficiently. A considerable number of the 2010 cases are still
pending in the courts. Kosovo still needs to address recommendations from the
election observation missions and experts. These include adoption of a
comprehensive electoral code and enhancing the accuracy of voters’ lists.
Electoral reform needs to ensure that the legal framework for elections
reflects best practice in the EU. Kosovo’s recent membership of the Venice
Commission can help in this regard.

The failure to
constitute the new legislature smoothly and in a timely manner has been a
setback. The new government and the Assembly will need to re-energise Kosovo’s
reform agenda. Both institutions need to build on the existing political
consensus in Kosovo on EU integration. Kosovo’s
government has demonstrated its capacity to coordinate its EU-integration
agenda, notably with regard to the SAA negotiations. Building on the expertise
across different departments and institutions, Kosovo’s negotiators put
substantial effort into scrutinising the proposed text and analysing its
possible impact. This reflects a good grasp of the impact of the commitments
made.

To implement and
meet the obligations under the future SAA, Kosovo’s executive and the Assembly
need to focus on the implementation of legislation and policies. Legislative
and policy plans need to realistically reflect the resources required. The new
legislature provides for a good opportunity to improve oversight of the
executive and the legislative process. The Assembly’s role in supervising
independent institutions and regulatory authorities needs to be strengthened.
The independence of these bodies needs to be upheld and appointments for these
bodies need to proceed without delay and be based on a fair and depoliticised
selection process with objective criteria.

Good cooperation
with the EU rule of law mission, EULEX, has continued. Kosovo authorities have
made a substantial political commitment to the extension of the mission’s
mandate and agreed to establish a specialist court to adjudicate findings of
the Special Investigative Task Force. To complete this process, Kosovo needs to
adopt the necessary legislative changes, including to its constitution.
Judicial authorities have coped well with structural challenges such as the
comprehensive judicial reform adopted in 2013 and the process of the transfer
of some EULEX functions to local authorities. The Structured Dialogue on the
Rule of Law continued to support this process. The backlog of cases and
ensuring impartial, independent justice remains a challenge. Kosovo judicial
authorities need to proactively pursue indictments based on admissible
evidence, and issue well-reasoned, timely judgments, irrespective of prevailing
public or political opinion.

With regard to
the fight against corruption and organised crime, the number of drug-related
crime investigations has increased and some human trafficking groups have been
dismantled. However, with a low number of actual convictions and drug seizures,
Kosovo is at an early stage in its fight against organised crime and
corruption. Law enforcement agencies are reluctant to initiate financial
investigations and the number of cases of freezing and confiscating assets
ordered by the judiciary and executed by the police continues to be low.
Witness intimidation is still a major concern. The new government and
parliament need to show zero tolerance towards corruption and organised crime
and a clear political will to the effective fight against corruption and
organised crime. Kosovo’s political class needs to demonstrate its readiness to
accept the outcome of independent judicial processes. Fighting
organised crime and corruption is fundamental to countering criminal
infiltration of the political, legal and economic systems.

The
implementation of the strategy (2010-13) and action plan (2012-14) on public
administration reform has been a major challenge for Kosovo, delivering very
limited results. Supported by a serious political commitment, Kosovo needs to
establish a realistic strategic framework for policy making, legislative
planning and the practical implementation of reforms. Completing the
legislative framework for the civil service, ensuring it is depoliticised and
carrying out performance appraisals of the civil service are priorities. Kosovo
also needs to adopt a law on general administrative procedures, which is
crucial for the development of a business-friendly environment. While some
public financial management rules and regulations are in place, Kosovo should
ensure a more comprehensive approach to the reforms in this field. Kosovo needs
to ensure their implementation and improve follow-up to Auditor-General
reports.

Human and
fundamental rights continue to be broadly guaranteed by law in Kosovo. The
Independent Media Commission is operational again. The perpetrators of violence
against Kosovo 2.0 journal received suspended sentences. Threats and attacks on
lesbian, gay, bisexual, transgender and intersex (LGBTI) activists and on
journalists have continued, which remains a serious concern. The conditions for
freedom of expression and media need to be put in place. Property rights need
to be effectively enforced, including women’s access to inherited property.
Kosovo has yet to streamline its institutional system dealing with human rights
protection. The respective responsibilities are not clear, which hinders the
implementation of legislation and monitoring.

Land has been
allocated to some internally displaced families from the Roma community living
in a camp in Montenegro. The main building of the Roma camp in
Leposaviq/Leposavić has been closed. The Implementation and Monitoring
Council has facilitated improved protection of cultural and religious heritage.
However, Kosovo needs to step up its efforts to ensure implementation of
legislation and policy frameworks, including the action plan on the integration
of Roma, Ashkali and Egyptian communities. Security incidents and crimes
targeting persons belonging to minorities and their property need to be
investigated and prosecuted thoroughly and promptly. The laws on the historic
centre of Prizren and on Velika Hoča/Hoçë e Madhe need to be implemented.
The Law on Velika Hoča /Hoçë e Madhe is of particular concern as no
progress in its implementation has been made despite a municipal decision of
February 2013 to move ahead and despite the provision of administrative
instructions by the Ministry of Environment and Spatial Planning. Robust action
is required to prevent illegal construction and demolition of cultural heritage
sites.

On regional
cooperation, Kosovo has made further progress, and it has concluded further
bilateral cooperation agreements with several of its neighbours.

Regarding
the normalisation of relations with Serbia, Kosovo has remained engaged
in the dialogue and overall committed to the implementation of the April 2013 First agreement of principles governing the normalisation of
relations and other agreements reached in the dialogue. This has led to a
number of irreversible changes on the ground, with local and parliamentary
elections held Kosovo wide for the first time and the dismantling of the Serbian
police and justice structures substantially advanced. A permanent solution for
Kosovo’s inclusion in the South-East European Cooperation Process (SEECP) was
endorsed. While there have been no high-level meetings since early elections
were called in Kosovo, work has continued at technical level, leading to
progress in the areas of customs collection, IBM, energy and telecoms.

However,
progress in the dialogue implementation has generally slowed down. Early
general elections were held in both Serbia and Kosovo. It is important that the
high-level dialogue resumes. It is also essential that both sides continue to
engage fully in the implementation in good faith of all existing agreements.
Further progress should gradually lead to the
comprehensive normalisation of relations between Serbia and Kosovo, in the form
of a legally binding agreement by the end of Serbia’s accession negotiations,
with the prospect of both Serbia and Kosovo being able to fully exercise their
rights and fulfil their responsibilities.

As regards the economic
criteria, Kosovo made limited progress on its path to become a functioning
market economy. Substantial efforts are needed to tackle
structural weaknesses to cope with competitive pressures and market forces
within the Union over the long term.

Economic growth
remained positive at 3.4 % but did not yield any improvements in labour
market conditions. High external imbalances persist despite some narrowing of
the trade deficit. Macroeconomic stability was broadly preserved despite
significant pre-election ad hoc increases in current expenditure, in
particular on wages and pensions. Such practice deteriorates the transparency,
predictability and credibility of fiscal policy, complicates fiscal planning
and shifts the composition of spending towards less growth-friendly
expenditure.

Strengthening
fiscal planning and effectively implementing the fiscal rule is vital.
Moreover, decisions on large infrastructure projects, such as in the transport
sector, should be based on proper cost-benefit evaluations to maximise economic
benefits. In view of the persistent and very high unemployment, efforts should
be undertaken to facilitate private-sector development through improvements in
the business environment. To that end, obstacles arising from weak
administrative capacities, difficult access to finance and lengthy and complex
privatisation procedures should be swiftly addressed. Kosovo must ensure a
properly functioning legal and judiciary system, enhance contract enforcement
and effectively reduce delays in courts. Economic statistics need to be
improved.

Regarding approximation
to EU laws and standards, Kosovo institutions have demonstrated
their capacity to deliver on the political priorities, such as the SAA
negotiations, the visa liberalisation dialogue and the dialogue with Serbia.
This was the result of strong political commitments. Delivery of results in
other priority reform areas has been more uneven. The basic legal framework
allowing for capital movement remains in place, but obstacles to real estate
purchases by foreigners persist. As concerns competition, Kosovo’s track record
is limited, which is due to very weak oversight of anti-competitive practice
and state aid. Kosovo needs to ensure that the competition authorities are
effective and independent. The law on public procurement was amended to
introduce preferences for local producers. These preferences will have to be
removed within five years of the entry into force of the SAA.

There has been a
steady improvement in Kosovo’s energy supply with the result that power cuts
are now infrequent. An explosion at the Kosovo A plant underlined the fragility
of the system. Kosovo needs to prepare more actively to decommission this
plant. There has been sound progress in agriculture and food safety, despite
scarce resources. The transfer of inspectors to the central agency needs to be
completed urgently. This is essential to enforce food and veterinary standards,
which are important for trade in the context of the SAA. The lack of interest
in the environment has become a serious issue for public health and the quality
of life in Kosovo.

Turkey

As
regards the political criteria, the year was marked once again by sharp
contrasts.

On
the one hand, implementation of reforms adopted
in previous years continued. Several measures under the 3rd and 4th
judicial reform packages, as well as measures announced in the democratisation
package presented in September 2013 were adopted and implemented. These
measures, amongst others, decreased the threshold for budget support to political
parties, allowed the conduct of political activity in languages and dialects
other than Turkish, and provided for private education in languages and
dialects other than Turkish. The adoption in March of an Action Plan on
Prevention of Violations of the European Convention on Human Rights (ECHR) was
an important step aimed at aligning Turkey’s legal framework and practice with
the case-law of the European Court of Human Rights (ECtHR). The Constitutional
Court continued applying the individual application procedure. It took a number
of important decisions strengthening the protection of fundamental rights in
the country and illustrating the resilience of the country’s constitutional
system.

In
June, the Turkish parliament adopted a law to ‘bring a stronger legal
foundation to the settlement process’ aiming at a solution of the Kurdish
issue. The law was adopted with broad support across political parties. It
encompasses measures to eliminate terrorism, strengthen social inclusion,
reintegrate those who leave the Kurdistan Workers’ Party (PKK) and lay down
their arms, and prepare public opinion for the return of former fighters. The
law strengthens the basis for the settlement process and makes a positive
contribution to stability and protection of human rights in Turkey.

In
September, the Ministry of EU affairs presented a ‘European Union Strategy’
intended to reinvigorate Turkey’s accession process. The Strategy is based on
three pillars: political reforms; socio-economic transformation in the accession
process; communication strategy. It is expected to be followed up by action plans
with concrete actions and timelines.

On
the other hand, the government’s response to allegations of corruption
targeting high-level personalities, including members of the government and
their families, raised serious concerns over the independence of judiciary and
the rule of law. This response consisted in particular in amendments to the Law
on the High Council of Judges and Prosecutors and subsequent numerous reassignments
and dismissals of judges and prosecutors, as well as reassignments, dismissals,
or even detention, of a large number of police officers. This raised concerns
with regard to the operational capabilities of the judiciary and the police and
cast serious doubts on their ability to conduct the investigations into
corruption allegations in a non-discriminatory, transparent and impartial
manner. The Constitutional Court found a number of provisions of the Law on the
High Council of Judges and Prosecutors unconstitutional, following which
parliament amended the legislation and brought back previous provisions.

These
developments have also resulted in an increased polarisation within the
political spectrum. Several pieces of legislation proposed by the ruling
majority, including
on fundamental issues for the Turkish democracy, were adopted
without proper parliamentary debate or adequate consultation of stakeholders
and civil society. The overall decision making process, both nationally
and locally, should involve more structured and systematic consultation of
civil society. It is essential to reform the existing legal environment and
make it more conducive to the development of civil society organisations in
general.

As
regards freedom of expression, wide public debate continued on topics
previously considered as sensitive, including the Kurdish and the Armenian
issues. However, a number of provisions of the Turkish legal framework and
their interpretation by members of the judiciary continue to hamper freedom of expression,
including freedom of the media. Amendments to the Internet Law restricted
freedom of expression on the internet. The blanket bans on YouTube and Twitter
have raised serious concerns. These bans were subsequently found
unconstitutional by the Constitutional Court. State officials continued making
statements having an intimidating effect on the media. This, together the ownership structure of the Turkish media sector, led
to widespread self-censorship in the press, as well as resignations and dismissals
of journalists.

Turkish
legislation concerning the right to assembly focusing more on the legality
rather than on the peaceful character of the demonstration, and its
implementation by law enforcement officers, have to be brought in line with
European standards. Legislation on the establishment of a law enforcement
monitoring commission as an independent oversight body for police offences
needs to be adopted.

The
unclear definition in criminal legislation of membership of an armed
organisation continues to be the source of a large number of arrests and
prosecutions. An ECHR-compatible legal framework has to be established on
matters of faith and conscientious objection. Substantial efforts are needed to
effectively guarantee the rights of women, children, and lesbian, gay,
bisexual, transgender and intersex (LGBTI) individuals. Domestic violence,
occasional ‘honour’ killings and the issue of early and forced marriages remain
a serious concern. Turkey needs to ensure full respect for all property rights,
including those of non-Muslim religious communities.

These
shortcomings need to be addressed and the authorities need to enhance efforts
to protect other fundamental rights and freedoms so that all citizens can
exercise their rights without hindrance.

The
signature of the EU-Turkey readmission agreement on 16 December 2013 in
parallel with the start of the visa liberalisation dialogue created a new
momentum for EU-Turkey relations. The readmission agreement has entered into
force on 1 October 2014, while the first report on Turkey’s progress
in the framework of the visa liberalisation roadmap will be published on 20
October 2014. It
is important that these two processes move forward. Full and
effective implementation vis-à-vis all Member States is crucial.

Regarding
the fight against organised crime, Turkey improved its programme to counter the
financing of terrorism, consolidated the network of witness protection units
and reorganised the responsibilities in the fight against the trafficking in
human beings. However, large-scale removals of police officers have taken place
which raised concern over their impact on the operational capabilities of key
police services involved in the fight against organised crime. Fighting
organised crime and corruption is fundamental to countering the illicit
influence of criminal groups on the political, legal and economic systems.

On foreign
policy, Turkey has continued to play an important role in its wider
neighbourhood. It has played a particularly important role on Syria, strongly
and repeatedly condemning the Syrian regime’s violence against civilians,
supporting the development of a more unified opposition and providing vital
humanitarian assistance to more than 1 million Syrians fleeing their country.
It has also continued to provide practical support to the E3+3 talks with Iran.
Solid foundations were laid for greater European energy security with
the adoption of the final investment decisions for the realisation of the three
Southern Gas Corridor projects. The regular political dialogue between the EU
and Turkey continued, covering both international issues of common interest
such as the Middle East and Central Asia, and global issues such as
counter-terrorism, foreign fighters and non-proliferation. Turkey has continued
its policy of engagement in the Western Balkans, including through its active
participation in the South-East European Cooperation Process and its
contribution to EU-led military, police and rule of law missions. In the light
of the serious challenges arising in Turkey’s immediate neighbourhood, the
dialogue with the EU should intensify further and
alignment with EU positions should improve.

Turkey supported
the resumption of the fully-fledged settlement talks between the leaders of
both communities in Cyprus under the good offices of the UN Secretary-General.
Turkey and Greece promoted reciprocal visits by the two Chief Negotiators to
Ankara and Athens in the context of the ongoing negotiations.

However, Turkey
continued to issue statements challenging the Republic of Cyprus’ right to
exploit hydrocarbon resources in Cyprus’ Exclusive Economic Zone for the
benefit of all Cypriots. Turkey is expected to actively support the
negotiations towards a fair, comprehensive and viable settlement of the Cyprus
issue within the UN framework, in accordance with the relevant UN Security
Council resolutions and in line with the principles on which the EU is founded.
Turkey’s commitment in concrete terms to such a comprehensive settlement
remains crucial. Despite repeated calls by the Council and the Commission,
Turkey has still not fulfilled its obligation to ensure full and
non-discriminatory implementation of the Additional Protocol to the Association
Agreement and has not removed all obstacles to the free movement of goods,
including restrictions on direct transport links with Cyprus. There was no
progress on normalising bilateral relations with the Republic of Cyprus.

Turkey
needs to commit itself unequivocally to good neighbourly relations and to the
peaceful settlement of disputes in accordance with the United Nations Charter,
having recourse, if necessary, to the International Court of Justice. In this
context, the EU has expressed once again serious concern and urged Turkey to
avoid any kind of threat or action directed against a Member State, or source
of friction or actions, which could damage good neighbourly relations and the
peaceful settlement of disputes.

The
EU has welcomed the fact that the cooperation initiatives between Greece and
Turkey to improve bilateral relations are continuing. The latest, 58th
round of exploratory talks for the delimitation of continental-shelf took
place. Greece and Cyprus made formal complaints about repeated and increased
violations of their territorial waters and airspace by Turkey, including
flights over Greek islands.

As regards the economic
criteria, Turkey is considered 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 accelerates the implementation of
comprehensive structural reforms.

Following the
slowdown in 2012, output and employment have increased at a moderately high
rate. Nevertheless, unemployment has risen as a result of a strongly expanding
labour force. The current account deficit, while narrowing somewhat in 2014,
has remained at an elevated level. The reliance on sustained capital inflows
makes Turkey vulnerable to changes in global risk sentiment, resulting in large
exchange rate fluctuations.

Although fiscal
deficit and public debt have remained at moderate levels, continuing budgetary
overruns on the expenditure side call for a strengthening of the fiscal
framework. Fiscal policy should help raising overall national saving in view of
the need to reduce the external deficit. Considering that inflation has trended
upwards, diverging further from the central bank’s target, monetary policy
needs to pursue a restrictive course and be focused clearly on price stability.
Notwithstanding some progress regarding privatisations and the liberalisation
of the electricity market, it is essential that structural reforms are
accelerated on a broad basis to improve the functioning of the markets for
goods, services and labour. These reforms should include further improvements
in the judicial system and of administrative capacity, enhanced transparency of
state aids, and an open, fair and competitive public procurement system.

As
regards the ability to take on the obligations of membership, Turkey has
continued to align with the acquis. In 2013, another negotiating chapter
(22 — Regional policy and coordination of
structural instruments) was opened.
There
has been good progress on trans-European networks. Turkey has also taken
important steps in key areas under chapter 24, in particular as regards
migration and asylum policy, in spite of the very considerable burden
represented by the continuous refugee crisis. Progress was
achieved on energy, especially on security of supply and the internal market
for electricity, on company law, on enterprise and industrial policy, on
statistics, on science and research, on free movement of capital regarding the
fight against money-laundering and terrorist financing, and in the implementation
of the pre-accession rural development programme.

Overall,
Turkey is advanced it its alignment in several chapters of the acquis,
including freedom of movement of goods, company law,
intellectual property law, financial services, energy, economic and monetary
policy, statistics, enterprise and industrial policy, trans-European networks,
science and research, customs union and external relations.

In
all areas, more attention needs to be given to enforcement of legislation.
Comprehensive efforts should continue in the area of justice, freedom and
security, food safety, veterinary and phytosanitary policy and environment and
climate change. Further significant progress is needed on judiciary and
fundamental rights, social policy and employment, especially in the areas of
labour law and health and safety at work. Legislative alignment needs to be
pursued especially in public procurement, competition policy, particularly
state aid, information society and media.

[1]               COM(2012)
600 final.

[2]               COM(2013)
700 final.

*               This
designation is without prejudice to positions on status, and is in line with
UNSCR 1244/99 and the ICJ Opinion on the Kosovo declaration of independence.

[3]               COM(2014)
330 final.

[4]               Croatia,
Serbia, Bosnia and Herzegovina and Montenegro.

[5]               April
2013 ‘First agreement of principles governing the normalisation of relations’.

[6]               Free movement of goods;
right of
establishment and freedom to provide services (Montenegro has fulfilled the
Opening Benchmark for this Chapter and, as a consequence, has been invited to
submit its negotiating position); competition policy; agriculture and rural
development; food safety, phytosanitary and veterinary policy; fisheries;
energy; economic and monetary policy; social policy and employment; regional
policy and coordination of structural instruments; environment and climate
change.

[7]               Free
movement of capital; public procurement; company law; intellectual property law;
information society and media; enterprise and industrial policy; foreign,
security and defence policy; financial control.