# EUR-Lex - 52012DC0601 - EN

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# 52012DC0601

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the Main Findings of the Comprehensive Monitoring Report on Croatia’s state of preparedness for EU membership /* COM/2012/0601 final */**

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COMMUNICATION FROM THE COMMISSION TO
THE EUROPEAN PARLIAMENT AND THE COUNCIL

on the Main Findings of the Comprehensive
Monitoring Report on Croatia’s state of preparedness for EU membership

1.         Introduction

Accession negotiations with Croatia were
closed in June 2011. After the Commission’s favourable opinion, the European
Parliament’s assent and the Council decision on the admission of Croatia, the
Accession Treaty was signed on 9 December 2011 (OJ L 112, 24.4.2012). Croatia
has ratified the Accession Treaty and will become a Member of the European
Union on 1 July 2013, subject to the Accession Treaty being ratified by all
Members States. As an acceding country, Croatia has an active observer status
during the interim period before accession.

In the course of the negotiations, Croatia
has agreed to a number of commitments, which have to be implemented by the date
of accession, at the latest, unless specific transitional arrangements have
been agreed.

In its Strategy Paper and Report published
in October 2011, and in the Monitoring Report on Croatia’s accession
preparations of April 2012[1],
the Commission noted the progress made by Croatia in its preparations for
accession. The Commission also identified a number of areas where further
improvements are necessary in order to fully meet all membership requirements.
Croatia has developed an action plan to follow up on the findings of the April
Monitoring Report. The action plan is being implemented, with a number of
measures having already been adopted. Notably, the restructuring of Brodosplit
advanced, and discussions are progressing with regard to the privatisation and
restructuring arrangements for 3.Maj and Brodotrogir. Implementation of the
judicial reform strategy and action plan has continued and a revised strategy
is currently under finalisation. The government proposed new enforcement
legislation to Parliament. The track record of results in fighting corruption
and organised crime continued to be developed and the initial steps have been
taken for the setting up of the Conflict of Interest Commission. In the field
of fundamental rights, amendments to the anti-discrimination Act and new
Ombudsman legislation were adopted. Discussions have intensified with Bosnia
and Herzegovina to address the outstanding issues on border management. Progress
was noted in the alignment with the Services Directive and in the field of
mutual recognition of professional qualifications. The fee/tax measure on
mobile services was abolished with effect from July 2012.

Article 36 of the Act of Accession requires
the Commission to closely monitor all commitments undertaken by Croatia in the
accession negotiations focusing in particular on competition policy, judiciary
and fundamental rights, and freedom security and justice. The Act further
provides for the Commission to present a Comprehensive Monitoring Report to the
European Parliament and the Council in autumn 2012.

This Communication summarises the main
findings of the Comprehensive Monitoring Report, which assesses the progress made
by Croatia in its preparations for accession in the period October 2011 to
September 2012, it provides an overall assessment of the level of preparedness
for membership and highlights the areas where further efforts are necessary in
order for Croatia to be ready for membership on 1 July 2013.

The report assesses Croatia’s state of
preparedness on the basis of the political and economic criteria for membership
and of the requirement to adopt and implement the EU acquis, as laid
down by the Copenhagen European Council in 1993.

The assessment is based on information
gathered and analysed by the Commission, including input provided by Croatia,
and information shared by Member States, and international and civil society
organisations in their regular contacts with the Commission. The Report is also
based on the Commission’s findings in its updated Monitoring Tables, a working
tool aimed at following up in detail on all of Croatia’s commitments in the
context of the negotiations.

Through this report, the Commission also
aims to assist Croatia in its further preparation for membership.

2.         Compliance
of Croatia with the Copenhagen criteria – summary of findings

2.1       Political criteria

Croatia continues to meet the political
criteria. In all areas covered by the political criteria (stability of
institutions guaranteeing democracy, the rule of law, human rights and respect
for and protection of minorities) work has continued and results are becoming
tangible.

Parliamentary elections were held in December 2011 in a pluralistic environment and were
administered in an efficient and transparent manner. Improvements are necessary
with regard to maintenance of the voters’ list, for which work has already
started. In the field of public administration, further efforts are
needed to improve the professionalism of the public service. Completion and
efficient implementation of the relevant legal framework is necessary in order
to build a modern, reliable, transparent and citizen-oriented public service.
In view of the recent substantial restructuring of the public administration,
and taking into account the additional responsibilities related to EU
membership, Croatia should address without delay the administrative capacity
constraints identified in the Comprehensive Monitoring Report and ensure that
the completion of preparations for EU membership is not affected.

In the field of judiciary, efforts
to strengthen the independence, accountability, impartiality and
professionalism of the judiciary have continued. The reformed State Judicial
Council (SJC) and State Prosecutorial Council (SPC) have continued to function
independently. Both bodies have continued to appoint judicial officials based
on transparent, uniform and objective criteria. Efforts are needed to improve
their functioning especially in order for them to carry out their increased
tasks including the systematic and accurate checking of assets declarations and
pro-active application of disciplinary procedures. Improvements are needed in
the procedures leading to the selection and assignment of new judges and
prosecutors. Croatia has continued to implement various measures aiming at
improving the efficiency of the judiciary. While the backlog of old criminal
cases continues to fall, the number of old civil cases has increased over the
last 18 months. This general trend of increase of unresolved cases, mainly
civil, commercial, misdemeanours and enforcement cases is a matter of concern. The
revised enforcement legislation, adopted by government in July 2012, needs to
be adopted by parliament and implemented in order to lead to further concrete
results.

With regard to
the fight against corruption, an adequate legal and institutional
framework remains in place and a track record of implementation continues to be
developed. Law enforcement bodies remain pro-active, especially on higher-level
cases. Local level corruption needs attention, particularly in public
procurement. Croatia has improved its track record of strengthened prevention
measures by means of a number of preventive legal instruments. However, Croatia
has not fully implemented the conflict of interest legislation and has
overturned the previous provisions on the criteria for membership of
supervisory and management boards of public companies. Some initial steps have
been taken for the setting up of the Conflict of Interest Commission, with the
publication by Parliament of the request for expression of interests for the
selection of the Commission’s members in August 2012. The Commission needs to
be established and start operating without delay. The scope and implementation
of the access to information legislation requires attention. Croatia is
advanced with regard to police cooperation and the fight against organised
crime. Activities have continued with the aim of bringing the national
legislation in line with the EU acquis and coping with the future challenges of
fighting the organised crime within the EU.

With regard to human rights and the protection of minorities, human rights continue to be generally
well respected, with attention still needed for the respect of Lesbians, gays,
bisexual and trans-gender people (LGBT) rights. The gay pride events in Split
and Zagreb took place without major incidents, with strong commitment of the
Croatian government to their smooth organisation.

With regard to respect for and protection
of minorities and cultural rights, protection of minorities has continued to
improve, through the implementation of measures for the protection of
minorities, including the Constitutional Act on the Rights of National
Minorities. However, the level of employment of minorities in the state
administration and judiciary remains below the requirements set by the act. In
line with the Constitution, eight representatives of national minorities were elected
at the parliamentary elections of December 2011. However, Croatia needs to
continue to foster a spirit of tolerance towards minorities, in particular
Croatian Serbs and to take measures to protect those who may still be subjected
to threats or acts of discrimination, hostility or violence. The Roma minority
faces particularly difficult living conditions, and challenges remain in the
areas of education, social protection, health care, employment and access to
personal documents.

The situation with regard to refugee return
issues has improved and the implementation of the housing care programmes
continues, although at a slower pace. Conditions for sustainable refugee return
need to be further developed.

With regard to war crimes, Croatia
continues to cooperate with the International Criminal Tribunal for the former
Yugoslavia (ICTY) and to process war crimes cases. Efforts to address impunity
for war crimes should be intensified, as the majority of crimes have yet to be
successfully prosecuted. Measures need to be taken to facilitate the protection
and attendance of witnesses at trial, especially in cases relocated to the
specialised chambers. As regards regional cooperation, Croatia has
maintained the dialogue with neighbouring countries in order to address open
bilateral issues. The Declaration of the Croatian Parliament of October 2011 on
promoting European values in south-east Europe emphasised Croatia’s firm
commitment to supporting the other countries of the region on their path to the
EU. Croatia continued to engage in cooperation on war crimes at the bilateral
and regional level and good cooperation between judicial authorities, in
particular prosecutors, is in place. Croatia has continued to contribute
actively to the Sarajevo Declaration Process. An international Donors’
Conference was held in April 2012 in Sarajevo to secure funding for a durable
solution for all refugees in the region who were displaced as a result of the
armed conflicts in the former Yugoslavia in the 1990s. Croatia needs to allocate
the necessary additional funding.

A comprehensive process to review the cases
of missing persons needs to be carried out as an important step in the
reconciliation process in the region.

With regard to bilateral relations,
the procedure on the international border arbitration between Croatia and
Slovenia started and the Arbitral Tribunal held its first procedural meeting on
13 April 2012. Concrete progress remains to be achieved with regard to border
demarcation with Serbia, Montenegro and Bosnia and Herzegovina.

2.2       Economic criteria

The economy
of Croatia stabilised temporarily in mid-2011 before returning to recession
towards the end of the year. The economic contraction continued in the first
half of 2012. Unemployment, public deficit and debt continued to increase in
2011 from already high levels. The high external indebtedness remains a key
vulnerability of the economy.

As regards the economic criteria, Croatia
is a functioning market economy. Vigorous implementation of urgently needed
structural reforms should enable Croatia to cope with competitive pressures and
market forces within the Union in the near term.

Broad political
consensus on the fundamentals of a market economy was maintained. Given the
existing constraints, macroeconomic policy has, by and large, been appropriate.
The central bank succeeded to preserve exchange rate and financial stability
while maintaining a relatively accommodative monetary policy as underlying
inflationary pressures stayed low. The banking sector remained well
capitalised. In the fiscal area, the authorities made efforts to contain the
rising deficit by reining in expenditures. The current account deficit remained
at a low level as a renewed rise of imports was offset by increasing exports.
Gross external debt has stabilised, albeit at a very high level.

Structural
reforms progressed slowly in some areas, not least with respect to
privatisation and the restructuring of loss-making enterprises, and were almost
non-existent in others. In the area of labour markets in particular, where
already low levels of employment and participation declined further, reforms
are still at a very early stage and need urgently to be stepped up. The
investment climate continued to suffer from a heavy regulatory burden, lengthy
procedures, uncertainties in the legal environment, unpredictability of
administrative decisions, and a high number of non-tax fees. Social transfer
payments, which represent a relatively high share of public budgets, remained
not well-targeted. Considering the need to achieve medium-term fiscal
sustainability, the budgetary process could be improved further. Enhancing the
efficiency of public spending remains a key challenge.

2.3       Ability to take on the
obligations of membership

Regarding its ability to take on the
obligations of membership, Croatia has continued to make progress in
adopting and implementing EU legislation and is now completing its alignment
with the acquis. Nevertheless, the Commission has identified a number of
issues requiring continued attention. The Croatian authorities need to take all
necessary measures to ensure that the country is fully prepared for membership
by 1 July 2013, including with regard to the administrative capacity for the
implementation of the acquis.

In accordance with Article 36 of the Act of
Accession, particular focus is given in this section to competition policy,
judiciary and fundamental rights and freedom, justice and security.

Chapter 8: Competition policy

Croatia is
generally meeting the commitments and requirements arising from the accession
negotiations in the field of competition policy and should be in a position to
implement the acquis as of accession. Urgent attention must be paid to
the signature of the contracts for privatising the shipyards in difficulty.

Croatia has
largely aligned its legislation in the fields of anti-trust and mergers and
of State aid. It has also kept up its efforts to build a positive
enforcement record. Croatia’s Competition Agency (CCA) is fully operational and
functionally independent; it carries out its duties in line with the
legislation in force. A proper system of merger and State aid control is
in place.

In the field of
anti-trust and mergers, since 1 October 2011, the CCA issued 29
decisions and 25 opinions. The CCA continued to provide the government with
assessments of draft laws and other expert opinions.

In the field of
State aid, the CCA took 30 decisions, of which 13 involved aid schemes
and 17 concerned individual aid measures.

With regard to
Croatia’s reporting obligations in the steel sector, the first reports were
submitted to the Commission on 15 December 2011 and 18 June 2012 in line with
the requirements arising during the negotiations.

Sisak has yet
to reimburse the aid received. In October 2011, the owners decided to close and
sell the steel mill, resulting in production being completely halted. The
owners of CMC Sisak sold the steel mill to a new investor, the Italian group
Danieli.

The reports
also provide updated information on the bankruptcy proceedings concerning the
other steel mill, Željezara Split.

With regard to
Croatia’s obligations to report on the shipbuilding industry, on 16 January
2012 it submitted the first six-monthly report on the restructuring of the
Croatian shipyards in difficulty as required by Annex VIII of the Act of
Accession. The report contains data on the measures taken to return to
viability, aid used, own contribution and production capacity, following the
methodology for monitoring implementation by Croatia agreed with the Commission.
The report also provides details on the agreements regulating property law in
the context of expropriation in the maritime domain. On 16 July 2012 Croatia
submitted its second six monthly report on the restructuring of the Croatian
shipbuilding industry. In addition, Croatia submitted the first Report on the
Annual Output of the Shipyards under restructuring.

In March 2012,
the bid for the shipyard Brodosplit was accepted and Croatia has
indicated that the privatisation contract will be signed shortly. The bids for
the shipyards Kraljevica and Brodotrogir were rejected by the
government and the bid for the shipyard 3.Maj was withdrawn by the
potential investor. The government has decided to initiate bankruptcy
proceedings for Kraljevica and to seek new privatisation and
restructuring arrangements for 3.Maj and Brodotrogir.

Croatia needs to proceed with the signing
of the privatisation contract for Brodosplit, following the Commission’s
positive decision of August 2012, and with finding a solution for 3.Maj
and Brodotrogir, as a matter of urgency in order to fulfil the
requirements of the Treaty Annex on restructuring of the shipyards by the date
of Croatia’s accession.

As regards
existing aid, Croatia has provided the Commission with a list of 11 aid
measures that it wishes to be considered as existing aid at the date of
accession. Seven of these measures have been included in the Act of Accession.
Croatia needs to provide further information on the remaining ones for the
Commission to complete its assessment.

Chapter 23: Judiciary and fundamental
rights

Croatia
is generally meeting the commitments and requirements arising from the
accession negotiations in the field of the judiciary and fundamental rights and
should be in a position to implement the acquis as of accession, as
outlined in the 10 areas set out in Annex VII of the Act of Accession. However,
increased efforts are needed to continue strengthening the rule of law, by
improving administration and the judicial system, and to fight and prevent
corruption effectively. Prosecution of domestic war crimes, respect for human
rights and the protection of minorities require continuous attention.

1) To
continue to ensure effective implementation of its Judicial Reform Strategy and
Action Plan

Implementation of the judicial reform
strategy and action plan has continued generally in line with the deadlines
set, and included legislative fine-tuning in a number of areas. Working groups
have been established and are active to further improve specific legislation and
to increase coordination of legal instruments. Human resources planning,
including for the long-term needs of the judiciary, remains to be improved. The
budget available for the judiciary remained stable at around € 337
million, or 0.7% of GDP. A council for monitoring the implementation of the
Judicial Reform Strategy was established in February 2012, focusing in
particular on the efficiency of court proceedings. Amendments to the State
Judicial Council Act were adopted in October 2011 to further increase scope for
transferring judicial staff according to needs.

2) To
continue to strengthen the independence, accountability, impartiality and
professionalism of the judiciary

Implementation of the various measures
taken in 2010 and 2011 to strengthen the independence, accountability,
impartiality and professionalism of the judiciary has continued. The reformed
State Judicial Council (SJC) and State Prosecutorial Council (SPC) have
continued to function independently.

Both bodies have continued to appoint judicial
officials based on transparent, uniform and objective criteria. Since 2011 63
judges have been appointed. Improvements in the implementation of the
transitional system of appointing judges and prosecutors have been introduced,
including greater transparency in marking interviews, with attention paid to
ensuring equal treatment of all candidates. This is important in the final
months of implementation of the transitional system, up to December 2012.
Lessons learned from the implementation of the transitional system should be
applied to the implementation of the new system of appointments through the
State School for Judicial Officials, which will start in January 2013. This
experience should also be taken into account in upgrading the selection procedure
for transferring judges to different positions. The first intake of candidates
for the State School for Judicial Officials is finishing the second school
year. However, enrolment of the second annual intake of 55 candidates was
substantially delayed, with candidates being selected only in July for the
programme to start in September.

The SJC has begun implementation of the new
system of asset declarations for judges. Disciplinary measures are being taken
in cases of wrongdoing by judicial officials. Both SJC and SPC became more
proactive. However, the track record of implementation of the new system of
disciplinary proceedings needs to be further developed.

The SJC and SPC need to be provided with
further administrative resources to function more effectively and need to
demonstrate independence and accountability in carrying out their increased
tasks, including systematic and accurate checking of asset declarations and
proactive application of disciplinary procedures.

Secondary legislation remains to be amended
to limit judges’ immunity, thereby completing the legislative framework in this
field, and further guidance should be provided on the application of the code
of conduct.

The Judicial Academy continued to work
well. Professional training programmes, including initial training, have
continued. Training on EU law has been stepped up. The involvement of the
Judicial Academy in Europe-wide activities has increased and Croatia has signed
a Memorandum of Understanding with the Commission on participation in the EU
Civil and Criminal Justice Programmes. However, budget limitations (a cut of
approximately 28% in the 2012 budget compared to 2011) affected the functioning
of the Academy. Attention has to be paid to fully preparing judges to apply EU
law and jurisprudence as of accession.

3) To
continue to improve the efficiency of the judiciary

Croatia has continued to implement various
measures aiming at improving the efficiency of the judiciary. In the first
semester 2012 the backlog of criminal cases continued to fall by around 12%,
and the number of old civil cases decreased by around 5%. However, a bigger
effort is needed to reduce the number of unresolved civil and commercial cases
further. Slightly more new cases entered the system in the first semester 2012 (844,218)
than were resolved (836,160).

Also the number of enforcement cases
increased by around 5% in the first semester 2012, although the enforcement
system for monetary claims run by the financial agency FINA worked well. In
July 2012 the government submitted to Parliament proposals for new enforcement
legislation, which no longer provides for the introduction of public bailiffs.
The new system, once adopted, will have to demonstrate its capacity to ensure
the enforcement of court decisions and writs of execution and to reduce the
backlog of enforcement cases. Further attention needs to be paid to ensuring
that higher courts, including the Supreme Court, are adequately equipped to
handle the disproportionate increase as cases advance through the system. The
new system of administrative justice came into force in January 2012, albeit
with some delays in appointing the necessary staff. Croatia needs to continue
to implement the foreseen immediate and short-term efficiency measures with
vigour, in particular to ensure improved rates of case handling and reductions
in the number of old cases.

Some progress has been made with the
physical infrastructure and computerisation of courts. The merger of courts as
part of the court rationalisation process is continuing. The roll-out of the
integrated case management system (ICMS) in 33 municipal courts is underway.
Once it is finished, it will cover almost all courts in Croatia. However, the
system should be applied to all courts, including the High Commercial Court and,
for case management of misdemeanours, the High Misdemeanour Court. Moreover,
further improvements are still needed in statistical data collection and
analysis and in the monitoring of the overall length of proceedings. In
general, misdemeanour courts need better equipment and premises. Further
efforts are needed to increase mobility of judges and to develop the framework
criteria for assessing their productivity.

4) To
continue to improve the handling of domestic war crimes cases

Croatia has continued to process domestic
war crimes cases. Implementation of the strategy for addressing impunity has
started and a number of priority cases identified at national and regional
level have been addressed, with further arrests, indictments and court rulings.
However, the majority of crimes have not yet been pursued in Court. A more
balanced approach to trials has continued, with further cases being transferred
to the four specialised courts (87). Measures have been taken to protect
witnesses with improved witness support services at certain courts. The war
crimes database should be upgraded to enable more analytical information
searches and should be effectively used by county prosecutors. Courts should
further specialise in war crimes trials, through specific training of dedicated
judges, and should prepare for an increasing number of cases. Croatia needs to
give continuous attention to the issue of witness protection and attendance of
witnesses in war crimes trials, especially in cases relocated to the
specialised chambers. The review of cases tried in absentia should
continue. The Law on invalidation of certain legal acts of the judicial
bodies of the Former Yugoslav National Army, the former Socialist Federal
Republic of Yugoslavia and of the Republic of Serbia adopted in October
2011 gave rise to concerns about future bilateral cooperation with Serbia in
war crimes cases. The law has been challenged by the President in the
Constitutional Court on procedural grounds. Croatia has made contact with
Serbia to address the possible adverse effects of the law, and has started
technical negotiations with Serbia on an agreement on cooperation in this
field.

Further efforts have to be made to tackle
impunity especially as the majority of cases have yet to reach final verdict or
are still to be investigated. Croatia needs to give continuous attention to the
issue of witness protection and attendance of witnesses in war crimes trials,
especially in cases relocated to the specialised chambers.

5) To
continue to ensure a sustained track record of substantial results based on
efficient, effective and unbiased investigation, prosecution and court rulings
in organised crime and corruption cases at all levels including high level
corruption, and in vulnerable sectors such as public procurement

An adequate legal and institutional
framework remains in place for the fight against corruption and organised crime
and a track record of implementation continues to be developed. Law enforcement
bodies remain proactive, especially in higher-level cases. Developments include
guilty verdicts against a former manager of a state-owned company, a city mayor
and a County Court judge for abuse of office and indictment of a political
party for corruption. While the law enforcement bodies continue to focus on
more complex, higher-level cases, the overall number of cases being handled is
falling.

Local-level corruption needs attention,
particularly in public procurement. The legal framework for the seizure and
confiscation of assets needs to be better implemented across the board.

Further attention should be paid to the
system for checking on dismissals of criminal cases by the prosecutor. The
current system does not provide for independent checks on decisions by State
prosecutors to dismiss reports of crime.

A number of senior appointments to the
police were made. The implementation of the Law on the Police should be
ensured, in particular to depoliticise the police and increase professionalism
of the police.

6) To
continue to improve its track record of strengthened prevention measures in the
fight against corruption and conflict of interest

Croatia improved its track record of
strengthened prevention measures in the fight against corruption by means of a
number of legal instruments, e.g. on the financing of political parties and
electoral campaigns, access to information and public procurement. However,
Croatia has not efficiently implemented all legal measures to prevent conflict
of interest.

As regards the financing of political
parties and election campaigns, the State Electoral Commission, which is the
supervisory body, was strengthened and new rules were applied to the general
elections in December 2011 without major difficulties and with few reported
shortcomings. A working group was set up to draw on lessons learnt in preparing
for the local elections planned for 2013. Continuous efforts are needed to
effectively control the financing of political parties, including outside the
election period.

New rules on access to information are
being applied, with the first appeals reaching court. However, general
monitoring by the Data Protection Agency, which is in charge of implementing
the law, is difficult because in 2011 less than half of the institutions
concerned submitted a report to the agency. In 2011, no public interest test
was applied to classified data. The current practice of the Administrative
Court is to confirm the existence of such data and deny access to it. The
practice of applying the public interest test to classified information needs to
be developed, including through legislative changes.

The new public procurement legislation in
force since January 2012 provides for increased transparency, including
publication of information on the actual execution of contracts. The effective
implementation of this legislation is key.

Improved and stricter conflict of interest
legislation was adopted in early 2011; however, the new Conflict of Interest
Commission has still not been appointed, and this has delayed the
implementation of the law. Some initial steps have been taken for the setting
up of the Commission, with the publication by the Parliament of the request for
expressions of interest for the selection of the Commission’s members in August
2012. The system for checking on asset declarations and unjustified wealth needs
to be strengthened and effectively implemented.

Provisions of the previous legislation on
criteria for membership of the supervisory and management boards of public
companies have been overturned. Croatia needs to ensure that a strong
system is in place to prevent corruption in state-owned companies. The
Conflict of Interest Commission needs to be established without delay. The
concept of political accountability and zero tolerance of corruption needs to
be strengthened.

7) To continue
to strengthen the protection of minorities, including through effective
implementation of the Constitutional Act on the Rights of National Minorities
(CARNM)

Implementation of the Constitutional Act on
the Rights of National Minorities continues. Eight members of parliament
representing national minorities were elected in December 2011. Some steps have
been taken by the government to implement the May 2011 plan for minority
employment for the period 2011-2014. The level of employment of minorities in
the state administration and judiciary remains below the requirements set by
the Constitutional Act on the Rights of National Minorities. While this may be
partially explained by relatively few new recruitments due to the general
economic crisis, more efforts should be made to ensure implementation of this
plan, including increased monitoring efforts.

Croatia also needs to continue to foster a
spirit of tolerance towards minorities, in particular Serbs, and to take
appropriate measures to protect those who may still be subjected to threats or
acts of discrimination, hostility or violence. The Roma minority faces
particularly difficult living conditions, and challenges remain in the areas of
education, social protection, health care, employment and access to personal
documents.

8) To
continue to address outstanding refugee return issues

Housing Care programmes for returning
refugees continue to be implemented, although at a slower pace. Under the March
2011 plan for dealing with the approximately 2,350 remaining applications, by
August 2012, 259 were settled, out of which 139 families took over the keys. By
August 2012, 1,305 positive approvals for housing care above the benchmark for
housing care have been given. 106 appeals for housing reconstruction are still
pending. The decision on validating pension rights continues to be implemented.
Croatia has also continued to engage with the other countries of the region in
the Sarajevo Declaration Process, in which progress is being made, particularly
on the regional housing project. There has been limited implementation of the
new purchase options under favourable conditions for housing care beneficiaries
and no significant progress with regard to the 15 unsolicited investment cases.
Conditions for sustainable refugee return need to be further developed.

9) To
continue to improve the protection of human rights

Human rights continued to be generally well
respected. However, existing legal provisions need to be applied with more
vigour. The general Ombudsman and specialised ombudspersons continue to play an
important role in human rights protection. However, the follow-up of the
Ombudsman’s recommendations needs to be ensured. The Constitutional Court
revoked a law on the merger of the Ombudsman’s offices with the Centre for
Human Rights and with the three specialised Ombudspersons for gender equality,
for children and for disabled persons, due to procedural reasons. New
legislation, which no longer foresees the merger of the offices, was adopted in
July 2012. The Ombudsman offices need to be strengthened to further improve the
human rights protection system. This includes providing adequate financing and
office premises, and setting up a joint database.

Croatia has further developed its track
record of implementation of the Anti-discrimination Act and legislation on hate
crimes. This needs to continue to develop, with attention paid to ensuring that
dissuasive sanctions are applied. Amendments to the Anti-discrimination Act
were adopted by the Parliament in September 2012. The gay pride events in
Split and Zagreb took place without major incidents, with strong commitment
from the Croatian government to their smooth organisation. Lesbians, gays,
bisexual and trans-gender (LGBT) people still face threats and attacks. The legal
framework for free legal aid has to be improved to enable better access to
legal aid and to foster the role of NGOs as legal aid providers.

10) To
continue to cooperate fully with the International Criminal Tribunal for the
former Yugoslavia

Croatia continues to cooperate with the
International Criminal Tribunal for the former Yugoslavia (ICTY). There have
been no particular developments with respect to Croatia’s investigations aimed
at locating or determining the fate of missing military documents requested by
the Office of the ICTY Prosecutor. Croatia’s request to act as amicus curiae
in the appeal against the verdict of 15 April 2011 in the case of Croatian
Generals Gotovina and Markač was rejected by the Court. The ICTY Chief
Prosecutor has issued a positive report on Croatia’s cooperation with the ICTY.

Chapter 24: Justice, freedom and
security

Croatia is
generally meeting the commitments and requirements arising from the accession
negotiations in the field of justice, freedom and security and should be in a
position to implement the acquis as of accession. Increased efforts are
needed in the area of migration, visa policy, border management and the fight
against organised crime, including on trafficking of human beings and
anti-terrorism, in order to ensure that Croatia
completes its preparations for membership by the date of accession.

In the field of
migration, Croatia has further aligned with the acquis and preparations
in this area are almost complete. The number of irregular migrants apprehended
in 2011 increased to 3,461. Over the same period, 552 unaccompanied irregular
minors were identified (their number is almost twice as high as the previous
year). Good cooperation with the other countries of the region in the field of
readmission can be noted; the agreement with Bosnia and Herzegovina entered
into force in April 2012. A similar agreement was signed with Germany in March
2012. Work is on track to build the facility for minors and other vulnerable
groups of irregular migrants in Jezevo. Further efforts are needed to start
building two additional transit reception centres for irregular migrants. On
legal migration, the new Aliens Act entered into force in January 2012, further
aligning the national legislation with the acquis in this field. The
preparation of a new migration strategy needs to continue without delays.

Croatia will need to implement the legal
framework on unaccompanied minors, by developing for them appropriate
assistance, and start building the new reception centres for irregular migrants
before accession. Alternative temporary solutions, taking into account the
growing number of migrants entering the country, especially in the border
areas, need to be considered.

In the field of asylum, Croatia has
almost completed alignment with the acquis. Preparations need to ensure
sufficient institutional capacity in this field, in terms of sufficient and
trained personnel, taking due account of the steady increase in the number of
asylum seekers in the country.

Implementing legislation in the field of
free legal aid during the asylum procedure was adopted in March 2012. The
administrative courts took over responsibility for second-instance asylum cases
as of January 2012. Following a three-month transitional period, the commission
for asylum ceased its work in March 2012. An initial number of posts for judges
and administrative staff of the new courts were filled and training on asylum
for the staff began. Refugees still face difficulties in securing access in
practice to the rights granted to them by national law. The recruitment and
training of administrative courts’ judges and employees need to continue. The
number of asylum seekers increased sharply, from 290 in 2010 to 807 in 2011.
The Ministry of the Interior has stepped up its efforts to offer certain
services to asylum seekers, with the support of local NGOs, but the involvement
of all the other ministries needs to be ensured. Preparations for implementing
the Dublin and Eurodac Regulations have continued, including by providing the
personnel of the Ministry of the Interior and the border police with relevant
training. Croatia will need to ensure that refugees enjoy full access to their
rights.

Legislative alignment is moderately
advanced as regards visa policy and needs to progress, to reach full
alignment with the acquis on visa requirements and travel documents. The
new Aliens Act entered into force in January 2012; the related implementing
legislation has not yet been adopted. On visa requirements, Croatia has fully
aligned its legislation with the EU positive list of Regulation 539/2001.
Further alignment is required with the uniform procedure for issuing visas and
the EU visa code. The list of countries whose nationals require a visa to enter
Croatian territory is not yet fully aligned with that of the EU. The government
adopted a decision temporarily liberalising the visa regime for citizens of the
Russian Federation, Ukraine and Kazakhstan for transit through or staying up to
90 days from 1 April to 31 October 2012, which is not in line with the acquis;
the decision will cease to apply as of November. Biometric passports are
compliant with EU standards; the old ID cards issued before 2003 are still in
circulation but in August 2012 the Government adopted the decision that they
cannot be used as valid travel documents.

With regard to external
borders and Schengen, legislative alignment with the acquis has
progressed moderately and needs to continue for Croatia to be prepared to take
over control of the EU external borders. The State Border Control Act and its
implementing legislation were amended at the end of 2011. The Integrated Border
Management (IBM) Action Plan was revised in April 2012. The National Maritime
Centre in Zadar has started to be operational; yet its interconnectivity with
relevant Ministries has to be ensured. The cooperation with Frontex was
enhanced and includes Croatia’s participation in different activities and joint
operations. Regular coordination meetings take place with neighbouring
countries, as do joint patrols of the borders; those with Serbia and with
Montenegro need to be enhanced. A common contact point with Serbia was
established at the border crossing point (BCP) of Bajakovo-Batrovci and it is
fully operational. A first coordination meeting with the authorities of Bosnia
and Herzegovina, to implement the mutual agreement on state border control, was
held in December 2011. Discussions with both countries, and with Montenegro, to
bring bilateral agreements on local border traffic in line with the acquis
are advancing and need to be finalised before accession. The Free Transit
Agreement with Bosnia and Herzegovina (‘Neum agreement’) needs to be brought in
line with the EU acquis before accession.

Staffing
targets for the border police set for 2011 were almost completely met; 308 new
officers were hired in 2011. The total number as of May 2012 is 6,017, of which
4,647 are at the future external border. The recruitment needs to continue to
reach the Schengen standards. Basic and specialised training continued; full
alignment with the programme of the Common Core Curriculum needs to be ensured,
with the specialised training systematically included in the curricula of the
border police.

The IBM Action
Plan was partly implemented; certain activities planned in 2011, relating to
the procurement of technical equipment and to infrastructures, have been
postponed to 2012. Delays in these areas need to be properly monitored and
addressed, particularly with regard to the Neum corridor. The construction of
the BCPs at the Neum corridor needs to be finalised such that they are
operational upon accession. The installation of the National Border Management
Information System (NBMIS) has continued but the new system is not yet
installed at all BCPs. As of August 2012, it was operational at 81 BCPs. The
preparation and the relevant training need to continue.

Efforts need to be made to conclude the
interministerial agreement and to continue recruitment, purchase of equipments
and trainings, with a view to making the National Maritime Centre in Zadar
fully operational. Inter-agency cooperation on IBM issues has continued, but a
joint risk analysis is missing. Croatia will need to address the delays in
implementing the IBM Action Plan, especially those related to infrastructures.
All bilateral agreements need to be brought into line with the acquis
before accession.

Croatia has
continued to align its legislation in the field of judicial cooperation in
civil and criminal matters and the preparation is almost completed. An
agreement on mutual execution of criminal judgments with Montenegro, and an
extradition agreement with the former Yugoslav Republic of Macedonia, were
signed in October 2011. A working group has been set up and met several times
to prepare the new Act on International Private Law. Cooperation with the
European Judicial Network in civil and commercial matters has progressed; a
network of national contact points is being developed in this regard.

Croatia will
need to continue strengthening interinstitutional coordination on judicial
cooperation.

As regards police
cooperation and the fight against organised crime, activities
have continued with the aim of bringing the national legislation into line with
the EU acquis and coping with the future challenges of fighting
organised crime within the EU. In this area, Croatia is advanced, but needs to
remain vigilant given the important challenges as regards organised crime
activities in the region.

A number of
bilateral agreements in the field of police cooperation and organised crime
were signed; those with Bulgaria and with Poland were ratified. Good
cooperation with Europol has continued. Two new liaison officers have been
appointed, respectively for Europol and for Bosnia and Herzegovina. The
technical preparation and staff training to establish the Supplementary
Information Request at the National Entry (SIReNE) Office and the National
Office for the Schengen Information System (SIS) have progressed. The
regulatory framework for the SIS office is still missing. A decision on the
premises, staff and the budgetary allocation destined to the SIReNE office
needs to be taken.

Both the legal
framework and the institutions in charge of combating organised crime have
effectively contributed to counteracting this phenomenon, at both national and
international level, taking into account the good level of alignment with the
EU standards achieved in this area. Training and activities to improve police
performance continued. The government decided not to revise the Law on Police
currently in force; part of the legislation implementing the Police Act is
still missing and needs to be prepared without delay. The Ministry of the
Interior needs to develop IT support to ensure transparent implementation of
the Strategy for its Human Resources Management. The track record on organised
crime cases has continued to develop, not least on drug trafficking.

Implementation of the legal framework on
the seizure and confiscation of assets needs to be consolidated, as does the
coordination between criminal and financial investigations. The total level of
assets seized and confiscated is relatively low and further efforts are
necessary in this regard. A monitoring system to fight corruption in border
management is in place. The equipment and the premises of PNUSKOK’s regional
office in Split would still need to be upgraded; operational guidelines and
specialised training for the newly employed staff of the office need to be introduced.
The second-instance body which reviews cases of offences against the public
administration is remains to be strengthened.

Inter-agency
cooperation in exchanging data on transactions suspected of involving money
laundering or terrorist financing is now facilitated by the signature of an
annex to the protocol on cooperation between authorities dealing with
corruption, organised crime and the associated crimes of money laundering and
terrorist financing. Training on anti-money laundering measures and on the
fight against cybercrime has continued. Administrative capacities in the
anti-money laundering field need to be improved (see also Chapter 4 — Free
movement of capital), as well as the capacities of the law enforcement
authorities to conduct financial investigations.

The new
Criminal Code, adopted in October 2011, splits the criminal offence of
trafficking in human beings and slavery, introducing new types of exploitation.
The national action plan against trafficking in human beings for the period 2012-2015
was adopted in February 2012; a new national committee for action against
trafficking was set up in March 2012.

Implementation of the legislative framework
on trafficking needs to be strengthened, as does public awareness, to ensure
better identification and protection of the victims. The new national committee
for action against trafficking has not yet met, since the beginning of 2012.

In 2011, only
14 victims were identified (7 in 2010). Further measures need to be put in
place to ensure their rehabilitation and compensation. The training for judges,
prosecutors and other civil servants dealing with trafficking needs to be
improved, as the level of sentencing in cases of human trafficking is very low
compared to other types of organised crime.

Croatia will
need to complete a number of steps in this field before accession. These
include putting in place the regulatory framework for the SIS office and making
the SIReNE’s one fully operational, upgrading police equipment and the
facilities of PNUSKOK, increasing the level of seized and confiscated assets
and better coordinating criminal and financial investigations. In the fight
against trafficking in human beings, attention needs to be paid to
implementation of the relevant legal framework and to the overall definition of
policies in this area.

With regard to internal border control, a decision on the application of the relevant Schengen acquis
in Croatia shall be taken by the Council, in accordance with the applicable
Schengen procedures and while taking into account a Commission report
confirming that Croatia continues to fulfil the commitments undertaken in its
accession negotiations that are relevant for the Schengen acquis.

Other acquis chapters

Croatia is meeting the commitments and
requirements arising from the accession negotiations and is in a position to
implement the acquis as of accession in the fields of freedom of
movement for workers, company law, intellectual property law, financial
services, information society and media, economic and monetary policy,
trans-European networks, science and research, education and culture, as
well as foreign, security and defence policy.

Croatia is meeting the commitments and
requirements arising from the accession negotiations and is expected to be in a
position to implement the acquis as of accession in the fields of free
movement of goods, right of establishment and freedom to provide
services, free movement of capital, public procurement, transport
policy, energy, taxation, statistics, social policy and
employment, enterprise and industrial policy, consumer and health
protection, customs union, external relations, financial
control, and financial and budgetary provisions.

However, for these chapters further
efforts are required, in the following areas.

In the field of free movement of goods,
further efforts are required in particular in the field of horizontal measures,
as well as new and old approach product legislation. Urgent attention must
still be paid to the requirements imposed by Croatia for additional
intermediate storage of imported petroleum products.

In the field of right of establishment
and freedom to provide services further efforts are needed, particularly
for the alignment with the Services Directive and in the field of mutual
recognition of professional qualifications, despite the progress achieved to
date in both areas.

In the field of free movement of capital
further efforts are required, in particular as regards amendments to the Act on
Privatisation of INA and of Telecom as well as the Nature Protection Act and
the implementation of the action plan against anti-money laundering.

In the field of public procurement
further efforts are required, in particular for the implementation of the new
public procurement act, especially at local level, also in view of the future
management of the structural funds. Furthermore, improvements concerning the
system of remedies are required.

In the field of transport policy
further efforts are required, in particular to strengthen the administrative capacity
of the railway safety agency and to establish a joint accident investigation
body.

In the field of energy further
efforts are required, in particular to complete the legislative alignment in
the area of the internal energy market, and to ensure the development of a
competitive market for electricity and gas. Croatia also needs to continue
efforts to meet the 2020 requirements regarding the promotion of energy
efficiency and renewable energy.

In the field of taxation further
efforts are required to ensure that all relevant IT
systems are in place and able to exchange information with the EU and other
Member States as from the day of accession.

In the field of statistics, further
efforts are required, in particular to complete preparations in the areas of
ESA95 transmission programme, GNI inventory and the government deficit and debt
statistics (EDP).

In the field of social policy and
employment, further efforts are required, in particular to complete legal
alignment in the field of equal opportunities, address the structural
weaknesses on the labour market, better target social welfare, and to
strengthen the administrative capacity.

In the field of enterprise and
industrial policy further efforts are required, in particular to improve
the business environment and to align the legislation as regards combating late
payment in commercial transactions.

In the field of consumer and health
protection further efforts are required, in particular in the area of medically
assisted reproduction, where legal alignment remains to be completed, and in
the areas of blood, tissues and cells, where facilities for handling them need
to be upgraded and restructured in accordance with the EU technical
requirements, and as regards staffing of the National Competent Authority in
this field.

In the field of customs union
further efforts are required, in particular to ensure
that all relevant IT customs systems are in place and able to exchange
information with the EU and other Member States as from the day of accession.

In the field of external relations
further efforts are required, in particular as regards alignment
with the acquis of Croatia’s bilateral investment agreements with third
countries.

In the field of financial control
further efforts are required, in particular to
consolidate the overall functioning of the Public Internal Financial Control
and external audit at central and local level.

In the field of financial and budgetary
provisions further efforts are required, in particular to further
strengthen the capacity to coordinate the overall system of own resources
efficiently after accession. The modernisation of the customs control strategy,
so that it focuses more on post clearance controls, needs to be stepped up.

Croatia is generally meeting the
commitments and requirements arising from the accession negotiations and should
be in a position to implement the acquis as of accession in the fields
of competition policy, agriculture and rural development, food
safety, veterinary and phytosanitary policy, fisheries, regional
policy and coordination of structural instruments, judiciary and fundamental
rights, justice, freedom and security and environment.

However, for these chapters increased
efforts continue to be necessary in the following areas.

In the field of agriculture and rural
development increased efforts are needed in the area of direct payments and
rural development.

In the field of food safety, veterinary
and phytosanitary policy increased efforts are needed in the area of the
animal by-products sector, the upgrading of establishments and its monitoring
and in particular with regard to border inspection posts. Continued attention
needs to be paid to the further strengthening of administrative capacity in
this area.

In the field of fisheries increased
efforts are needed in the legislative alignment and implementation of the acquis
in the areas of fleet and resources management, inspection and control as well
as structural measures, in particular as regards the preparation of the
management plans, the phasing out of the category of subsistence fisheries and
the completion of the satellite based vessel monitoring system.

In the field of regional policy and
coordination of structural instruments, increased efforts are needed to
strengthen the administrative capacity for future cohesion policy
implementation and to develop a high-quality and mature project pipeline with a
view to swift absorption of regional policy funds, building on the recent
report of the European Court of Auditors.

In the field of environment, increased
efforts are needed to properly implement and enforce legislation. In particular
in the field of climate change, urgent steps need to be taken to be in a
position to implement the acquis by the date of accession. Administrative
capacity needs to be strengthened, especially in the fields of climate change,
industrial pollution control and risk management, nature protection and
chemicals. Investments need to be increased across the sectors, but more
particularly in the fields of air quality, industrial pollution control and
risk management, water and waste. Specific attention needs to be paid to the
timely fulfilment of commitments in the fields of waste and industrial
pollution control and risk management. The quality of environmental impact
assessment for projects needs to be significantly improved.

2.4       Translation
of the acquis

Croatia must
ensure that the acquis is translated into Croatian. Of the nearly 144
000 pages of acquis, Croatia has already translated about 114 000 pages. However, about 50% of these
already translated pages have still to be revised by the national authorities
before they can be submitted to the EU institutions.

Croatia should
further increase its capacity to ensure the completion of the translation and
revision of the acquis in time for accession. The Commission calls on
the Croatian authorities to maintain focus on this issue, which is essential in
order to ensure legal certainty in the implementation of EU legislation.

2.5       EU
support measures

Financial
assistance is provided under the Instrument for
Pre-accession Assistance (IPA). The 2012 IPA programmes amounted to € 156
million. This assistance is focused on institution-building and preparing for
implementation of the EU’s common agricultural policy and cohesion policy. In addition,
Croatia continued to benefit from regional and horizontal programmes. A
transition facility has been agreed for the first year following accession to
strengthen administrative and judicial capacity in Croatia.

3.         Conclusions

In light of the above, the Commission
confirms its earlier assessment that Croatia continues to meet the political
criteria. Efforts must continue to strengthen the rule of law, by improving
public administration and the justice system, and by fighting corruption and
organised crime effectively. As regards the economic criteria, Croatia is a
functioning market economy. Vigorous implementation of urgently needed
structural reforms should enable Croatia to cope with competitive pressures and
market forces within the Union in the near term.

Croatia has continued to make progress in
adopting and implementing EU legislation and is now completing its alignment
with the acquis. Further progress has been achieved since the 2011
Progress Report, followed by the Monitoring Report on Croatia’s accession
preparations and the last update of the monitoring tables of April 2012. The
Commission has identified areas where further efforts are necessary and a
limited number of issues where increased efforts are required. These issues
relate in particular to (1) the preparations for future EU structural funds in
order to ensure their proper management; (2) the restructuring of the Croatian
shipbuilding industry; (3) the strengthening of the rule of law through
continued implementation of Croatia’s commitments to further improve public
administration, the justice system, (4) preventing and fighting corruption
effectively, as well as (5) the management of external borders. Without
prejudice to the importance of addressing all issues underlined in the Comprehensive
Monitoring Report, the Commission considers that particular attention should be
paid by Croatia in the coming months to the following specific actions in the
areas of competition policy, judiciary and fundamental rights, and freedom
security and justice:

1.
Sign the privatisation contract for Brodosplit
shipyard and take the necessary decisions to find a viable solution for the
shipyards 3.Maj and Brodotrogir in order to complete the restructuring of the
Croatian shipbuilding industry.

2.
Implement the immediate and advance on the
short-term measures elaborated in September 2012 for increasing the efficiency
of the judiciary and reducing the court backlog.

3.
Adopt the new enforcement legislation, in order
to ensure the execution of court decisions and reduce the backlog of
enforcement cases.

4.
Establish the Conflict of Interest Commission so
that it starts its regular working activities.

5.
Adopt the new law on access to information, in
order to strengthen the legal and administrative framework in the area of access
to information.

6.
Complete the adoption of related by-laws, to
ensure the implementation of the police law

7.
Complete the construction of border crossing
points at the Neum corridor.

8.
Achieve the established recruitment target for
border police for 2012.

9.
Finalise and adopt the migration strategy,
clearly defining measures for the integration of the most vulnerable groups of
migrants.

10.
Increase the capacity to translate and revise
the acquis such that this task can be completed in time for accession.

In addition, particular attention should be
paid by Croatia, in the field of agricultural and rural development, to
complete the alignment of the legislation on direct payments and the
accreditation of the paying agency for direct payments by the end of 2012 at
the latest.

In view of the recent substantial
restructuring of the public administration, and the additional responsibilities
related to EU membership, Croatia should also take immediate steps to address
administrative capacity constraints identified in the Comprehensive Monitoring
Report and ensure that the completion of preparations for EU-membership is not
affected.

The Croatian authorities should take all
necessary measures to ensure that the country is fully prepared for membership
by 1 July 2013. This includes the full translation of the acquis in time
before accession.

The Commission will continue monitoring the
fulfilment of the commitments taken by Croatia in the context of the accession
negotiations focusing on the issues identified in the comprehensive monitoring
report and, if circumstances would so warrant, make use of all instruments
available under Article 36 of the Act of Accession.

In accordance with that Article, the
Commission will present a final monitoring report on Croatia’s accession
preparations in spring 2013.

In order to help Croatia preparing for the
economic policy coordination within the EU, Croatia will participate in the 2013
European semester on an informal basis.

Croatia is expected to continue playing an
active role in regional cooperation in the Western Balkans, and is encouraged
to address the remaining open bilateral issues with its neighbours.

[1]               COM(2012) 186 final.