[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 6.11.2007

SEC(2007) 1436

COMMISSION STAFF WORKING DOCUMENT TURKEY 2007 PROGRESS REPORT accompanying the

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Enlargement Strategy and Main Challenges 2007-2008

{COM(2007) 663 final}

TABLE OF CONTENTS

1. Introduction 4

1.1. Preface 4

1.2. Context 4

1.3. Relations between the EU and Turkey 4

2. Political criteria and enhanced political dialogue 6

2.1. Democracy and the rule of law 6

2.2. Human rights and the protection of minorities 11

2.3. Regional issues and international obligations 24

3. Economic criteria 26

3.1. The existence of a functioning market economy 26

3.2. The capacity to cope with competitive pressure and market forces within the Union 30

4. Ability to assume the obligations of membership 32

4.1. Chapter 1: Free movement of goods 32

4.2. Chapter 2: Freedom of movement for workers 34

4.3. Chapter 3: Right of establishment and freedom to provide services 35

4.4. Chapter 4: Free movement of capital 36

4.5. Chapter 5: Public procurement 37

4.6. Chapter 6: Company law 38

4.7. Chapter 7: Intellectual property law 39

4.8. Chapter 8: Competition policy 40

4.9. Chapter 9: Financial services 41

4.10. Chapter 10: Information society and media 43

4.11. Chapter 11: Agriculture 44

4.12. Chapter 12: Food safety, veterinary and phytosanitary policy 45

4.13. Chapter 13: Fisheries 47

4.14. Chapter 14: Transport policy 48

4.15. Chapter 15: Energy 49

4.16. Chapter 16: Taxation 50

4.17. Chapter 17: Economic and monetary policy 51

4.18. Chapter 18: Statistics 52

4.19. Chapter 19: Employment and social policy 53

4.20. Chapter 20: Enterprise and industrial policy 55

4.21. Chapter 21: Trans European networks 56

4.22. Chapter 22: Regional policy and coordination of structural instruments 56

4.23. Chapter 23: Judiciary and fundamental rights 58

4.24. Chapter 24: Justice, freedom and security 63

4.25. Chapter 25: Science and research 67

4.26. Chapter 26: Education and culture 68

4.27. Chapter 27: Environment 68

4.28. Chapter 28: Consumer and health protection 70

4.29. Chapter 29: Customs union 71

4.30. Chapter 30: External relations 73

4.31. Chapter 31: Foreign, security and defence policy 74

4.32. Chapter 32: Financial control 76

4.33. Chapter 33: Financial and budgetary provisions 77

STATISTICAL ANNEX 78

INTRODUCTION

Preface

Following the conclusions of the Luxembourg European Council in December 1997, the Commission has reported regularly to the Council and the Parliament.

This report on progress made by Turkey in preparing for EU membership largely follows the same structure as in previous years. The report:

- briefly describes the relations between Turkey and the Union;

- analyses the situation in Turkey in terms of the political criteria for membership;

- analyses the situation in Turkey on the basis of the economic criteria for membership;

- reviews Turkey's capacity to assume the obligations of membership, that is, the acquis expressed in the Treaties, the secondary legislation, and the policies of the Union.

The period covered by this report is from 1 October 2006 to early October 2007. Progress is measured on the basis of decisions taken, legislation adopted and measures implemented. As a rule, legislation or measures which are under preparation or await Parliamentary approval have not been taken into account. This approach ensures equal treatment across all reports and permits an objective assessment.

The report is based on information gathered and analysed by the Commission. In addition, many sources have been used, including contributions from the government of Turkey, the Member States, European Parliament reports[1], and information from various international and non-governmental organisations.

The Commission draws detailed conclusions regarding Turkey in its separate communication on enlargement[2], based on the technical analysis contained in this report.

Context

The Helsinki European Council of December 1999 granted the status of candidate country to Turkey. Accession negotiations with Turkey were opened in October 2005.

The Association Agreement between Turkey with the then EEC was signed in 1963 and entered in force in December 1964. Turkey and the EU formed a customs union in 1995.

Relations between the EU and Turkey

Accession negotiations with Turkey continued. The preparatory analytical phase reached its final stage. In this stage the level of preparedness to start negotiations on individual chapters is assessed on the basis of screening reports. Of a total of 33 reports, 5 remain to be delivered by the Commission to the Council whilst 6 are being discussed in the Council.

In December 2006 the Council decided that negotiations will not be opened on eight chapters relevant to Turkey's restrictions regarding the Republic of Cyprus and that no chapter will be provisionally closed until the Commission confirms that Turkey has fully implemented the Additional Protocol to the Association Agreement.

At the same time, the Council emphasised that the screening process would continue, and that chapters for which technical preparations have been completed would be opened in accordance with established procedures, in line with the Negotiating Framework. So far, negotiations have been opened on 4 chapters ( science and research , industrial policy, statistics, financial control ) and provisionally closed on one ( science and research). In addition, the EU informed Turkey about the progress needed to reach a satisfactory level of preparedness to start negotiations on 14 chapters.

The enhanced political dialogue between the EU and Turkey has continued. Political dialogue meetings were held in June 2007 at ministerial level and in March and September 2007 at political director level. These meetings focused on the main challenges faced by Turkey in terms of the Copenhagen political criteria and reviewed progress being made towards fulfilment of Accession Partnership priorities. Foreign policy issues were also regularly discussed.

The EC-Turkey customs union contributed to a further increase in bilateral EU-Turkey trade, which reached € 85 billion in 2006, thereby making Turkey the EU's seventh trading partner. The reduction of national mandatory product standards supported this positive trend. The EU asked Turkey to remove all remaining restrictions on the free movement of goods, including restrictions on means of transport regarding Cyprus. A number of Turkey’s commitments on technical barriers to trade, import licenses, state aid and enforcement of intellectual property rights remain unfulfilled. No progress can be reported concerning Turkey's long-standing ban on imports of live bovine animals, beef and other animal products.

The EU provides guidance to the authorities on reform priorities through the Accession Partnership . Progress on these reform priorities is encouraged and monitored through the bodies set up under the Association Agreement. The Association Committee met in March 2007. Eight sectoral sub-committees have been held since November 2006.

Another round of negotiations on a readmission agreement between Turkey and the EC took place in December 2006. Some contacts on the issue have taken place since then, but no progress was made on negotiations. Turkey has not started negotiations on a visa facilitation agreement.

As regards financial assistance , some € 500 million have been earmarked for Turkey from the new Instrument for Pre-accession Assistance (IPA) in 2007. The Multi-Annual Indicative Planning Document 2007-2009, which provides the strategic multi-annual framework for all programmes at national level, was adopted by the Commission on 30 April 2007. In addition, Turkey is benefiting from a series of regional and horizontal programmes under IPA.

Two financing agreements were signed in 2007, releasing some € 370 million for EU funded projects under the 2006 National Programme (NP) for Turkey. € 21.5 million from the 2006 NP will support civil society dialogue between the EU and Turkey through grants to projects selected in September 2007. The European Commission allocated € 62 million in 2007 to co-finance Turkey's participation in Community Programmes and Agencies.

Absorption of pre-accession funds is slowly improving. This is being facilitated by the setting of intermediate contracting deadlines. However, Turkey's key decentralised implementation system (DIS) institutions remain weak. Turkey needs to make further efforts to strengthen them, and to further improve the quality and efficiency of the project and programme cycles.

Political criteria and enhanced political dialogue

This section examines progress made by Turkey towards meeting the Copenhagen political criteria which require stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities. It also monitors the respect for international obligations, regional cooperation, and good neighbourly relations with enlargement countries and Member States.

Democracy and the rule of law

Constitution

On 10 May 2007, the Turkish Grand National Assembly adopted a package of constitutional reforms proposed by the majority Justice and Development Party (AKP). The package introduces the election of the President by popular vote for a renewable term of five years, the shortening of the government's term of office from five to four years and the establishment of a quorum of one third for all sessions and decisions of parliament. A referendum held on 21 October endorsed these reforms.

In a separate constitutional amendment, the minimum age for a person to be elected to parliament was lowered from 30 to 25 years. The new rules will not be applicable until the next parliamentary elections.

Parliament

Parliamentary elections were held on 22 July 2007. Voter turnout was over 83%. Following an invitation from the Turkish authorities, the OSCE Office for Democratic Institutions and Human Rights, OSCE/ODIHR, carried out an election assessment mission. In a press statement, the OSCE/ODIHR stressed that the electoral process was characterized by pluralism and a high level of public confidence underscored by the transparent, professional and efficient performance of the election administration. A delegation from the Parliamentary Assembly of the Council of Europe (PACE) also observed the elections and came to similar conclusions.

Three parties crossed the 10% threshold of the national vote required to be represented in Parliament. These were the Justice and Development Party (AKP) with 46.6%, resulting in 341 seats, the Republican People’s Party (CHP) with 20.9% (99 seats) and the Nationalist Movement Party (MHP) which obtained 14.3% (70 seats). 26 independent candidates were also elected. 20 of these, from the Democratic Society Party (DTP), formed their own political group. This brought the number of political groups to four. Additional parties represented in parliament are the Democratic Left Party (DSP), with 13 Members of Parliament, the Grand Unity Party (BBP) and the Freedom and Democracy Party (ÖDP) with one seat each.

The newly-elected parliament is now more representative of the country's political diversity. Nevertheless, the debate continued on reducing the 10% threshold, which is the highest among European parliamentary systems. This issue was also brought to the European Court of Human Rights (ECtHR), which ruled in January 2007 that the threshold does not violate the right to free elections. However, it also noted that it would be desirable for the threshold to be lowered in order to ensure optimal representation, while preserving the objective of achieving stable parliamentary majorities. The issue was referred to the Grand Chamber.

President

In view of the expiration of the presidential term of President Sezer in May, in April the Parliament convened to elect a new President of the Republic. The first round of voting, held in the Parliament on 27 April 2007, was boycotted by opposition parties, and the sole candidate, Foreign Minister and Deputy Prime Minister Abdullah Gül, failed to obtain the required two-thirds majority. On the same day the General Staff interfered with the presidential elections by issuing a memorandum ( See civilian oversight of the security forces ).

Following an application of the main opposition party CHP the Constitutional Court ruled on 1 May that the vote be invalidated because a two-thirds quorum of participants was lacking (See section on judicial system) . A new vote was held, but the two-thirds quorum was not achieved. Mr. Gül then withdrew his candidacy and the entire procedure was cancelled. This triggered early elections, as provided for in the Turkish Constitution.

In August the newly-elected Parliament elected Minister Gül President at the third round with 339 votes.

President Sezer exercised his right of veto on several laws related to political reforms, notably the law on the Ombudsman, the law on Foundations, and the law on private education institutions. The President also appealed to the Constitutional Court against the law on the Ombudsman. Strained relations between the President and the government contributed to slowing work on political reforms.

Government

Following the general election a single-party AKP government was formed by Prime Minister Erdoğan and endorsed by Parliament on 5 September. The government programme includes a commitment to continue reforms. The government plans to carry out extensive constitutional reforms aimed in particular at fully aligning Turkey to international standards in the area of fundamental rights. The government reiterated its intention to push forward the implementation of the Turkish road map for EU accession presented in April 2007. The Road Map provides internal guidance to line Ministries on alignment with the acquis and covers alignment of primary and secondary legislation to be adopted and implemented between 2007 and 2013. The inter-ministerial Reform Monitoring Group met in September.

In the new government the Foreign Ministry will continue to be in charge of accession negotiations with the EU. The Secretariat General for EU Affairs (EUSG) was placed under the Ministry of Foreign Affairs and will continue to play a coordinating role, in particular on the political criteria, financial cooperation and negotiations on individual chapters. In September 2007 it was announced that the EUSG and the State Planning Organisation will exercise a quarterly progress review of the road map implementation.

However, given its significant role there is a need to strengthen the EUSG staff and resources. Only limited action was taken in this respect.

Overall, through free and fair parliamentary elections Turkey resolved the political and constitutional crisis which followed the April presidential elections. The elections were fully in line with the rule of law and international democratic standards. Participation was high and the new Parliament is highly representative of Turkish political diversity. Elections of the President in August took place smoothly and in accordance with the Constitution. A new government was formed and presented an EU-oriented reform agenda.

Public administration

The Public Financial Management and Control (PFMC) law was amended in April 2007 to facilitate proper staffing of the “strategy development units” which are responsible for financial control within each ministry. The government assigned about 600 internal audit staff for the local administrations in October 2006, which is a step forward in implementing the PFMC.

Moreover, the government adopted in October 2006 a regulation to establish city councils. These councils have been made compulsory by the Municipality Law and are to serve as platforms to enhance local ownership and participation in municipality management. As regards recruitment of personnel, general principles for employment of personnel by municipalities and special provincial administrations were adopted in February and June 2007 respectively.

Turkey has made some progress on better regulation: The government issued a circular in April 2007 on the implementation of the Regulatory Impact Assessment (RIA), and RIA guidelines were adopted to enhance the quality of regulations. Concerning the reduction of red tape and administrative burden, in November 2006 "one-stop" offices were established within governorates and district governorates to lessen the administrative burden on citizens requesting certain public services. Moreover, as part of a simplification drive, 1,085 outdated government circulars were cancelled in January 2007. The user-friendliness of e-government applications was markedly improved.

However, Turkey has yet to establish an Ombudsman system, pending the implementation of the ombudsman law, suspended by the Constitutional Court in November 2006.

There has been no progress with regard to the adoption of the Framework Law on Public Administration, which aims to reform central administration and devolve powers to local administrations. Moreover, no progress has been made with regard to transferring more financial resources to local administrations.

Despite the fact that the reform of the civil service has been recognized as an important issue a comprehensive draft law on Civil Service was not sent to Parliament. There is a need to implement fully the PFMC and to develop a comprehensive strategy to reduce red tape.

Overall, there has been some progress in legislative reform of the public administration and civil service system. Limited progress has been recorded in terms of implementation and capacity building, which remain key issues. Attention needs to be paid to reducing red-tape, enhancing transparency and strengthening accountability mechanisms as well as devolution of powers to and increasing financial resources of local governments.

Civilian oversight of the security forces

Despite public comments from the army and attempts to interfere in the political process, the outcome of the spring 2007 constitutional crisis reaffirmed the primacy of the democratic process.

The National Security Council (NSC) continued to meet in line with its revised role. Ambassador Burcuoğlu was appointed as new Secretary-General in September. The total staff of the NSC decreased from 408 to 224, and the number of military personnel from 26 to 12.

However, the armed forces continued to exercise significant political influence. Senior members of the armed forces have stepped up their public comments on domestic and foreign policy questions including Cyprus, secularism and Kurdish issues. On a number of occasions, the General Staff reacted publicly to government statements or decisions. The General Staff directly interfered with the April 2007 presidential election by publishing a memorandum on its website expressing concern at the alleged weakening of secularism in the country.

There were several attempts from senior members of the armed forces to restrict academic research and public debate in Turkey, in particular on security and minority rights issues. Furthermore, the military targeted the press on various occasions (S ee section on freedom of expression ).

The 1997 EMASYA secret protocol on Security, Public Order and Assistance Units remains in force. The protocol, signed by the General Staff and the Ministry of Interior, allows for military operations to be carried out for internal security matters under certain conditions without a request from the civilian authorities.

No change has been made to the Turkish Armed Forces Internal Service Law and the law on the National Security Council. These laws define the role and duties of the Turkish military and grant the military a wide margin of manoeuvre by providing a broad definition of national security. No progress has been made in enhancing civilian control over the Gendarmerie when engaged in civilian activities.

No progress has been made in terms of strengthening parliamentary oversight of the military budget and expenditure. The Parliamentary Planning and Budget Committee reviews the military budget only in a general manner. It does not examine programmes and projects. Furthermore, extra-budgetary funds are excluded from parliamentary scrutiny.

As regards auditing, according to the Constitution the Court of Auditors can carry out external ex-post audit of military expenditures and properties. However, the Court remains unable to audit military properties, pending the adoption of the Law on the Court of Auditors. Furthermore, the 2003 Law on Public Financial Management and Control providing for the internal audit of security institutions has yet to be properly implemented.

Overall, no progress has been made in ensuring full civilian supervisory functions over the military and parliamentary oversight of defence expenditure. On the contrary, the tendency for the military to make public comments on issues going beyond its remit, including on the reform agenda, has increased.

Judicial system

Some progress has been made in terms of the efficiency of the judiciary, including through amendments to the Turkish Criminal Code (CC) and the Criminal Procedure Code (CPC) adopted in December 2006. These amendments extend the discretion of the prosecutor as regards decisions not to prosecute, while the provisions regarding mediation are simplified. Judicial supervision - introduced in the CPC as an alternative to arrest for offences requiring imprisonment of three years or less - has started functioning satisfactorily. Probation is an area where progress has been achieved in implementation: 133 probation centres employing 1,298 staff have become fully operational since November 2006.

Efforts to modernise the judiciary through the use of information technology continued. Judges have reported positive results as regards the National Judicial Network Project (UYAP[3]) on court proceedings while the lawyers' portal was integrated into this network in March. 864 judges and 476 prosecutors were appointed during the reporting period. The funds for the judiciary have increased from € 409 million in 2005 to € 482 million in 2006 and are planned to reach € 865 million by the end of 2007. In May 2007, nine locations for regional courts of appeal were identified and their geographical areas of jurisdiction defined in line with legal requirements.

However, concerns remain as regards the independence and the impartiality of the judiciary. In the context of the election of the new president in April, the Constitutional Court ruled by a majority of seven to four that a quorum of two thirds (367 deputies) is necessary for the first and second rounds of presidential elections in Parliament, and annulled the first round of voting. This decision led to strong political reactions and allegations that the Constitutional Court had not been impartial when reaching this decision. In the event, and as regards the election of the President of the Republic by Parliament, the Court introduced a one-third blocking minority.

In its final decision of November, the High Council of Judges and Prosecutors dismissed the prosecutor who had prepared the indictment on the Semdinli case[4]. The Court of First Instance in Van has started a fresh examination of the case, following a ruling of the Court of Cassation that the offences had not been properly constituted. The Court of Cassation had also ruled that the case falls under the jurisdiction of the military court, but this was rejected but the Court of First Instance.

There have been tensions as regards the appointment of high court judges. For a few months the High Council of Judges and Prosecutors has been unable to elect judges to vacant posts at the Court of Cassation and the Council of State because the Minister of Justice and his Undersecretary did not attend the meetings. The issue was finally resolved and elections were held in April.

Overall, there has been some progress as regards the efficiency of the judiciary through implementation of adopted legislation and continued use of IT. However, tensions in the relations between the government and the judiciary have not been conducive to the smooth and effective functioning of the system. More needs to be done in terms of strengthening the independence and impartiality of the judiciary. Finally, there is no overall National Reform Strategy for the Judiciary or a plan to implement it (See also chapter 23 - Judiciary & fundamental rights).

Anti-corruption policy

As regards coordinating the system currently in place for combating corruption, the Prime Minister's office transferred responsibility for policy definition and coordination with international organisations to the Ministerial Committee for Enhancing Transparency and Improving Good Governance. The Prime Ministry Inspection Board was tasked with providing technical and administrative support to the Committee.

The Military Court of the General Staff, for the first time, sentenced a serving lieutenant general to imprisonment for corruption. Eight officers were also sentenced. The High Tribunal gave a suspended prison sentence to a former energy minister for irregularities in the awarding of a contract. Corruption incidents, particularly in local government, were frequently covered by the media.

However, a number of issues remain to be addressed. No progress has been made regarding the adoption of the law on the Court of Auditors. Moreover, the Parliament does not exercise effective oversight over public expenditure because of the lack of a public accounts committee in the Parliament.

Limiting the extensive immunities granted to parliamentarians and public officials providing improved legislation and transparency on political party and election campaign financing remain key issues. As to the extension of the Code of ethical principles to parliamentarians, academics, the military or the judiciary, no progress has been made.

There was no progress on the development of an anti-corruption strategy. The establishment of a central body to develop and evaluate anti-corruption policies and activities remain crucial. Institutions involved in the fight against corruption, such as inspection boards, have not been strengthened. No public body is in charge of collecting data and statistics on corruption.

Overall, corruption is widespread and there has been limited progress in the fight against corruption. The development of an anti-corruption strategy the creation of a central body to coordinate its implementation, and strengthened legislation are of great importance. (See also chapter 23 - Judiciary & fundamental rights) .

Human rights and the protection of minorities

Observance of international human rights law

As regards ratification of human rights instruments, in October 2006 Turkey ratified Protocol No 14 of the European Convention on Human Rights (ECHR) amending the control system of the Convention. The First Optional Protocol to the International Covenant on Civil and Political Rights (ICCPR), signed in 2004, was ratified in November 2006 and entered into force in February 2007. This Protocol recognises the competence of the UN Human Rights Committee to receive and consider complaints from individuals on violations of human rights.

The UN Convention on the Rights of Persons with Disabilities was signed in March 2007, following its adoption by the UN General Assembly in December 2006.

However, the Optional Protocol to the UN Convention against Torture (OPCAT), signed in September 2005, has not been ratified. Turkey has not ratified three additional Protocols to the ECHR.

During the reporting period, the European Court of Human Rights (ECtHR) has delivered a total of 330 judgements finding that Turkey had violated at least one article of the ECHR. The total number of new applications to the ECtHR from 1 September 2006 to 31 August 2007 is higher than the same period last year. More than two thirds of these new applications refer to the right to a fair trial and the protection of property rights. The right to life and the prohibition of torture are referred to in a number of cases.

Past reforms have had positive consequences on the execution of ECtHR judgements. During the reporting period, the Committee of Ministers closed several cases such as the ECtHR judgements for convictions under the former article 8 (freedom of expression) of the Anti-Terror Law, and cases on the dissolution of political parties.

However, there are a considerable number of ECtHR judgments awaiting enforcement by Turkey. Some are related to issues requiring general legislative measures. These include among others legal restrictions on freedom of expression, and provisions in Turkish Law preventing the re-opening of domestic proceedings in certain circumstances. Furthermore, the Committee of Ministers awaits information on the measures envisaged by Turkey in order to bring the legal framework governing the situation of those who refuse to perform military service on conscientious or religious grounds into conformity with the requirements of the ECHR.

Other pending cases before the Committee of Ministers awaiting the adoption of necessary execution measures relate to the control of actions of security forces and effective remedies against abuses. These cases refer mainly to violations that took place against the background of the fight against terrorism in the first half of the 1990s, but some concern events in the course of normal police activity. A number of positive legal reforms have been adopted since the judgements were issued. The Committee is monitoring the remaining pending issues.

In the case of Cyprus v. Turkey, the Committee of Ministers decided to close the examination of the violations established in relation to the right to education and freedom of religion at its meeting in April. Issues which remain pending include restrictions on the property rights of Greek Cypriots in the northern part of Cyprus and the issue of missing persons.

As regards the property rights[5] of displaced persons in Cyprus, the December 2006 Court ruling in the Xenidis Arestis case found that the new compensation mechanism has in principle fulfilled the requirements indicated by the Court. However, the Court did not address the effectiveness of the remedy on all relevant issues.

Overall, Turkey has made progress on the ratification of international human rights instruments and on the execution of ECtHR judgements. However, the OPCAT remains to be ratified, and further efforts are needed for Turkey to comply fully with its obligations under the ECHR.

As far as the promotion and enforcement of human rights is concerned, the Human Rights Presidency under the Prime-Minister's office and the 931 Human Rights Boards received more applications in 2006 than during the previous year. Visits by the Human Rights Boards to places of detention and state-sponsored social services continued.

However, there remains a need for better public awareness of the work of these institutions and for the allocation of adequate resources, in particular as regards staffing. Some NGOs invoke the lack of independence of the Human Rights Boards as a reason for refusing to take part in this institution. Furthermore, the Human Rights Advisory Board - a body composed of NGOs, experts and representatives of Ministries under the Office of the Prime Minister – has not been operating since the publication of a report on Minority Rights in October 2004. Legal proceedings were initiated against the two main authors of this report. The initial acquittal has been overruled by the Court of Cassation in September 2007, and an appeal procedure is ongoing.

Overall, further efforts are needed to improve the institutional framework for human rights.

Civil and political rights

The legislative safeguards introduced by the zero tolerance policy on torture continue to have positive effects. The downward trend in the number of reported cases of torture and ill-treatment was confirmed. The reforms regarding access to lawyers have shown positive results ( See access to justice ). Turkey pursued its efforts to strengthen the system for the medical examination of alleged cases of abuse. The number of forensic medicine centres in Turkey has been increased, and the Council for Forensic Medicine started a project to strengthen the implementation of the Istanbul Protocol[6].

However, cases of torture and ill-treatment are still being reported, especially during arrest and outside detention centres. There is no independent monitoring of places of detention by independent national bodies, pending the adoption of the Optional Protocol to the UN Convention against Torture .

The use of statements obtained in the absence of legal counsel or which are not confirmed in front of a judge is prohibited by the Criminal Procedure Code. However, the Court of Cassation ruled that the ban on the use of such statements does not apply retroactively. There are cases where lower Courts have not removed such evidence from the case file, although allegations of ill-treatment were made by the defendant.

There is a need to strengthen the independence of the Council for Forensic Medicine -which is under the Ministry of Justice- and to improve the overall quality of its medical reports. Furthermore, medical examinations sometimes take place in the presence of a law enforcement officer. Victims of torture and ill-treatment rely essentially on rehabilitation services provided by NGOs. This is partly due to the lack or inaccessibility of state-sponsored services for victims of torture and ill-treatment.

The fight against impunity of human rights violations remains an area of concern. There is a lack of prompt, impartial and independent investigation into allegations of human rights violations by members of security forces. Furthermore, judicial proceedings into allegations of torture and ill-treatment are often delayed by the lack of efficient trial procedures or abuse of such procedures.

Overall, the Turkish legal framework includes a comprehensive set of safeguards against torture and ill-treatment. However, cases still occur, especially before detention starts. The fight against impunity remains an area of concern. Turkey needs to investigate more thoroughly allegations that there have been human rights violations by members of the security forces.

Some progress was made regarding access to justice . Access to a lawyer for detainees improved during the reporting period. Reports indicate that in urban areas most detainees consulted lawyers immediately after detention.

However, access to lawyers has varied across the country and according to the type of crime committed. Security forces have not always provided detainees with immediate access to lawyers, as required by law. In rural areas, particularly in the Southeast of the country, there have been a higher number of cases where defendants have not had access to a lawyer on terms similar to those applying in urban areas. Under the current legal framework, defendants are under the obligation to return the lawyers' fees if they are sentenced.

Amendments to the Criminal Procedure Code adopted in December 2006 introduced a new system for commissioning of a defence lawyer. Under the new system, the range of offences qualifying for compulsory commissioning of a defence lawyer might be more limited as compared to the past. After an initial disagreement with the government on the implementation of the new scheme and suspension of appointment of lawyers in protest of the new provisions, the bar associations finally reached an agreement with the government and the system started functioning again.

The improvement of the physical infrastructure of prisons as well as the training of staff continued. As concerns high-security F-type prisons, a circular was issued to address previously identified shortcomings of the communal activities for inmates. Prisons are subject to regular inspection visits by the Penal Institutions and Detention Houses Monitoring Boards, and visits of UN bodies and the Council of Europe Committee for the Prevention of Torture.

However, outstanding problems in prisons include: overcrowding, lack of consistent implementation of provisions regarding communal activities, restrictions on prisoners’ correspondence, and inadequate health/psychiatric resources. Furthermore, civil and military prisons are not open to monitoring by independent national bodies, pending the ratification of the Optional Protocol to the UN Convention against Torture.

Provisions regarding the application of solitary confinement for persons sentenced to aggravated life imprisonment remain in force. Such a regime needs to be applied for as short time as possible and be based on an individual risk assessment of the prisoner concerned. Furthermore, cases of ill-treatment by prison staff have occurred.

As regards freedom of expression, including the media , open debate continued in the Turkish media on a wide range of issues, including those perceived to be sensitive by Turkish society.

However, the prosecution and conviction for the expression of non-violent opinions under certain provisions of the Turkish Criminal Code are a cause of serious concern. The number of persons prosecuted almost doubled in 2006 compared with in 2005), and there was a further increase in the number of prosecutions in 2007. More than half of these charges were brought under the Criminal Code, and in particular under article 301, which penalises insulting "Turkishness", the Republic and the organs and institutions of the state. The restrictive jurisprudence established in 2006 by the Court of Cassation on article 301 remains in force. Against this background, article 301 needs to be brought in line with the relevant EU standards. The same applies to other legal provisions[7] which have been used to prosecute the non-violent expression of opinions and may limit freedom of expression. The potential impact of the anti-terror law on freedom of expression is a concern.

Hrant Dink, a Turkish journalist of Armenian origin who faced several criminal charges for expressing non-violent opinions related to historical issues, was assassinated in January 2007. While his death led to a movement of solidarity in Turkish society, there were also expressions of support for the perpetrators. The trial against the alleged perpetrators of Hrant Dink's murder opened on 2 July and is ongoing. There is a need for full investigations, including into allegations of police negligence.

Judicial proceedings and threats against human rights defenders, journalists and academics have created a climate which has led to occurrences of self-censorship in the country, including in the academic field. The weekly newspaper Nokta, which published several articles on issues relating to the military, stopped its publication in April 2007 at the decision of the owner. This followed a police raid on the paper's premises at the instruction of the public prosecutor acting on behalf of the General Staff Military Prosecutor. Journalistic freedom on military issues is restricted by an internal memorandum from the General Staff, which establishes that journalists most critical of the army are to be denied accreditation to military receptions and briefings.

Overall, prosecutions and convictions for expressing non-violent opinions, and actions against newspapers illustrate that the Turkish legal system does not fully guarantee freedom of expression in line with European standards. Article 301 and other provisions of the Turkish Criminal Code that restrict freedom of expression need to be brought into line with the ECHR and case law of the ECtHR.

The legal framework for freedom of assembly is broadly in line with European standards. Citizens have been able to exercise this right without interference by the authorities or the security forces in most cases. Mass demonstrations were held peacefully in Ankara, Istanbul and İzmir during the presidential election period. Few violent incidents were reported during the Kurdish New Year (Newroz) celebrations.

However, there is an investigation into the use of excessive force by the police at the 1 May demonstration in Istanbul when more than 700 persons were detained.

As regards freedom of association , amendments to the legal framework introduced in 2004 had positive results. These include an increase in the number of associations and their membership.

There were positive developments as regards the registration of religious associations. In the closure case against the Association for Supporting Jehovah’s Witnesses, whose statute includes explicitly religious objectives, the Court of Cassation confirmed the acquittal decision. Representatives of the Association consider that their Association will have legal personality, i.e. that it will now be in a position to own property, rent or purchase meeting places, accept donations, and defend their legal interests in court. Another similar case is ongoing, following a first instance acquittal decision.

The Council of Europe Committee of Ministers closed cases related to execution of judgements of the ECtHR on the dissolution of political parties. In its resolution, the Committee of Ministers noted that the constitutional changes of 2001 and the amendments to the Law on Political Parties adopted in 2003 reinforced the requirements of proportionality for any interference by the state in the freedom of association.

However, the obligations imposed by the Law on Associations to notify the authorities before receiving financial support from abroad and to provide detailed documents on such support place a burden on associations' operations. Furthermore, some associations face difficulties. The accounts of Amnesty International Turkey have been blocked since 1 January 2007. Political parties are not allowed to use languages other than Turkish ( See cultural rights).

The positive trend in civil society development and dialogue triggered by recent reforms and observed over the last few years has continued. Civil society organisations have been able to take a more active role in shaping policy and addressing social, economic and political causes. There are approximately 80,000 registered associations and several hundred unions and chambers (including vocational and professional associations). However, political pluralism would be enhanced if participation in policy-making would be higher.

As concerns freedom of religion , freedom of worship continues to be generally guaranteed.

The Association for Support of Jehovah's Witnesses has received a final decision from the Turkish authorities confirming that the association is legally registered. ( See Freedom of Association )

The dialogue between the government and the non-Muslim communities continued. A delegation composed of high-level officials from various Ministries visited the religious leaders of these communities in June 2007 in Istanbul. On 19 June, the Ministry of Interior issued a Circular on freedom of religion of non-Muslim Turkish citizens. The Circular acknowledges that there has been an increase in individual crimes against non-Muslim citizens and their places of worship. It requests the governors of all provinces to take the necessary measures to prevent such incidents from happening again and to enhance tolerance towards individuals with different religion and beliefs. The impact of this Circular will need to be assessed in practice.

The regulation implementing the Law on Demographic Services entered into force in November 2006. It provides that information requested on religion in the family registries will be entered, amended or deleted only on the basis of a written statement by citizens.

However, administrative documents such as ID cards include an entry on religion that may be filled in or left blank. This might lead to discriminatory practices. In addition, there are still concerns regarding religions which are not recognised.

In April, three Protestants were killed in Malatya in the publishing house of the local Protestant community. The crime is being investigated under the Anti-Terror Law. Another court case against Protestants for "insulting Turkishness" is ongoing amid intense security measures. Attacks against clergy and places of worship of non-Muslim communities have been reported. Missionaries have been portrayed in the media or by the authorities as a threat to the integrity of the country and non-Muslim minorities as not being an integral part of Turkish society. To date, use of language that might incite hatred against non-Muslim minorities has been left unpunished.

Non-Muslim religious communities - as organised structures of religious groups - continue to face problems such as lack of legal personality and restricted property rights. These communities have also encountered problems with the management of their foundations and with recovering property by judicial means.

Local authorities differ from province to province on issuing construction permits for places of worship. This might lead to arbitrary implementation of the zoning law. Several churches have not been able to register their places of worship. Alevis face difficulties with opening their places of worship (Cem houses or "Cemevi"). Cem houses are not recognised as places of worship and receive no funding from the authorities.

As regards education, religious culture and ethics classes are compulsory. Further to an application lodged by a family who are followers of Alevism, the ECtHR held unanimously, in October 2007, that there had been a violation of Article 2 of Protocol No.1 (right to education) to the ECHR[8]. The Court took note of the Government's acknowledgement that these classes do not take into account the religious diversity which prevails in Turkish society; it further considered that the religious instruction syllabus in Turkey could not be considered to meet the criteria of objectivity and pluralism necessary in a democratic society, and that there is no appropriate method to ensure respect for parents' convictions. Consequently, the Court held that Turkey should bring its educational system and domestic legislation into conformity with the ECHR.

Restrictions on the training of clergy remain. Turkish legislation does not provide for private higher religious education for these communities and there are no such opportunities in the public education system. The Halki (Heybeliada) Greek Orthodox seminary remains closed. In December 2006, 122 foreign clergy were working in Turkey under the Bylaw on the Law on Work Permits for Foreigners. However , there are still cases reported of foreign clergy who wish to work in Turkey facing difficulties and whose right to equal treatment with Turkish nationals is not ensured.

The Ecumenical Patriarch is not free to use the ecclesiastical title Ecumenical on all occasions. In June 2007, the Court of Cassation ruled on a case against the Holy Synod of the Ecumenical Patriarchate. The Court acquitted the accused. However, it also concluded that there is no basis in Turkish legislation providing that the Patriarchate is Ecumenical; that the Patriarchate is a religious institution which has no legal personality; that persons who participate and are elected in religious elections held in the Patriarchate should be Turkish citizens and be employed in Turkey at the time of the elections. This decision potentially creates further difficulties to the Patriarchate and to other non-Muslim religious communities in the exercise of their rights guaranteed under the ECHR.

Overall, the environment as regards freedom of religion has not been conducive to the full respect of this right in practice. A legal framework has yet to be established in line with the ECHR so that all religious communities can function without undue constraints. No real progress can be reported on the major difficulties encountered by the Alevis and non-Muslim religious communities.

Economic and social rights

As concerns women's rights , amendments have extended the Law on Protection of the Family to all individuals in the family, including family members living separately. They have also abolished all fees for applications and administrative transactions related to court proceedings. The Turkish authorities have issued circulars to governorates, judges and prosecutors, with the aim of improving services to victims of violence. Implementation of the prime ministerial circular to combat honour killings and domestic violence against women is underway, under the coordination of the Directorate-General for the Status of Women. Cooperation between public institutions and civil society has improved and regular meetings are held with public institutions and women's NGOs to monitor the implementation of the circular.

Campaigns to prevent violence against women are continuing, supported by the government, the media, the private sector and the UN Population Fund. Conscripts in the army receive relevant training as part of the existing curriculum. The number of shelters for women subjected to domestic violence increased to 33, including those operated by the Social Services and Child Protection Agency, municipalities and women's NGOs.

The campaign conducted by an NGO to raise awareness about participation by women in politics and to promote female candidates in the July 2007 elections has been successful in drawing public attention to the issue. The need for more women in Parliament and the possibility to introduce quotas for this purpose was publicly debated. In the 2007 elections, almost double the number of women (51) was elected to Parliament compared with the previous Parliament.

As regards institutional capacity, additional staff were recruited by the Directorate-General for the Status of Women.

However, domestic violence against women is continues to be widespread. Honour killings, early and forced marriages continue to occur. Moreover, access to reliable data on the incidence of violence against women and of honour killings continues to be a problem. More shelters for victims of domestic violence are needed to meet the demand, and services should be improved. Training for law enforcement bodies, judges and prosecutors should be stepped up.

In general, women's participation in the labour market remains low, although women occupy some high-profile positions. (See Chapter 19 - Employment and social policy). Women's participation in national and local elected bodies remains limited.

Overall, progress has been achieved on protecting women from violence. The legal framework guaranteeing gender equality is in place. However, further efforts are needed to translate it into social reality. The gap between men and women in economic participation and opportunity, educational attainment, health and survival, and political empowerment remains significant.

With respect to children's rights , efforts to combat child labour have continued. A child labour survey revealed a decrease in the proportion of working children, from 10.3% in 1999 to 5.9% in 2006.

As concerns education, the gender gap in primary education decreased to 4.6% in the 2006-2007 school year from 5% in the 2005-2006 school year. The first phase of the campaign on education for girls conducted by the Ministry of National Education and UNICEF ended. Between 2004 and 2006 a total of 191,879 girls and 114,734 boys were integrated into primary education. A cash transfer scheme reinforced the campaign by providing direct income support to families. Private-sector and NGO campaigns aimed at increasing enrolment rates in primary and pre-school education continued.

The Ministry of Labour and Social Security has started to develop a national strategy against child poverty. In order to provide the basis for tackling the incidence of street children, a government circular was issued to collect data on children working and/or living on the streets. Seven cities with large numbers of street children have adopted action plans under the new scheme.

A regulation implementing the Law on Child Protection has entered into force. It requires that during an investigation child victims who have been psychologically affected as a result of the offence committed will be heard as a witness only once and in the presence of an expert. Juveniles taken into custody will be detained in juvenile units of law enforcement agencies and may not be handcuffed or fettered. A Juveniles Bureau now needs to be set up at the offices of public prosecutors.

However, the primary school enrolment rate remains at 90%. In the area of education, improved monitoring of progress and drop-outs, especially of girls from primary education, is needed. More efforts are needed to reduce regional disparities in schooling rates. Girls' enrolment in primary education has increased, but the gap in secondary education remains wide.

Although in the last 10 years there has been a significant decrease in the proportion of unregistered children compared with 10 years ago, the proportion of children under five years of age who were not registered at birth remains high in particular in the East and Southeast of the country. This creates obstacles for children's subsequent access to health and education services. Official statistics show that the ratio of children who die at birth is still high.

The way in which children are treated in institutions remains a cause for concern. Efforts are required to review the existing standards of care and protection of the Social Services and Child Protection Agency and to improve the capacity of its staff. Efforts to encourage foster parenting as an alternative to institutional care need to be intensified.

Child labour is still widespread in seasonal agricultural work and on the streets. Shortcomings remain in the labour law and its implementation, and the national resources allocated to tackle child labour are insufficient ( See Chapter 19 – Social policy and employment ).

Further progress needs to be made as regards the implementation of the Law on child protection as well as the provision of educational and social services. The child courts need to be better equipped to deal with the challenges they face and their number needs to increase.

The vast majority of detained juveniles are awaiting a final court decision. Significant improvement is needed in physical conditions in detention centres and in the quality of care and protection provided to children by their staff.

Overall, there has been progress with regard to child labour, access to, and reduction of the gender gap in primary education and the registration of children at birth. However, sustained further efforts are needed in all these areas. Similar efforts are also needed to combat violence against children and improve the overall implementation of the Law on Child Protection.

As regards socially vulnerable and/or persons with disabilities , in the area of mental health, a government directive was issued to regulate the use of electro-convulsive therapy in hospitals in line with human and patients' rights. Relevant guidelines for implementation of the directive have also been prepared.

No progress can be reported on access to education, health, social and public services for persons with disabilities. In particular, physical barriers to access to public buildings remain. Lack of data and research in this area and on conditions of care for mentally ill persons are preventing informed policy-making. Implementation of the Law on People with Disabilities and related regulations is critical for improving the rights and living conditions of persons with disabilities.

On labour rights and trade unions , the requirement to have worked at least ten years in order to be elected to the management bodies of trade unions has been lifted by new legislation. Furthermore, some employers' and employees' unions have concluded joint declarations and protocols on bipartite social dialogue.

However, restrictions remain on the exercise of full trade union rights. Turkey fails to fully implement the International Labour Organisation (ILO) Conventions in particular as regards the right to organise, the right to strike and the right to bargain collectively. Turkey still maintains its reservations on Article 5 (right to organise) and Article 6 (right to bargain collectively) of the revised European Social Charter.

Overall, little progress has been achieved with regard to labour rights and trade unions. Turkey needs to adopt legislation guaranteeing full trade union rights in line with EU standards and the relevant ILO Conventions, in particular as regards the right to organise, the right to strike and the right to bargain collectively. Turkey also needs to reinforce the social dialogue mechanisms, including at tripartite level.

As regards anti-discrimination policies , the principle of anti-discrimination is enshrined in the Constitution and upheld in several laws. However, there is no specific protection against discrimination on grounds of age or sexual orientation. A closure case against an association, which represents lesbian, gay, bisexual and transgender people, is ongoing. Transsexuals and transvestites are, on occasion, subjected to physical harassment. There is a need for the police to properly investigate such cases.

With respect to property rights , the ECtHR judgment in the Fener Boys High School Foundation v. Turkey case became final in April. The Court held unanimously that there had been a violation of Article 1 of Protocol No 1 (peaceful enjoyment of possessions) to the ECHR and recommended either return of the property or financial compensation for the complainant. A friendly settlement was concluded between the Turkish government and the Istanbul Armenian Hospital Foundation on a case brought to the ECtHR by the Foundation regarding property it acquired in 1943 and 1963. Under the settlement, the government returns the property to the foundation. The Turkish government had confiscated the property on the basis of a Court of Cassation decision of May 1974.

However, the final adoption of the new Law on Foundations voted by Parliament in November 2006 and subsequently vetoed by the then President is still pending. Adoption of the new law would address a number of issues which religious communities face with property management and acquisition.

There has been no progress in the situation of Syriacs, who continue to face difficulties in relation to property. Complaints about seizures of their properties have increased.

Minority rights, cultural rights and protection of minorities

As regards the educational rights of minorities, the Law on Private Educational Institutions which entered into force in February 2007 reconfirms the right of non-Muslim minorities associated by the authorities with the Treaty of Lausanne to hold minority schools.

However, Turkey's approach to minority rights remains unchanged. According to the Turkish authorities, under the 1923 Treaty of Lausanne minorities in Turkey consist exclusively of non-Muslim religious communities. In practice the minorities associated by the authorities with such Treaty are Jews, Armenians and Greeks. Without prejudice to the Treaty, the Turkish authorities consider Turkish citizens as individuals having equal rights before the law rather than as individuals belonging to the majority or to a minority.

This approach should not prevent Turkey from granting specific rights to certain Turkish citizens on the grounds of their ethnic origin, religion or language, so that they can preserve their identity. Full respect for and protection of language, culture and freedom of association, assembly, expression and religion and effective participation in public life for all citizens irrespective of their background or origin, in accordance with European standards, have yet to be fully achieved.

The OSCE High Commissioner on National Minorities (HCNM) visited Ankara in December 2006 for the third time, following previous visits in 2003 and 2005. His proposal to visit regions - notably the South-East of Turkey - was not accommodated. There is a need to start a dialogue between Turkey and the HCNM on issues such as the participation of minorities in public life and broadcasting in minority languages. This would facilitate Turkey's further alignment with international standards and best practice in EU Member States.

Turkey is a party to the UN International Covenant on Civil and Political Rights (ICCPR). However, its reservation regarding the rights of minorities and its reservation to the UN Covenant on Economic, Social and Cultural Rights (ICESCR), regarding the right to education, are matters of concern[9]. Turkey has not signed the Council of Europe Framework Convention for the Protection of National Minorities or the European Charter for Regional or Minority Languages.

The management of the minority schools, including the dual presidency, remains an issue. Further efforts are needed to remove discriminatory language from textbooks.

The Greek minority continues to encounter problems with education and property rights. In this context, problems affecting the Greek minority on the islands of Gökçeada (Imvros) and Bozcaada (Tenedos) continue to be reported.

Overall, Turkey has made no progress on ensuring cultural diversity and promoting respect for and protection of minorities in accordance with European standards.

As regards cultural rights, broadcasting in languages other than Turkish, in March 2007 a new radio channel in Diyarbakır, Çağrı FM, received authorisation to broadcast in Kırmanchi and Zaza Kurdish. There are now four local radio and TV stations broadcasting in Kurdish.

However, time restrictions apply, with the exception of films and music programmes. All broadcasts, except songs, must be subtitled or translated into Turkish, which makes live broadcasts technically cumbersome. Educational programmes teaching the Kurdish language are not allowed. An appeal against these rules has been pending before the Council of State for three years. Court cases have been opened against some broadcasters for trivial reasons.

Children whose mother tongue is not Turkish cannot learn their mother tongue in the Turkish public schooling system. Such education can be provided only by private educational institutions. In the case of Kurdish, all such courses were closed down in 2004. Today there are no opportunities to learn Kurdish in the public or private schooling system.

No measures have been taken to facilitate access to public services for non-speakers of Turkish, although interpretation is usually available in courts. In a case against the municipality of Sur in June 2007 the Council of State dismissed the mayor from office and dissolved the Municipal Council for providing multilingual municipal services. The court ruled that this is contrary to the constitutional principles that the language of the state is Turkish and that no language other than Turkish should be taught as a mother tongue (Articles 3 and 42 of the Constitution respectively). An appeal is ongoing.

Use of languages other than Turkish remains illegal in political life. Several investigations and court cases have been opened against officials and executives of the Democratic Society Party (DTP) for alleged infringements of Article 81/c of the Law on Political Parties which forbids the use of languages other than Turkish by political parties[10]. In February and April 2007 several members and executives of the Rights and Freedoms Party (Hak-par) were sentenced in two separate Court cases for having spoken Kurdish at party's general congresses. A Court case for the closure of Hak-par is pending.

No steps have been taken to amend the Law on foreigners residing and travelling in Turkey which contains discriminatory provisions on Roma , particularly as regards extradition. Turkey does not participate in the 2005-2015 Decade of Roma Inclusion.

Further to an April 2006 decision by the Council of Ministers, an urban renewal programme targeting "wrecked urban areas" is being implemented. In this context Roma neighbourhoods have been demolished in several provinces, in particular in Istanbul. Istanbul municipalities have taken no steps to provide shelter, basic sanitary facilities or other social and economic services for Roma people after the demolitions. Inhabitants of the Sulukule district in Istanbul and civil society organisations have applied to the Administrative Court of Istanbul to suspend the expropriations and evacuation of the district.

Turkey has made no progress in the area of cultural rights. Significant further efforts are required, in particular on use of languages other than Turkish in broadcasting, in political life and when accessing public services. The Roma continue to experience discriminatory treatment in access to adequate housing, education, social protection, health and employment.

As regards the situation in the East and Southeast , the legislative elections in July resulted in increased representation of voters from the south-east of Turkey compared to the previous Parliament.

However, the overall socio-economic situation in the south-east remains difficult. No steps have been taken to develop a comprehensive strategy to achieve economic and social development in the region and to create the conditions required for the Kurdish population to enjoy full rights and freedoms.

There has been a further deterioration of the situation in terms of attacks by the PKK and other terrorist groups. The PKK is on the EU list of terrorist organisations. Several hundred terrorist attacks have been recorded since the beginning of the year causing multiple casualties. On 22 May a suicide bombing in Ankara claimed the lives of 9 people. There was an increase of terrorist attacks targeting civilians throughout the whole country.

As part of the fight against terrorism, three security zones were established from June to December 2007, covering parts of three provinces along the border with Iraq. Strict security measures are applied in these zones, including restrictions on access. On 17 October 2007, the Parliament adopted a motion authorising the Government to intervene militarily in the northern part of Iraq[11].

Landmines remain a security concern. In 2006 Turkey reported about one million mines within the country. Every year there are several casualties among civilians and security forces due to anti-personnel landmine explosions. Under the Ottawa Convention, of which it is a signatory party, Turkey has taken the commitment to clear the earth-laid landmines by 2014 and to eliminate its stocks by 2008.

With respect to internally displaced persons, progress continued on the process of compensation. By 24 May 2007, 269,759 persons had applied to the Damage Assessment Commissions for compensation under the Law on the Compensation of Losses due to Terrorism and the Fight against Terrorism 57,071 applications have been examined, of which 37,309 have obtained a favourable response.

To allow more potential beneficiaries to apply for compensation, the deadline for applications was extended until 30 May 2008. In order to tackle the backlog of open cases, in December 2006 Parliament extended to January 2008 the deadline for finalising the assessment of applications. In addition, the Council of Ministers was given the authority to further extend this deadline if necessary. Furthermore, the number of Damage Assessment Commissions was increased to 106. The Ministry of the Interior issued guidelines which aim to harmonise implementation of the law nationally.

In December 2006 Hacettepe University's Institute of Population Studies released the quantitative results of a government-sponsored survey on migration and the internally displaced population in Turkey. The survey showed that the number of IDPs in Turkey is substantially higher than previous estimates, and stands between 950,000 and 1,200,000. The survey is intended to be a basis for planning policy solutions to the problems of IDPs.

However, the government lacks an overall national strategy to address the IDP issue. The office in charge of IDPs lacks resources. Institutional capacity-building is needed in all departments responsible for IDPs. Reports of inequitable implementation of the Compensation Law between provinces have continued. The practical effects of the measures taken by the government in this respect remain to be assessed.

IDPs in urban areas live in poverty with little or no access to social, educational and health services. The factors hindering the return of IDPs, i.e. the absence of basic infrastructure, lack of capital, limited employment opportunities and the security situation persist in the east and south-east. The presence of landmines and village guards also remain obstacles to the safe return of IDPs.

No progress has been made towards abolishing the system of village guards[12]. On the contrary, amendments were adopted by Parliament in May 2007 to facilitate recruitment of village guards at the request of a provincial governor and with the approval of the Ministry of the Interior. The Law also improves the social rights and pensions of the village guards. There were cases of the hiring of new voluntary village guards, who are not paid but are armed by the state.

Regional issues and international obligations

Cyprus

The Turkish government has continued to express its commitment to a comprehensive settlement of the Cyprus problem under the auspices of the United Nations. It is expected that the government will continue to support the launching of fully fledged negotiations on a comprehensive settlement, for which the 8 July 2006 agreement between the leaders of the two communities on the island should prepare the ground.

Following Turkey's non-fulfilment of its obligation of full and non-discriminatory implementation of the Additional Protocol to the Association Agreement, in December 2006 the Council decided that accession negotiations will not be opened on eight chapters relevant to Turkey's restrictions regarding the Republic of Cyprus and that no chapter will be provisionally closed until the Commission confirms that Turkey has fulfilled its commitments. The Council also decided to review progress made on the issues covered by the declaration of 21 September 2005 and invited the Commission to report on this in its annual reports, in particular in 2007, 2008 and 2009.

Since the Council's decision of December 2006, Turkey has made no progress towards fully implementing the Additional Protocol.

Turkey has made no progress on normalising bilateral relations with the Republic of Cyprus. Turkey continues to veto Cyprus's membership of several international organisations and of the Wassenaar Agreement on the Code of Conduct on Arms Exports and on Dual-Use Goods.

In January Turkey protested against an agreement concluded by the Republic of Cyprus with Lebanon on delimitation of the maritime exclusive economic zone with a view to oil drilling which it claimed was not in line with the 1960 Treaty of Guarantee and the international law on maritime boundaries. Turkey thus contested the right of the Republic of Cyprus to conclude such agreements.

In March Turkey also protested against a defence cooperation agreement between France and the Republic of Cyprus which it claimed was not in line with the 1960 Treaty of Guarantee.

In its December 2005 verdict on the Xenides-Arestis case[13] the European Court of Human Rights (ECtHR) asked Turkey to introduce a remedy which secures effective redress for property right violations in Cyprus. In its follow-up decision of December 2006, the Court accepted, in principle, the Immovable Property Commission established by the Turkish Cypriot Community as a legitimate domestic remedy. However, the Court could not address all the relevant issues concerning the effectiveness of this remedy due to lack of agreement between the parties on the issue of just satisfaction.

Peaceful settlement of border disputes

Turkey and Greece have continued their efforts to improve bilateral relations. The 36th round of exploratory talks was held in March in Athens. Exploratory talks have been continuing since 2002.

In November the Turkish Chief of General Staff visited Greece. On this occasion the military-related aspects of the previously agreed confidence-building measures were reviewed and evaluated. Further confidence-building measures in the military field were discussed, among them development of technical measures to ensure flight and traffic safety, establishment of a committee of Chiefs of General Staff from the Balkan countries, to meet periodically, establishment a Joint Operations Unit to ensure participation in peace support operations under NATO, establishment of a joint land force unit to participate in NATO Response Force operations and establishment of a Joint Turkish-Hellenic Civilian Standby Disaster Response Unit.

Implementation of confidence-building measures is continuing. Joint exercises between Military Disaster Response Units were conducted in Turkey in November and December. The Greek Coast Guard Commander visited Turkey in December.

Both countries' Chiefs of General Staff met again in the margin of the First Balkan Countries Chiefs of Staff Regional Conference in Thessaloniki in April. During the reporting period Greece formally complained about continued Turkish airspace violations.

The Negotiating Framework includes the requirement of "Turkey's unequivocal commitment to good neighbourly relations and its undertaking to resolve any outstanding border disputes in conformity with the principle of peaceful settlement of disputes in accordance with the United Nations Charter, including if necessary jurisdiction of the International Court of Justice". Furthermore, the Accession Partnership has included as a short-term priority, to "unequivocally commit to good neighbourly relations; address any sources of friction with neighbours; and refrain from any action which could negatively affect the peaceful process of peaceful settlement of border disputes". It should be noted in this context that the threat of "casus belli" in relation to the possible extension of Greek territorial waters in the resolution adopted by the Turkish Grand National Assembly in 1995 still remains.

Bilateral relations with other enlargement countries and other neighbouring member states developed positively.

As concerns the International Criminal Court (ICC), see Chapter 31 - Common Foreign and Security Policy .

ECONOMIC CRITERIA

In examining the economic developments in Turkey, the Commission's approach was guided by the conclusions of the European Council in Copenhagen in June 1993, which stated that membership of the Union requires the existence of a functioning market economy, and the capacity to cope with competitive pressure and market forces within the Union.

The existence of a functioning market economy

Economic policy essentials

The Pre-Accession Economic Programme submitted to the Commission in December 2006 adequately reflects needs and commitments to further reform. The authorities largely adhered to economic policy agreed with international financial institutions, as stipulated in particular in the Stand-By Arrangement with the International Monetary Fund (IMF) and in the Country Assistance Strategy with the World Bank, revised in 2006. However, political considerations occasionally caused some reform deceleration. The fragmentation of responsibilities between government bodies is complicating coordination for budgeting and medium-term economic policy making. Decisions are sometimes taken on an ad hoc basis and impact assessments are either lacking or based on partial information. Turkey's further challenge is to lock in the economic success and stability for the future in a consistent, holistic approach.

Macroeconomic stability

Real GDP grew in 2006 by 6.1%, down from 7.4% in 2005. In the first half of 2007, growth decelerated to 5.3%. Domestic consumption slowed down since the second half of 2006 as a result of the monetary policy tightening, which followed the financial turbulences of May-June 2006. The slowdown in domestic demand appears to be partly alleviated by strengthening external demand. Government consumption and investment have been broadly kept under control by tight fiscal policies. Economic growth slowed down slightly, but remained strong.

Strong domestic demand fuelled by rapid credit growth and higher oil import prices led to a widening of external deficits. The current account deficit increased from 6⅓% of GDP in 2005 to 8% of GDP in 2006. In the first half of 2007 however, strong exports contributed to a slight reduction of the deficit to approximately 7.8% of GDP in the first seven months of 2007. Turkey can still comfortably finance its current account deficit and has recently considerably increased its foreign currency reserves as a consequence of high privatisation revenues and rising interest from foreign investors. Moreover the current account deficit was also driven by higher investment, which should over the medium term further enhance the export capacity of the economy. External deficits were sizeable, but the financing became more sustainable.

Even though economic growth has been strong, few new jobs have been created, as employment grew by only 1.3% in 2006. The employment rate hovered around 44-45% in 2006-2007. In particular, the female employment rate remained low at 22-23%. The unemployment rate has remained between 8% and 10%. The skill-mismatch between labour demand and supply, and in particular the cost of hiring and firing continue to hamper job creation. Unemployment was much higher among the young (around 19%) and of a long-term nature for more than half of job-seekers. The lower unemployment rate in the agricultural sector, where unpaid family workers are incorporated, suggests the existence of large pockets of underemployment in the economy.

At the end-2006, inflation had increased to about 10% (from 8% early 2006) driven by various issues, including the exchange rate pass-through, rigidities in services prices and high energy prices. This rate was significantly higher than the central bank's year-end target of 5%. Inflation started to come down again in the second quarter of 2007, to 7.1% in the year to September 2007. Unprocessed food, oil prices, exchange rate volatility and fiscal policy loosening are major risks for the inflation trend. In sum, the downwards trend in inflation decelerated.

The Central Bank of Turkey (CBT) reacted firmly to the financial turbulence of mid 2006 by increasing policy rates by 425 basis points. Consequently, Turkish asset prices have bounced back and recovered most of the ground lost. In mid-September 2007, policy rates were unexpectedly cut by 25 basis points. Market participants saw the CBT actions as a reaffirmation of the independence of the bank and a signal of its continuing commitment to the disinflation process. The CBT implemented a new policy framework of inflation targeting as from 1 January 2006 in order to make its policy more transparent. It uses short-term interest rates as a main instrument. CBT's commitment to disinflation has brought about credibility after a very turbulent period and was appreciated by financial markets.

Consolidation of public finances has largely been on track, even though ahead of the parliamentary elections, fiscal consolidation has weakened slightly. The 2006 primary surplus target of 6.5 of GDP (IMF methodology) was reached, helped by buoyant one-off revenues. Revenues rose strongly by 27% annually, but spending in health, agriculture, and personnel was higher than budgeted. In 2006, the general government budget surplus amounted to 0.4% of GDP (according to ESA 95, the EU methodology) compared with a (revised) deficit of 0.3% in 2005. The budget for 2007 is designed to achieve a similar a public sector primary surplus. Fiscal targets for the central budget for the first half of 2007 have been missed by less than 1 percentage point of GDP, due to some election spending. Functional allocations of public expenditures could be improved in terms of efficiency and cost containment. The implementation of the social security reform is stalled. All in all, fiscal policy loosened slightly, but remains strong.

A significant primary surplus and strong GDP growth have further reduced the debt-to-GDP ratio. General government gross debt fell markedly to 60.7% of GDP by end-2006 from 69.6% the year before. Turkey has also launched various sovereign bonds on the international market. By mid-2007 the share of public debt denominated in domestic currency had risen to around 65%, up from 55% in 2003. Furthermore, debt has been shifted further to fixed interest rates and debt maturities have been lengthened, in particular on domestic borrowing, to almost 40 months by mid-2007. However, debt remains relatively high and the debt service dynamics still remains closely related to movements on global financial markets. The risks of the public debt structure and maturities to macroeconomic and financial stability have been further reduced.

The administration has put emphasis on the implementation of adopted legislation, in particular the Public Financial Management and Financial Control Law (PFMC). Several coordinating and controlling bodies have been created within the Ministry of Finance, and accountability, efficiency and transparency have benefited substantially. This resulted in, for example, an improvement of the budget preparation, as illustrated in the Medium-Term Fiscal Framework (2008-2010) which has been adopted by the authorities in June 2007. The law on PFMC is broadly consistent with EU standards on internal controls. Some key elements are still lacking, in particular the Turkish Court of Accounts Law, which would enhance transparency and provide significant support for anti-corruption efforts. Overall, measures to increase fiscal transparency have continued.

Interplay of market forces

The government has confirmed the independence of regulatory and surveillance agencies, although some imperfections persist. But despite the regulatory framework, government authorities have a tendency to set the prices in transport sector, in particular in the civil aviation. Ahead of the Parliamentary elections, the government did not allow global price changes have an impact on electricity consumption and natural gas prices. Cross-subsidies continued in the electricity sector. There remained large arrears regarding the utility bills of public institutions and local administrations. Although the regulatory framework is in place, the liberalisation of backbone services, in particular in the energy sector was stalled.

The share of administrated prices in the consumer price index (CPI) basket amounts presently to 10.2% of the total weight of the CPI basket. Price reform is not completed, and in particular electricity prices are far from reflecting costs and include cross-sector subsidies. In early 2007, the government refused to increase energy prices, which have been frozen for several years in spite of sharp increases in global prices. Price liberalisation is fairly advanced, but has not made much further progress.

In 2006, 87 privatisation deals were concluded. Their proceeds corresponded to 2% of GDP. The privatisation process slowed down in 2007. Two real estate sales were conducted in Istanbul. A 25% stake of state-owned Halkbank was sold through initial public offering. Petkim (petrochemicals) was privatised in July 2007. The government postponed the privatisation of electricity distribution assets after the tender process started. Energy, banking, petrochemicals, and air transport sectors are still awaiting some major privatisation. The agenda is not yet finished as 5% of GDP (and 15% of value added in manufacturing) is still accounted for by state enterprises. Privatisation proceeds were significant, but the agenda is not yet finished.

Market entry and exit

In 2006, the business registration process was further streamlined. As a result, it now takes on average only 9 days to open a business, one of the fastest registrations in the world. Almost 100,000 enterprises were established in 2006, almost unchanged from the previous year. However, registration costs (estimated about € 750) are relatively high. Some fees are rather intransparent, such as those for the official registration of a company’s articles and accounting books. Fees related to the trade registry are significant. Closing a business is expensive and time consuming in Turkey. Insolvency procedures take about 6 years and recovery rates are very low at 10% on average. Therefore, progress in removing exit barriers remains weak. Turkey has established most of the legal framework of a market economy, but must ensure further implementation.

The legal system

The legal system, including the regulation of property rights, is in place. However, the implementation of laws and contracts should be further improved. I n particular the commercial courts work relatively slowly and the time lag between the adoption of framework legislation and its implementation is often long. Moreover, the enforceability of the decisions of the autonomous authorities and of courts continues to prove difficult, including with foreign investors. Training of judicial personnel is not always sufficient and hampers a swift settlement of commercial cases. The implementation of the legislation on intellectual property rights is not adequate.

Financial sector development

The banking sector has made significant progress in developing financial intermediation, encouraged by the strong economic growth and improvements in the regulatory framework. In spite of the volatility in several periods during 2006-2007, financial markets have shown remarkable resilience. After being hit by the financial turbulence in mid-2006, financial sector's risk ratios improved in the second half of 2006, driven mainly by the recovery in market prices. Private credits grew from 25% of GDP in 2005 to 32% by mid-2007. Total bank assets have expanded from 81% of GDP in early 2006 to almost 90% by mid-2007. In 2006, the sector benefited from a rapid revival of investor appetite for Turkish assets. Increased foreign participation in the banking sector has enhanced competition. Majority-owned foreign banks accounted for about 25% of Turkish banking assets in mid-2007, compared with 12% in 2005. Financial intermediation costs are still high at almost one-third of the loan interest rates and remain a major impediment to efficient intermediation. Overall, the banking sector is in good shape.

Supervision standards in the banking sector were significantly enhanced, due to the implementation of the banking Law adopted in 2005. Most of the by-laws - in particular those transferring the regulatory and supervisory power for financial holding companies, leasing companies, factoring companies and consumer finance companies to the Banking Regulation and Supervisory Agency - have been put in place in 2006-2007. However, the prudential regulatory framework's effectiveness is still hampered by the absence of a regulation on country and transfer risk as well as on interest rate risk in the banks' books. In addition, risks are not always assessed on a consolidated basis, in particular in the case of mixed conglomerates and integrated supervision of entire banking groups. Banking concentration can be qualified as moderate (just over 60% of total banking assets are with the five largest banks). In sum, supervision of the financial sector has been further strengthened.

The main non-bank financial institutions, i.e. insurance companies, pension funds, leasing and factoring firms experienced impressive growth, yet their total assets only amount to 10% of GDP in mid-2007. A new mortgage law was adopted in February 2007, and a new Insurance Law was passed by the Parliament in June 2007. This new legislation aims at facilitating more flexibility and security in the financial sector's expansion. Rapidly growing, albeit still undercapitalised, equity markets are increasingly helping the corporate sector to raise funds. For the first time in a decade, a Turkish Lira denominated corporate bond was launched in mid-2006. Non-bank financial institutions are small, but increasingly dynamic and rapidly expanding.

The capacity to cope with competitive pressure and market forces within the Union

Existence of a functioning market economy

Macroeconomic stability has been largely preserved . Recent financial market turbulence added some uncertainty to the business environment, but at the same time underlined the economy's improved shock resilience. The authorities have improved the investment climate by reducing administrative barriers for firms’ entry and operation; reducing and simplifying the personal and corporate income taxes and improving effectiveness of the tax administration and corporate governance, and privatising many state owned enterprises; and focusing on improving corporate governance. However, certain features remained which distort the functioning of markets, such as low transparency regarding state aid and market exit.

Human and physical capital

The authorities have designed a new educational reform programme as a key part of the National Development Plan (2007-2013). This programme has two key pillars for education, modernisation and reform: increase the responsiveness of education to the demand; and enhance the educational system. However, the challenges are significant. While the top students in Turkey perform well, the vast majority of Turkish students perform at the lowest proficiency levels in basic competencies and problem solving. The distribution of Turkish scores is highly skewed toward the lower levels of proficiency. Participation in higher education remains low relative to international standards. Around 40% of 20 to 24 year olds had a secondary degree and about ten percent of school-age children are still not enrolled in primary schools. Reforms and increased spending on education are generating some positive impact on educational attainment, but significant problems pertain.

Labour force participation rates are low, particularly for women and older people, and increased only marginally in 2006 and 2007. The fast-growing working-age population and the sectoral shift out of agriculture create a strong demand for new jobs, but due to the limited diversity of the rural economy, a skill mismatch and labour market rigidities major imbalances pertain. There have been few systematic efforts to reduce the substantial employment in the informal economy. No significant changes have been made to the labour framework. The legal focus remains on protecting jobs, while less than 4% of the unemployed workforce get unemployment benefits. The non-wage costs of hiring labour remain large. Active labour market policies do not have a broad scope and have had limited success in reducing unemployment. Corporate income tax rates are high and complex, although reductions have recently been introduced. Taxes on labour (personal income tax rates –PIT- and social security contributions) are also relatively high. This system contributed to creating incentives for self-employed entrepreneurs to remain in the informal part of the economy. In 2006, the top PIT rate was reduced from 40% to 35% and the number of brackets down to four. Overall, the situation in the labour market remains challenging and policy responses have been limited.

Private gross fixed capital formation grew by around 30% in 2006, but growth fell to 7% in the first half of 2007. Private capital formation amounted to around 17% of nominal GDP. FDI inflows increased significantly in 2006, to 4.9% of GDP. Around 85% of these FDI inflows were equity investment and around 14% real estate purchases. As a result, the FDI stock reached € 37.3 billion (about 20% of GDP), with almost half (46%) due to 2006 inflows. Most of the equity investments in 2006 occurred in financial services (40%), communication (36%), wholesale and retail trade (9%) and chemicals (3%). FDI inflows remained strong, as they amounted to about 5% of GDP in the first half year of 2007.

Infrastructure investments have for many years been hampered by the need for consolidating public finances and the failure to reduce lower-priority spending. No major investments have been initialled. Although the official target of the government is to increase the research and development expenditures to 2% of GDP by 2010, realisations remain much lower, as Research and development expenditure amounted to just 0.7% of GDP in 2006. Inadequate infrastructure, including in the area of power supply, increasingly affects economic activity. Gross electricity consumption growth has averaged some 7% in each of the past four years, and no extra-power generating capacity has been constructed. Improvements in infrastructure have been modest.

Sector and enterprise restructuring

The share of agriculture in employment decreased from 30% of total employment in 2005 to 27% in 2006. Jobs were created in the industrial sector (including construction) and its share in the total labour force rose from 24% to 26.5% in 2006. Employment in the services sector increased from 42% in 2005 to over 47% in 2006. For the first time in five years, job creation in industry and services fully compensated for the reduction in agricultural employment. The relative size of agriculture fell from 10.3% in GDP in 2005 to 9.2% in 2006. The industry (including construction) proportionally remained stable at roughly 31% of GDP. Services increased to about 60% of GDP. The informal economy has remained sizeable, affecting the competitiveness of the economy. Overall, the process of structural transformation of the economy accelerated.

SMEs in Turkey account for 99% of total enterprises and 80% of total employment. However, SME ratios for capital investment (38% of the total), value added (26%), exports (10%) and bank credit (5%) point at low labour productivity, insufficient access to finance and barriers to enter foreign markets. Informality is widespread throughout all corporate sectors, but particularly amongst SMEs. In sum, SME have insufficient access to finance and are often operating in the grey economy.

Restructuring was supported by privatisation in some areas, such as the telecom sector. Progress was achieved in restructuring and preparing privatisation of the state owned banks, including by launching the IPO of 25% of Halkbank, but the process has been delayed repeatedly. Efforts to restructure and liberalise the energy sector also fell behind schedule. Some of the main outstanding problems in the sector are related to cross-subsidies and large distribution losses. In the private sector, strong productivity gains indicated a largely successful restructuring process. Enterprise restructuring continued at a mixed pace.

State influence on competitiveness

Overall, the role of the state as an active player in the markets has been further reduced. The work of the Competition Authority continued. It is widely appreciated by economic agents and its role was further strengthened by the privatisation process. Transparency in the corporate sector improved and accounting standards were upgraded although the new legislation has not yet fully implemented. The absence of a transparent monitoring of state aid and of supporting policies to decrease distortions adversely affects competition and competitiveness in the economy. Public procurement policies continued to be undermined by the exceptions made to the regulatory framework.

Economic integration with the EU

Turkey's trade openness increased marginally. Exports and imports of goods and services totalled 63% of GDP in 2006. The share of exports destined for the EU declined from 52.3% in 2005 to 51.6% in 2006, as exports to neighbour countries benefited from increased stability in the region. Imports from the EU as a share of total imports also declined, from 42.1% to 39.3%, mainly due to the rising import bill on energy, which Turkey imported almost exclusively from non-EU countries. The EU remained Turkey's largest trading partner, but other markets are gaining in importance. In 2006, FDI-inflows from the EU amounted to 82% of total FDI, compared to 58% a year earlier. The FDI-stock totalled about 20% of annual GDP of which roughly two thirds originated from EU countries.

Labour productivity growth in the manufacturing sector further increased in 2006 and 2007, from almost 15% to less than 5% annualised. During the same period production per working hour also increased by 5.3%. Productivity also continued to improve in the public sector, where the number of employees decreased by 6% while productivity increased by almost 10%. The pace at which the real effective exchange rate increased (based on Unit Labour Costs) slowed down considerably. Productivity growth slowed down in most sectors of the economy.

Turkey's average per capita income, measured in purchasing power standards, reached in 2006 nearly 30% of the EU-27 average in 2007, slightly up from the corresponding level in 2005.

ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP

This section examines Turkey’s ability to assume the obligations of membership – that is, the acquis as expressed in the Treaties, the secondary legislation, and the policies of the Union. It also analyses Turkey’s administrative capacity to implement the acquis . The analysis is structured in accordance with the list of 33 acquis chapters .

Chapter 1: Free movement of goods

Some progress can be reported regarding alignment on general principles applicable to free movement of goods. The Communiqué on standardisation in foreign trade, applicable in 2007, further reduced the list of items which are subject to mandatory standards or technical specifications upon import; 35 mandatory standards in the area of construction products were abolished. The remaining mandatory standards are in the area of foodstuffs and various other sectors, including old standards and purely national standards. In principle, products which are in free circulation in the EU, and bearing the “e”, “E” or “CE” marking, are exempted from conformity assessment procedures. However, implementing provisions and administrative requirements continue to impose limits on the free circulation of products. Licences remain necessary for goods considered as old, renovated or faulty and for second-hand motor vehicles.

As regards horizontal measures, progress can be reported in the area of standardisation The Turkish Standards Institute (TSE) continued adopting EN standards of the European Committee for Standardisation (CEN), the European Committee for Electro-technical Standardisation (CENELEC) and the European Telecommunications Standards Institute (ETSI). More than 90% of EN standards are now adopted. ETSI standards are adopted as part of the harmonisation of related EU directives; 382 such standards are in use. The TSE has been reorganised in order to reach full compatibility with the EU requirements concerning standardisation.

In terms of conformity assessment, significant progress was achieved in the