Copenhagen Twenty Years On

Fundamentals First - Rule of Law, Democracy and the Economy

I. The enlargement agenda

Twenty years ago, the Western Balkans were torn by conflict. At the same time, the European Union agreed the conditions, known as the Copenhagen criteria, for entry of future Member States into the EU. The Copenhagen criteria reflect the values on which the EU is founded: democracy, the rule of law, respect for fundamental rights, as well as the importance of a functioning market economy. This paved the way for the historic transformation and accession of the countries of Central and Eastern Europe.

Ten years later, at the Thessaloniki Summit in 2003, the EU granted all countries of the Western Balkans a clear perspective of EU membership, subject to fulfilment of the necessary conditions, in particular the Copenhagen criteria and the conditions of the Stabilisation and Association Process (SAP).

Croatia has met these conditions. Following ratification of the Accession Treaty by all Member States, the European Union welcomed Croatia as the 28th Member State on 1 July 2013. Croatia is the first country to complete the Stabilisation and Association Process. Croatia’s accession is an example of the transformative power and stabilising effect of the enlargement process and the EU’s soft power.

The historic agreement reached by Serbia and Kosovo* in April is further proof of the power of the EU perspective and its role in healing history’s deep scars. It also, crucially, reflects the courage of the political leadership in both countries. In June, the European Council decided to open accession negotiations with Serbia and the Council authorised the opening of negotiations for a Stabilisation and Association Agreement between the EU and Kosovo.

It has been a significant year for the other enlargement countries:

In June 2013, Montenegro adopted comprehensive actions plans for the chapters on judiciary and fundamental rights and on justice, freedom and security, in line with the new approach to tackle these chapters early in the accession process. In Albania, cross-party support for key reforms, orderly conduct of parliamentary elections and further steps in the fight against corruption and organised crime means candidate status is now within reach. The former Yugoslav Republic of Macedonia has emerged from its political crisis earlier in the year, but concerns remain, notably as regards freedom of expression and media. Steps have been taken to improve good neighbourly relations. More broadly, a breakthrough in the UN-facilitated name talks is now vital. In Bosnia and Herzegovina, a lack of political will to implement reforms and the failure to implement the Sejdic-Finci ruling is hampering the country’s EU progress and economic prospects.

In Turkey, there has been progress in judicial and other reforms and the much anticipated democratisation package was presented in September. Peace talks with the PKK were pursued with a view to ending terrorism and violence in the southeast of the country, laying the ground for a solution to the Kurdish issue. However, the handling of demonstrations in response to the proposed development of Gezi Park in Istanbul raised serious concerns and underlined the need for the EU to remain the anchor for reform.

As regards Iceland, the new government has put accession negotiations with the EU on hold and declared that negotiations will not be continued without a referendum.

The accession process today is more rigorous and comprehensive than in the past. This reflects the evolution of EU policies as well as lessons learned from previous enlargements. The process is built on strict but fair conditionality with progress towards membership dependent on the steps taken by each country to meet the established criteria. A key lesson from the past is the importance of addressing the fundamentals first.

The rule of law is now at the heart of the enlargement process. The new approach, endorsed by the Council in December 2011, means that countries need to tackle issues such as judicial reform and the fight against organised crime and corruption early in accession negotiations. This maximises the time countries have to develop a solid track record of reform implementation, thereby ensuring that reforms are deeply rooted and irreversible. This new approach is a key element of the negotiating framework for Montenegro and will shape the Commission’s work with the other enlargement countries.

The global economic crisis of the past five years has underlined the need, for all countries, to fundamentally review and strengthen their economic governance. This applies in particular to the countries of the Western Balkans, none of which is a functioning market economy. All are affected by high unemployment, particularly among the young. It is essential that these countries intensify reforms to return to sustainable growth and address the challenges necessary to meet the economic criteria and improve competitiveness. This Communication sets out proposals to support this aim, including the introduction of national economic reform strategies and of action plans for public financial management.

Events in a number of enlargement countries have underlined the importance of strengthening democratic institutions and ensuring inclusive democratic processes that support these institutions and reinforce core democratic principles and common EU values. A stronger role for civil society is key, as are cross-party platforms for EU integration and further progress with electoral, parliamentary and public administration reforms.

The European Union is founded on common values and principles, including respect for fundamental rights. All the countries of the Western Balkans and Turkey need to undertake further reforms to ensure that the principles of freedom of expression and the protection of the rights of persons belonging to minorities, including Roma are respected in practice, not just enshrined in law. More robust measures are needed to protect other vulnerable groups from discrimination, in particular on grounds of sexual orientation.

Good neighbourly relations and regional cooperation are essential elements of the Stabilisation and Association process. Developments in Serbia and Kosovo in particular have shown that countries can make progress towards overcoming the legacy of recent conflict, in line with the very principle on which the European Union was founded. Regional cooperation needs to be further strengthened, to be inclusive and regionally-owned. The Commission fully supports the work of the South-East Europe Cooperation Process (SEECP) and Regional Cooperation Council, including the Regional 2020 strategy. There needs to be a renewed effort to overcome bilateral disputes among enlargement countries and with Member States. Bilateral issues need to be addressed by the parties concerned as early as possible and should not hold up the accession process.

2014 sees the launch of the second Instrument for Pre-Accession Assistance. Through IPA II, the EU will continue to provide substantial support to the enlargement countries in their preparation for accession, with a comparable level of funds for the period 2014-2020 (€11.7 billion in current prices) as in the current financial framework. IPA II will also support regional and cross-border cooperation. IPA II will focus on areas of shared interest, in particular to support reforms and their sustained implementation in the rule of law area, to strengthen democratic institutions and good governance as well as socio-economic development.

The launch of IPA II is also an opportunity to ensure an even closer link between the enlargement strategy and the priorities for assistance. IPA II introduces some important innovations, notably the focus on defining long-term policies and strategies in a limited number of priority sectors, which will be aligned with the needs and capacities of each country. Clear targets and realistic indicators will be set and linked to multi-annual sector assistance. If countries meet the necessary standards of public financial management, they will be able to benefit from budget support – a further incentive for reform. Incentives will be available to countries that advance on their reform path. In case of underperformance, funds will be reallocated. The management of IPA programmes will be further streamlined, mainly through fewer and larger projects.

All enlargement countries have a clear European perspective. Progress towards membership depends on the steps taken by each country to meet the established criteria, based on the principle of own merits. This is crucial for the credibility of enlargement policy and for providing incentives to the countries to pursue far-reaching reforms. At the same time, it is essential for Member States, together with the EU institutions, to lead an informed debate on the political, economic and social impact of the enlargement policy. They have a key role in providing citizens with the facts on enlargement policy and, in so doing, to inform them of the benefits, including its major contribution to peace, security and prosperity, and to address any concerns they may have.

II. Key Challenges

In this Communication, the Commission underlines a number of key challenges facing the Western Balkans and Turkey: economic governance and competitiveness; the rule of law; the functioning of institutions guaranteeing democracy; fundamental rights; and, in the case of the Western Balkans, overcoming the legacy of the past. These challenges are central to the Copenhagen criteria and the conditionalities of the Stabilisation and Association process. Measures to address these challenges are also mutually reinforcing. For example, promoting the rule of law and guaranteeing fundamental rights increase legal certainty and together with deeper regional integration, contribute significantly to supporting economic development and competitiveness.

a) Economic governance and competitiveness

In the last three years, the EU has significantly strengthened its economic governance. In the European semester, Member States coordinate fiscal and structural policies before the respective parliaments adopt their national budgets. The tools of the economic dialogue with enlargement countries are gradually being adapted to the new challenges and the coordination mechanisms in the EU. The countries have been already asked to put more emphasis on the sustainability of their external position and on the main structural obstacles to growth. It is important now to more fully reflect the main EU instruments in the economic dialogue given how economically and financially integrated the enlargement countries are with the EU.

The EU is the destination for approximately 60% of exports from the Western Balkans. The EU is also by far the biggest provider of foreign direct investment (FDI). With the exception of Turkey, EU banks dominate the financial sector. Access to the EU’s single market for goods and services provides an important channel for growth. Recovery in the EU will also have a positive impact on the Western Balkans in particular. The Commission’s most recent forecast is that the Western Balkans should grow by 2% in 2013. The forecast for Turkey is 3.2%, indicating a return to higher growth rates after a relative slowdown in 2012.

Modest recovery in the Western Balkans is not a guarantee for sustainable growth and convergence. There remain significant challenges in all enlargement countries in terms of economic reform, competitiveness and job creation:

· While Turkey is a functioning market economy, no Western Balkan enlargement country enjoys this status.

· Public financial management systems need to be significantly strengthened to reduce the risk of fraud and corruption.

· The rule of law needs to be significantly improved to provide greater legal certainty for economic operators and to increase investor confidence.

· Structural reforms need to be prioritised and competitiveness enhanced in order to support fiscal consolidation, tackle high external imbalances as well as high unemployment in all countries, averaging over 20% in the Western Balkans. There are considerable regional differences within the countries, with higher levels of poverty in rural areas.

A new approach is proposed to help the enlargement countries tackle the economic fundamentals first and meet the economic criteria. The countries will be invited to enhance economic policy and its governance through the co-ordinated preparation of a national economic reform strategy comprising two elements – a macroeconomic and fiscal programme and a structural reforms and competitiveness programme. These will be dealt with both in the bilateral and multilateral dialogue with the countries:

· The macroeconomic and fiscal programme will continue to be addressed through the existing instruments, namely Pre-Accession Economic Programmes for candidate countries and Economic and Fiscal Programmes for potential candidates. To strengthen surveillance, the joint ECOFIN Council with candidate countries will be invited to provide more targeted policy guidance through country-specific recommendations and to undertake an annual review and stock-tacking of policy implementation.

· As a new element, the countries will be asked to develop structural and competitiveness reform programmes. These programmes will be prepared in parallel with the fiscal programmes, but will be then reviewed in the context of the relevant Stabilisation and Association Agreement bodies, most notably in the areas of industry, competition, internal market, research, education, transport, energy and environment. Furthermore, the Commission will use the autumn progress reports to give clear guidance on the reforms needed for achieving further progress in meeting the economic criteria.

The Commission will also engage in dialogue on public financial management with the enlargement countries, which will, inter alia, support progress towards meeting the economic criteria. Countries will need to draw up action plans in this field that will be monitored by the Commission. Progress towards effective public financial management will also open up the possibility of sector budget support, as provided for under IPA II.

The Commission will take forward this approach in close cooperation with relevant international financial institutions and will provide comprehensive regional technical assistance to this effect. The Commission recommendations on the economic criteria will offer guidance as to the scope of this technical assistance.

Other measures to boost competitiveness, investments, growth and jobs

The Commission’s support for sustainable economic development in the Western Balkans goes beyond macro-economic stabilisation and the achievement of the functioning market economy status. Since the beginning of the crisis, the Commission has been insisting that more needs to be done to address the difficult socio-economic situation, in particular high unemployment. The Commission has also highlighted the need to support investment in infrastructure in the Western Balkans. Cross-border transport, energy and communications networks are underdeveloped. In view of the size of the Western Balkan economies, closer integration is key. Regional economic cooperation has been recognised as an opportunity for growth and a basis for political cooperation and good neighbourly relations. The planned liberalisation of services in the Central European Free Trade Area (CEFTA) would further support this aim. Developing human and physical capital in rural areas and further adoption of EU standards in the agri-food sector will contribute to the competitiveness of the regional agriculture sector.

The Commission has already started a new dialogue on employment and social reform programmes with Turkey and Serbia. Dialogues with the former Yugoslav Republic of Macedonia and Montenegro will follow. The socio-economic situation in the potential candidates is more challenging than in the candidate countries and extra support will be needed to build administrative capacity to facilitate participation in the new process. The potential candidates will be gradually invited to the new dialogue. Comprehensive technical assistance will be programmed in 2014, with emphasis on the potential candidates. With a view to reducing the skills gap and improving education systems, the Commission will continue developing the Western Balkans platform on education and training.

Under the auspices of the Regional Cooperation Council (RCC), regional groups established under the Thessaloniki agenda have started to address the priorities of Europe 2020. A Regional 2020 strategy is in the making. More needs to be done to increase awareness and capacity of the currently dispersed regional groups so they can engage in regular peer reviews and issue recommendations. The RCC will need to develop a public monitoring mechanism. Findings from the groups and the monitoring mechanism will be followed up by the Commission in its economic dialogue and in the IPA programming process.

Reforms leading to fulfilment of the economic criteria will also be supported by the Western Balkans Investment Framework (WBIF). The WBIF plays an increasingly important role helping prepare and support those investments most needed for boosting growth and jobs. Under the WBIF, the Commission, bilateral donors and international financial institutions are supporting €4 billion worth of investments per year in transport, energy, the environment, climate change, the social sector and private sector / SME development, where the Commission is co-financing a Western Balkan SME platform aimed at improving access to finance for SMEs through guarantees and venture capital.

Improving transport and energy interconnection between the EU and enlargement countries will be a key priority for promoting sustainable economic growth, jobs, trade and cultural exchange. The Commission underlines the importance of further development of Trans-European energy infrastructure and co-operation with the Energy Community. The forthcoming Transport Community Treaty will promote integration of land transport markets and infrastructure whilst helping the Western Balkan countries implement EU land transport standards. The Commission has reviewed the EU’s Trans-European Networks in the field of transport (TEN-T) and energy (TEN-E) with a view to improving connections with the countries covered by the enlargement and neighbourhood policies. In this sense, the Commission has adopted a list of Projects of Common Interest (PCIs) for the development of trans-European energy infrastructure. A list of Projects of Energy Community interest (PECIs) should be adopted by the upcoming Energy Community Ministerial Council.

Cooperation with Turkey will be enhanced, not least in view of its strategic location and potential as an energy hub. In 2013, Turkey ratified the Trans Anatolian Pipeline Agreement aimed at connecting with the Trans Adriatic Pipeline, bringing natural gas to the EU from the Caspian via Turkey. In this context, strengthening of the EU-Turkey energy cooperation as well as relevant progress in the accession negotiations would facilitate further progress towards the interconnection and integration of the energy markets of the EU and Turkey. The Commission looks forward to an evaluation by the World Bank reviewing the EU-Turkey Customs Union. This evaluation, contracted by the European Commission, will make recommendations on the improvement of its functionality and the possible widening of its scope.

To support work on the above challenges, the Commission will:

- Invite the enlargement countries to prepare a national economic reform strategy comprising two elements – the existing macroeconomic and fiscal programme and a new structural reforms and competitiveness programme. The process will result in country specific recommendations and in clear guidance on actions needed for achieving further progress towards becoming a functioning market economy and for improving competitiveness.

- Launch a dialogue with the countries on necessary requirements to meet public financial management standards, preparing the ground for possible IPA budget support.

- Provide comprehensive technical assistance in close cooperation with other international organisations.

In the period 2007-2013, up to €190 million pre-accession assistance have been provided to strengthen institutional capacities of governments in areas such as the management of public funds, economic and fiscal policy and statistics, as well as institutional capacities of national banks.

Through IPA II, the Commission will continue to support reforms leading to fulfilment of the economic criteria and socio-economic development, including through the Western Balkans Investment Framework (WBIF), prioritising improvement in transport and energy interconnection between the EU and enlargement countries, and provide technical assistance to support economic governance, the dialogue on employment and social issues, the objectives of the RCC on a regional 2020 strategy, and agriculture and rural development.

b) The rule of law

The rule of law is a fundamental value on which the EU is founded. Safeguarding values, such as the rule of law, is what the European Union was made to do, from its inception to the latest chapters in enlargement. The rule of law remains a priority for the EU and is at the heart of the accession process, a key pillar of the Copenhagen political criteria. Countries aspiring to join the Union need to establish and promote from an early stage the proper functioning of the core institutions necessary for securing the rule of law. Rule of law supports the business environment, providing legal certainty for economic operators and stimulating investment, jobs and growth. Fighting organised crime and corruption is fundamental to countering the criminal infiltration of the political, legal and economic systems. In most enlargement countries there is a need for inclusive, transparent and ambitious judicial reforms with the aim of ensuring independent, impartial, efficient and accountable judicial systems. Particular attention is needed to the appointment, evaluation and disciplinary procedures for judges. There is also a need to put in place stronger frameworks for tackling corruption and organised crime, which remain a serious concern in many enlargement countries. Efforts are needed to ensure a sustained track record of substantial results in this field based on efficient, effective and unbiased investigation, prosecution and court rulings in cases at all levels, including high level corruption.

The visa liberalisation process has incentivised the countries of the Western Balkans to take substantial steps to reform those aspects most closely related to the visa liberalisation process. Those reforms have strengthened internal governance. The countries need to step-up efforts to consolidate those reforms and implement measures to prevent abuse of the liberalised visa regime as outlined and recommended by the Commission in its post-visa liberalisation monitoring reports. The Commission will present the fourth such report by the end of 2013. Migration and border management issues will continue to be addressed in the appropriate fora, such as in the SAA framework, and including in chapter 24 on justice, freedom and security.

A new approach to the accession negotiations on the judiciary and fundamental rights and justice, freedom and security is being implemented. Building on lessons learned, the new approach introduces the need for solid track records of reform implementation to be developed throughout the process. Tackling these areas early in the negotiations gives maximum time to enlargement countries to ensure that reforms are deeply rooted and irreversible. The new approach is now being applied in the negotiations with Montenegro, which has prepared comprehensive action plans as a basis for opening negotiations on these chapters. Following the invitation of the European Council in June 2013, the new approach is being fully integrated into the negotiating framework for Serbia and the screening of chapters 23 and 24 is under way.

The rule of law is also a key theme in the EU’s relations with other enlargement countries. The Commission’s High Level Accession Dialogue with the former Yugoslav Republic of Macedonia continues to address rule of law issues. A number of the key priorities of the Commission’s 2010 Opinion setting out the conditions for the opening of accession negotiations with Albania concern the rule of law. The Commission supports judicial reform through its Structured Dialogue on Justice with Bosnia and Herzegovina and also holds a Structured Dialogue on the Rule of Law with Kosovo, focusing on the fight against organised crime and corruption and reform of the judiciary. The rule of law is also a priority under the positive agenda with Turkey.

To support work on the above challenges, the Commission will:

- Implement the new approach to chapters judiciary and fundamental rights and justice, freedom and security with Montenegro and Serbia and continue to prioritise the rule of law through targeted dialogues with the other enlargement countries.

- Ensure coordination with the relevant European agencies (in particular Europol, Eurojust and Frontex) and encourage strengthened cooperation between these agencies and enlargement countries, including the conclusion of operational agreements with Europol.

- Strengthen support to rule of law-related reforms through IPA II at both national and regional levels, to embed reforms in these key areas and to ensure an effective exchange of best practice in establishing track records in tackling organised crime and corruption.

In the period 2007-2013, over €800 million pre-accession assistance has been provided to improve the justice sector, independence of judiciary, fight against corruption and organised crime, as well as border management and security. Through IPA II, sector strategies will be developed with a particular focus on developing independent, efficient and professional judiciaries and supporting the development of a strong framework at national and regional level and track record of implementation in the fight against organised crime and corruption. This includes prevention measures and providing law enforcement bodies with effective legal and investigative tools, in particular the capacity to conduct financial investigations.

c) The functioning of institutions guaranteeing democracy

The Copenhagen political criteria require candidate countries to achieve stability of institutions guaranteeing democracy. The proper functioning of core institutions is vital, whether the national parliament, the government or the public administration. The transparency, accountability and effectiveness of institutions and public administrations, including a greater focus on the needs of citizens and business, needs to be prioritised in most enlargement countries. More needs to be done to strengthen participatory democracy and establish national platforms for EU-related reforms that build a consensus across parties and wider society to support the major reforms required. The countries also need to find an appropriate balance between central, regional and local government that best supports implementation of reforms and the delivery of services to citizens. The role of regional and local authorities in the EU alignment process and eventual application of EU rules is also key.

Democratic institutions remain fragile in a number of enlargement countries. A culture of consensus building is lacking, with the role of national parliaments underdeveloped. Democracy is about more than the conduct of free and fair elections. It is about strong, accountable institutions and participatory processes, centred around national parliaments. Parliamentary scrutiny is often undermined by excessive use of urgent procedures for legislation, weak parliamentary committee systems and procedures and insufficient stakeholder consultation, with minimal input from experts.

Elections are all too often seen as an opportunity to gain political control of state institutions well beyond the normal legitimate hand-over of political power associated with a change of administration. In many cases, even relatively junior positions in the public administration are effectively politicised. This undermines both the capacity and accountability of administrations. Public administration reform is vital, including professionalization and de-politicisation of the civil service. Embedding meritocratic principles, tackling corruption and ensuring adequate administrative procedures, including with respect to human resources, are of fundamental importance.

Civil society and citizens and particularly young people are too often marginalised from day to day politics. Dialogue between decision makers and stakeholders needs to be further developed. An empowered civil society is a crucial component of any democratic system. It enhances political accountability and social cohesion, deepening understanding and inclusiveness of accession-related reforms, as well as supporting reconciliation in societies divided by conflict. In some cases, a more supportive and enabling environment needs to be developed that improves the conditions for policy dialogue and non-partisan input to the decision making process, supported by good quality statistics provided by independent national statistical bodies. The independence and effectiveness of key bodies such as the ombudsman and state audit institutions need to be ensured and their recommendations appropriately followed-up.

To support work on the above challenges, the Commission will:

- Work more intensively with international organisations such as the Council of Europe, OSCE/ODIHR and OECD (SIGMA) to support electoral and parliamentary reform; continue to promote inter-parliamentary cooperation between national parliaments of the region and those of the EU Member States and the European Parliament.

- Increase the priority attached to public administration reform in the accession process, with particular emphasis on transparency, de-politicisation and meritocratic recruitment processes.

–Increase focus on civil society, including capacity building and encouraging the creation of an enabling environment for its development and greater involvement of stakeholders in reforms, including through greater transparency of government action and spending;

- Promote broad-based participation in the accession process, building on the positive example of Montenegro, and encourage maximum transparency in handling of relevant documents.

In the period 2007-2013, over €30 million pre-accession assistance has been provided to enhance amongst others the capacity of national parliamentary assemblies, ombudsmen and national audit institutions. In the same period, civil society organisations have been supported by almost €190 million from IPA, as well as by over €35 million from the European Instrument for Democracy and Human Rights (EIDHR). Through IPA II, the Commission will support the strengthening of democratic institutions, good governance, including ombudsmen, and public administration reform, including twinning projects in the above areas. The Commission will also explore options to empower and further support the next generation of policy makers, public officials and leaders, including through more targeted visits programmes and a possible EU scholarships scheme. The Commission will also continue to support capacity building of civil society, including through the Civil Society Facility, and provide an enhanced role to civil society in the strategic programming of IPA II.

d) Fundamental rights

Civil, political, social and economic rights, as well as the rights of persons belonging to minorities are significant issues in most enlargement countries. Fundamental rights are broadly guaranteed in law in the enlargement countries but in many cases not implemented in practice. More needs to be done to improve the position of women and ensure gender equality, to implement children’s rights and support people with disabilities.

In a number of enlargement countries, freedom of expression remains a serious concern. Ethnic minorities, notably the Roma, face many difficulties, despite the existence of legal frameworks supporting their rights. It is important to consolidate a coherent framework on combating certain forms and expressions of racism and xenophobia in areas such as audio-visual media, sports, politics, education and the internet. Discrimination on the basis of sexual orientation is also widespread. These vulnerable groups also face societal hostility which can descend into hate speech, violence and intimidation.

In this year’s Communication, the Commission lays particular emphasis on freedom of expression, the situation of the Roma, and the position of LGBTI persons. The Commission is working closely on these fundamental rights issues with the relevant international and regional organisations, in particular the Council of Europe and the OSCE. The Commission proposes that candidate countries participate as observers in the EU’s Fundamental Rights Agency, in view of supporting their efforts to ensure full respect of fundamental rights.

- Freedom of expression

The Commission has been prioritising freedom of expression and the media in the EU accession process and in our financial and technical support. In June 2013, the Commission together with the European Parliament held a Speak-Up!2 conference which brought together hundreds of key stakeholders from the media, civil society and national authorities.

The enlargement countries are characterised in most cases by pluralist media landscapes. However, the Speak-Up!2 conference confirmed that a number of important challenges need to be urgently addressed. Cases of violence and intimidation against journalists are a continuing problem, leading to self-censorship. Authorities need to step up their efforts in investigating new and past cases and ensure dissuasive sanctions are applied against perpetrators. By decriminalising defamation, a major step towards protecting free and critical journalism was taken in south east Europe. However, prosecutions of journalists continue. There is a need to develop and train the judiciary to prevent abuse of state power.

Political interference with media freedom remains a serious concern. More efforts are needed to ensure the political and financial independence of public service broadcasters in the Western Balkans. This is best ensured by having sustainable funding and transparent rules for appointing board members and strong national commitment to the needed reforms. In most enlargement countries, regulatory agencies are not performing satisfactorily. Moreover, there is no functional media self-regulation in place and media outlets need to make more of an effort to improve their internal governance. There is also a need to tackle informal economic pressure on the media, including through transparency of media ownership, preventing its excessive concentration and transparent rules on procurement of government advertising. Labour laws at media outlets also need to be properly implemented

To support work on these challenges, the Commission will:

- Promote freedom of expression and media and stress its importance for EU membership through our regular political dialogues with the enlargement countries.

- Ensure freedom of expression and media is consistently addressed as a priority through chapter 23 judiciary and fundamental rights and chapter 10 information society and media.

- Grant an award for excellence in investigative journalism starting in 2014.

In the period 2007-2013, over €27 million pre-accession assistance has been provided to help countries address the challenges related to freedom of expression. Through IPA II, the Commission will develop a long term vision of EU financial assistance on freedom of expression, also working together with key partners (e.g. Council of Europe, OSCE, OECD).

- Roma

There are about 10 to 12 million Roma in Europe, of which about 4 million are in Turkey and 1 million in the Western Balkans. Across Europe, the situation of most Roma communities is a matter of serious concern. Roma are very often the victims of racism, discrimination and social exclusion and live in deep poverty, lacking sufficient access to healthcare, education and training, housing and employment. In light of the difficult conditions they face, significant numbers leave the region and seek asylum in a number of EU countries. Most of these claims are ultimately unsuccessful. This situation is not sustainable.

Since 2011, a framework for National Roma Integration Strategies is in place at EU level. With a focus on reducing poverty, social exclusion and discrimination of Roma, the goals and principles of this framework are equally relevant for enlargement countries, where much more needs to be done to facilitate the social and economic inclusion of Roma and to develop and ensure adequate implementation, follow-up and monitoring of national Roma strategies. Roma inclusion has to become a national priority, not just in strategy papers but in actual engagement on the ground, with measures to increase access to education, to foster employment and increase health and housing conditions, in particular to ensure access to public utilities such as water and electricity. The issue of civil documentation and registration of Roma needs to be addressed.

Roma inclusion remains a key objective and will be an increasing political challenge if stronger action is not taken. It requires a coordinated approach based on strong political will at all levels, particularly from municipal authorities and national governments in the countries concerned, as well as a change of mind-set among majority populations. Roma leaders also need to play their part, by promoting higher rate of civil registration, by ensuring participation in compulsory education and by limiting the flow of asylum seekers. Local authorities must be willing to enforce attendance and address resistance from majority populations to joint education, including by linking welfare payments to school attendance.

The Commission is working closely with each of the enlargement countries to review progress in implementing key commitments undertaken to promote further inclusion of the Roma community. Coherence of support to Roma in the enlargement countries with the work being done at EU level needs to be enhanced.

To support work on the above challenges, the Commission will:

- Support and encourage national follow-up meetings to the 2011 seminars; with rigorous monitoring of implementation of operational conclusions through country monitoring committees.

- Increase and better target IPA funding through a Roma ‘facility’ to finance measures agreed in the national seminars, with improved cooperation with other international organisations.

- Hold a Roma conference in Brussels in 2014 on the way forward, including prizes awarded to NGOs for innovative and successful projects for Roma inclusion.

In the period 2007-2013, over €100 million pre-accession assistance has been provided to support social inclusion and integration of Roma in the enlargement countries, including housing. Through IPA II, the Commission will better target funds and strengthen strategic cooperation with external stakeholders, identifying and building on best practice. Projects directly making an impact on the lives of individual Roma persons will be prioritised, with a particular focus on education and social inclusion.

- Lesbian, gay, bisexual, transgender and intersex (LGBTI) persons

Homophobia, discrimination and hate crimes on the basis of sexual orientation and gender identity are still widespread phenomena in the Western Balkans and Turkey. This is partly due to incomplete legislative frameworks, but also to the inconsistent implementation of the legal provisions in place. Rights violations include discrimination in areas such as employment and education, failure of certain authorities to enforce freedom of speech and of assembly, hate speech, intimidation and physical violence, even murders.

In June 2013, the EU adopted guidelines for the promotion and protection of the enjoyment of all human rights by LGBTI people to provide guidance for the EU’s external actions in this field. A successful strategy in this field in the enlargement countries requires strong political commitment from governments, local authorities and law enforcement bodies concerned, as well as from the EU. The authorities in the enlargement countries can play a key role in bringing about a change in mind-set across society as a whole towards LGBTI persons, which is often at best ambivalent and at worst hostile.

There is an urgent need for anti-discrimination legislation to be extended to include sexual orientation and gender identity within its scope in Turkey and the former Yugoslav Republic of Macedonia. Hate crime legislation still needs to be introduced in most countries. Training of law enforcement, ombudsman institutions, judges and media professionals is needed to raise awareness of new legislation, to ensure proper implementation and contribute to increasing understanding. Countries must pursue a zero-tolerance approach to hate speech, violence and intimidation and take steps as a matter of priority to address cases from the past and be prepared to react robustly to new cases in the future. Countries need to take measures to counter stereotypes and misinformation, including in the education system. Religious or cultural values cannot be invoked to justify any form of discrimination. Freedom of assembly and expression should be protected, including through appropriate handling of pride parades, including in Serbia, where regrettably this year's parade was banned for the third year in a row on security grounds.

To support work on the above challenges, the Commission will:

- Increase political support and visibility by inter alia ensuring these issues are systematically addressed in the appropriate fora with enlargement countries as well as in the accession negotiations, setting clearer policy priorities and improving monitoring and follow-up.

- Organise a high-level LGBTI conference in 2014 with the aim of taking stock of the state of play and progress achieved, sharing best-practice as well as adopting operational conclusions.

- Improve strategic cooperation with external stakeholders (international organisations and civil society).

In the period 2007-2013, over €2.5 million has been provided in specific support of LGBTI issues, both through IPA and EIDHR. Through IPA II, the Commission will better target funding including training of employees of relevant public institutions, including judges and police, and targeted campaigns and other initiatives (workshops, events) to raise awareness and increase tolerance. The Commission will coordinate its assistance on these issues, notably with the Council of Europe and OSCE.

e) Dealing with bilateral issues and overcoming the legacy of the past

The historic agreement in April between Belgrade and Pristina creates the conditions for building a common European future for both sides. It puts other bilateral disputes in a new light, demonstrating what can be achieved with political will, courage and EU support. Following numerous high level meetings facilitated by the EU, Serbia and Kosovo agreed on 19 April to a ‘First agreement of principles governing the normalisation of relations’, complemented in May by a comprehensive implementation plan with a clear timeline until the end of 2013. This paved the way for the European Council decision to open accession negotiations with Serbia and the Council to approve negotiating directives for an SAA with Kosovo.

Progress on bilateral issues elsewhere in the region has also been made, with good neighbourly relations – an essential element of the Stabilisation and Association process -reinforced. Serbia and Bosnia and Herzegovina have intensified contacts, Serbia’s President has expressed a public apology for crimes committed in Bosnia and Herzegovina, and there has been a new more constructive mood in relations between Serbia and Croatia. Bilateral and multilateral contacts between the countries of the region have also continued in sensitive areas such as war crimes, refugee return, organised crime and police cooperation. Several agreements between war crimes prosecutors have been signed, including between Bosnia-Herzegovina and both Croatia and Serbia. Obstacles to extradition are being addressed. Representatives of the Presidents of Bosnia and Herzegovina, Croatia, Montenegro, Serbia and Kosovo met in September to discuss the statute of the truth and reconciliation initiative RECOM for the first time. They agreed on the objectives and essential role of this initiative. The regional housing project under the Sarajevo process is being implemented by Croatia, Serbia, Bosnia and Herzegovina and Montenegro.

The progress made needs to be consolidated. Many bilateral problems remain unresolved, including as regards minorities and issues stemming from the break-up of the former Yugoslavia such as border demarcation. Fundamentally opposed views of recent history burden relations, as does the prevalence of inter-ethnic problems. Political and other leaders need to show more responsibility and take a stronger stand to condemn hate speech and other manifestations of intolerance when it occurs. More work is needed to hold perpetrators to account for war crimes, to address pending issues concerning refugees and internally displaced persons and to normalise relations on the situation of minorities. There has been insufficient progress on missing persons.

Inter-ethnic and status disputes continue to hinder the functioning of institutions within states, particularly in Bosnia and Herzegovina, frustrating the reform process. Difficult ethnic-related issues can be successfully addressed through dialogue and compromise, as demonstrated by the Serbia-Kosovo agreement and ongoing implementation of the Ohrid Framework Agreement in the former Yugoslav Republic of Macedonia.

Outstanding bilateral issues continue to negatively affect the accession process. In the spirit of good neighbourly relations, open bilateral issues need to be addressed by the parties concerned as early as possible. Every effort needs to be made to avoid importing significant bilateral disputes into the EU. The Commission urges parties to make every effort towards solving outstanding disputes in line with established principles and means, including referring issues as appropriate to the International Court of Justice or other existing or ad hoc dispute settlement bodies. Slovenia and Croatia have shown that such an approach can lead to positive results. Bilateral issues should not hold up the accession process.

The EU is now in the process of integrating the requirement for normalisation of relations between Belgrade and Pristina into the framework for accession negotiations with Serbia. As regards the former Yugoslav Republic of Macedonia, maintaining good neighbourly relations, including a negotiated and mutually acceptable solution to the name issue, under the auspices of the UN, remains essential and needs to be found without further delay. The Commission stands ready to facilitate the creation of the necessary political impetus in the search for solutions and to support related initiatives.

Reconciliation is essential to promote stability in a region so recently afflicted by conflict. Countries of the region, Member States and the EU need to do more to support the creation of an environment in south-east Europe conducive to overcoming the legacy of the past, thereby minimising the risk of open bilateral issues being politically instrumentalised. The Commission underlines the importance of Croatia’s declaration on promoting European values in South-East Europe. Croatia’s willingness to use its unique position as the EU’s first Member State seriously affected by the conflicts of the 1990s to provide political and technical support to its neighbours on their EU path is commendable. The Commission is ready to facilitate such support in particular through the Taiex facility.

Regional cooperation has continued within regional fora such as the Energy Community, the European Common Aviation Area, the Central European Free Trade Area (CEFTA) and the Regional School of Public Administration. The Regional Cooperation Council is further developing its role as a platform for the promotion of issues of importance to the whole region and its EU perspective thus further mainstreaming regional cooperation in the countries’ political agenda. Montenegro’s proposal for a Western Balkans Six grouping (bringing together Albania, Bosnia and Herzegovina, the former Yugoslav Republic of Macedonia, Kosovo, Montenegro and Serbia) is a constructive initiative, drawing on the positive experience of the Visegrad Four. It is important that such initiatives are complementary and add value to existing arrangements, and that they are regionally owned and driven. Active participation in the Danube and the forthcoming Adriatic-Ionian macro-regional strategies can also support economic and social development and promote EU integration.

To support work on the above challenges, the Commission will:

- Encourage the development of a network of bilateral agreements among countries party to Stabilisation and Association Agreements to provide a framework for increased political dialogue on the key issues.

- Continue to offer political support and facilitation to all countries concerned to find solutions to bilateral issues as early as possible and continue to actively support the efforts in other fora to find solutions.

In the period 2007-2013, the Commission provided significant pre-accession funding to projects and initiatives supporting reconciliation, and, more generally, regional and cross-border cooperation. Under IPA II, reconciliation will be a key theme and the Commission will continue to support initiatives aimed at addressing war legacy issues (Sarajevo process, war crimes prosecutor network, truth and reconciliation process (RECOM)). Cooperation will also be encouraged and supported in fields such as education, science, culture, media, youth and sport. The Commission will continue to support regional initiatives, such as the Regional Cooperation Council and the Regional School of Public Administration. It will be important to ensure close coherence and the alignment of funds between country and regional programmes and relevant macro-regional strategies.

***

III. Conclusions and recommendations

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

I

1. Twenty years ago the Western Balkans were torn by conflict. At the same time, the European Union agreed the Copenhagen criteria for the entry of future Member States into the EU. Ten years later, at the Thessaloniki Summit in 2003, the EU Member States granted all countries of the Western Balkans a clear perspective of EU membership, subject to fulfilment of the necessary conditions, including those of the Stabilisation and Association Process.

Croatia has met these conditions, and in July 2013 the EU welcomed Croatia as the 28th Member State. Croatia’s accession is an example of the transformative power and stabilising effect of the enlargement process. The historic agreement reached by Serbia and Kosovo in April is further proof of the power of the EU perspective and its role in healing history’s deep scars.

The Copenhagen criteria are just as relevant today, reflecting the core values on which the EU is founded: democracy, the rule of law, respect for fundamental rights. The economic challenges facing the EU underline the importance of the economic criteria and the need to further consolidate economic and financial stability and foster growth and competitiveness in the enlargement countries.

2. The accession process today is more rigorous and comprehensive than in the past, reflecting the evolution of EU policies as well as lessons learned from previous enlargements. The process is built on strict but fair conditionality with progress towards membership dependent on the steps taken by each country to meet the established criteria. This is crucial for the credibility of enlargement policy and for providing incentives to enlargement countries to pursue far reaching reforms. A key lesson from the past is the importance of addressing the fundamentals first.

3. The rule of law is now at the heart of the enlargement process. The new approach, endorsed by the Council in December 2011, means that countries need to tackle issues such as judicial reform and the fight against organised crime and corruption early in accession negotiations. This maximises the time countries have to develop a solid track record of reform implementation, thereby ensuring that reforms are deeply rooted and irreversible. This new approach is a key element of the negotiating framework for Montenegro and will shape our work with the other enlargement countries. The visa liberalisation process has brought significant benefits to citizens of the Western Balkans and has incentivised the countries to implement reforms in the field of rule of law as well as border control and migration. The countries need to step up efforts to consolidate reforms and implement measures to prevent abuse of the liberalised visa regime.

4. The global economic crisis has underlined the need for all countries to strengthen their economic governance. None of the Western Balkan countries is yet a functioning market economy. All are affected by high unemployment, particularly among the young. It is essential that these countries intensify reforms to achieve sustainable growth and address the challenges necessary to meet the economic criteria and improve competitiveness. The Commission has set out a number of proposals to support this aim, including the introduction of national economic reform strategies and of action plans for public financial management. The Commission will work with the major international financial institutions to support reforms leading to fulfilment of the economic criteria. The Western Balkans Investment Framework will continue to support investments boosting jobs and growth. An environment more conducive to attracting foreign direct investment is crucial.

5. Events in a number of enlargement countries have underlined the importance of strengthening democratic institutions and ensuring that democratic processes are more inclusive. The Commission encourages and will support through financial assistance a stronger role for civil society and cross-party platforms for EU integration. The Commission will also promote electoral, parliamentary and public administration reforms, in close cooperation with other international organisations in these fields.

6. The European Union is founded on common values and principles, including respect for fundamental rights. All countries of the Western Balkans and Turkey need to undertake further reforms to ensure that the principles of freedom of expression and the protection of the rights of persons belonging to minorities, including Roma are respected in practice. More robust measures are needed to protect other vulnerable groups from discrimination, in particular on grounds of sexual orientation. The Commission will increase the priority attached to these issues in the accession process, including better targeted IPA funding and increased assistance to support Roma inclusion through a Roma ‘facility’.

7. Regional cooperation and good neighbourly relations are essential elements of the Stabilisation and Association process. Issues related to past conflicts, including war crimes and refugee return, as well as the treatment of minorities and ensuring equal rights for all citizens remain key challenges to stability in the Western Balkans and need to be fully addressed. To this end, the Commission will continue to support initiatives aimed at overcoming the legacy of the past. Regional cooperation needs to be further strengthened, to be inclusive and regionally-owned. The Commission fully supports the work of the South-East European Cooperation Process (SEECP) and Regional Cooperation Council, including the Regional 2020 strategy.

8. A renewed effort to overcome bilateral disputes among enlargement countries and with existing Member States is needed. Bilateral issues need to be addressed by the parties concerned as early as possible and should not hold up the accession process. The Commission urges parties to make every effort towards solving outstanding disputes in line with established principles and means. The context of accession negotiations can generate political impetus for the resolution of disputes. The Commission will continue to offer political support and facilitation to all countries concerned to find solutions to bilateral issues as early as possible and continue to actively support the efforts in other fora to find solutions. The Commission will encourage the development of a network of bilateral agreements among countries party to Stabilisation and Association Agreements to provide a framework for increased political dialogue on the key issues.

9. 2014 sees the launch of the second Instrument for Pre-Accession Assistance for the period to 2020. Through IPA II, the EU will continue to provide substantial support to the enlargement countries in their preparations for accession and will also support regional and cross-border cooperation. The focus will be on areas of shared interest with fewer priorities and larger projects. The key challenges facing the countries will be addressed in a more strategic and coherent way, with innovations including a sector approach, incentives for better performance, increased budget support and a stronger focus on achieving measurable results. To help meet the high investment needs and to create growth and employment, the Commission will strengthen cooperation with IFIs so that IPA funds can also leverage private capital through innovative financial instruments.

10. Enlargement policy depends on the support of EU citizens. It is essential for Member States, together with the EU institutions, to lead an informed debate on the political, economic and social impact of the enlargement policy. They have a key role in providing citizens with the facts on enlargement policy and, in so doing, to inform them of the benefits, including its major contribution to peace, security and prosperity, and to address any concerns they may have.

II

11. Montenegro: The launch of accession negotiations last year marked the opening of a new stage for Montenegro on its path to the EU. The deep and lasting political reforms necessary to implement the new approach to chapter 23 on judiciary and fundamental rights and chapter 24 on justice, freedom and security will require strong political will and enhanced administrative capacity. The accession process needs to be inclusive, with strong involvement of civil society throughout. Montenegro has adopted detailed action plans providing a comprehensive reform agenda for strengthening the rule of law. Implementation of these plans and progress in meeting the interim benchmarks on these chapters will determine the overall pace of accession negotiations. In this regard, implementation of the July constitutional amendments strengthening the independence of the judiciary and further progress with respect to the fight against organised crime and corruption, including at high level, are essential.

Public administration reform is a priority to ensure Montenegro has the capacity to apply the acquis, to tackle politicisation and increase transparency and professionalism of the civil service. Events over the last months, in particular the alleged use of public funds for party political purposes, have highlighted the importance of strengthening citizens’ trust in public institutions. In this context, it is important to ensure that investigations are completed thoroughly and rapidly and that any appropriate action is taken. Adequate follow-up of the work of the parliamentary group on the electoral process is also needed. Freedom of expression needs to be strengthened, including by properly investigating all cases of violence and threats against journalists and bringing perpetrators to justice. In the economic field, improving the business environment and tackling high unemployment are key issues. Restructuring of the aluminium producer KAP is now urgent.

12. Serbia: 2013 has been a historic year for Serbia on its path to the European Union. The decision of the June European Council to open accession negotiations represents the start of a significant new phase in Serbia’s relations with the European Union. This is recognition for the progress made on key reforms and the substantial efforts made by Serbia towards normalisation of its relations with Kosovo. In September, the Stabilisation and Association Agreement entered into force.

Serbia has actively and constructively worked towards a visible and sustainable improvement of relations with Kosovo. In April, Serbia’s engagement in the EU-facilitated dialogue resulted in the landmark ‘First agreement of principles governing the normalisation of relations’ with Kosovo (the First Agreement), which was complemented in May by an implementation plan. Implementation has continued and has already led to a number of irreversible changes on the ground. The parties also reached agreement on energy and on telecommunications. Serbia needs to remain fully committed to the continued normalisation of relations with Kosovo and implementation of all agreements reached in the dialogue.

The Commission started the screening of the acquis in September and looks forward to the first inter-governmental conference on Serbia’s accession by January 2014 at the very latest, once the Council has adopted the negotiating framework. In this new demanding phase, Serbia will need to pay particular attention to the key areas of rule of law, particularly the implementation of the reform of the judiciary, fight against corruption and organised crime, public administration reform, independence of key institutions, media freedom, anti-discrimination and protection of minorities. The Roma Strategy needs to be proactively implemented. Serbia needs to continue improving the business environment and develop a competitive private sector. Tackling high unemployment is also essential. Serbia needs to build on the positive contribution made to regional cooperation over the past year, which included stepping up high-level contacts with neighbouring countries.

13. The former Yugoslav Republic of Macedonia: The political crisis which followed events in parliament late last year exposed deep divisions among political parties, affecting the functioning of parliament, and demonstrated the need for constructive politics in the national interest. Continued implementation of the 1 March political agreement is key. The EU agenda remains the country’s strategic priority. The High Level Accession Dialogue has contributed to progress in most priority areas, including the elimination of court backlogs and progress in the fight against corruption. The country has already reached a high level of alignment relative to where it is in the accession process and has made further progress in improving its ability to take on the obligations of membership.

The reform priority for the coming year should be the effective implementation and enforcement of existing legal and policy frameworks. Particular attention should be paid to the rule of law, including the independence of the judiciary and achieving further results in the fight against corruption and organised crime. Freedom of expression and the media situation in general also remain issues of concern. The review of the Ohrid Framework Agreement, particularly important for inter-ethnic relations, must be completed and its recommendations implemented. The Roma Strategy needs to be proactively implemented. The blurring of the distinction between state and party needs to be addressed, as highlighted by the OSCE/ODIHR in the electoral context. High unemployment needs to be tackled and public financial management strengthened.

The Commission considers that the political criteria continue to be sufficiently met and recommends that accession negotiations be opened. Moving to the next, more challenging stages of the enlargement process is essential in order to consolidate and encourage further reforms as well as to strengthen inter-ethnic relations. The High Level Accession Dialogue is a useful tool which will continue to focus on key issues, including good neighbourly relations, but it cannot replace the accession negotiations.

The Commission remains convinced that a decision to open accession negotiations would contribute to creating the conditions conducive to improving good neighbourly relations in general and, in particular, to finding a mutually acceptable solution to the name issue, which the Commission considers essential. After almost two decades, intense political commitment from all sides in the UN process is required to finally reach a solution, with the active engagement of the international community.

This is the fifth time the Commission recommends the opening of accession negotiations with this country. No decision has been taken by the Council to date. Failure to act on this recommendation poses potentially serious challenges to the former Yugoslav Republic of Macedonia and to the EU. This calls into question the credibility of the enlargement process, which is based on clear conditionality and the principle of own merits. The lack of a credible EU perspective puts at risk the sustainability of the country’s reform efforts.

Upon invitation by the European Council, the Commission reiterates its intention to present without delay a proposal for a negotiating framework, which takes into account the need to solve the name issue at an early stage of accession negotiations, and will carry out the process of analytical examination of the EU acquis beginning with the chapters on the judiciary and fundamental rights, and justice, freedom and security. The Commission considers that, if the screening and the Council discussions on the negotiating framework were under way, the necessary momentum could be created which would support finding a negotiated and mutually accepted solution to the name issue even before negotiating chapters are opened. Applying the new approach on chapters 23 and 24 also to the former Yugoslav Republic of Macedonia would provide the necessary tools to tackle key issues of concern also to Member States and contribute to the sustainability of reforms.

In advance of the tenth anniversary of the entry into force of the SAA in April 2004, the Commission also calls for a fifth time on the Council to adopt its 2009 proposal to move to the second stage of the association, in line with the relevant provisions of the SAA, which foresee that the association shall be fully realised over a transitional period of a maximum of ten years.

14. Albania: Last October, the Commission recommended that the Council should grant Albania the status of a candidate country subject to the completion of key measures in the areas of judicial and public administration reform and revision of the parliamentary rules of procedure. In December 2012, with a view to deciding whether to grant candidate status, the Council invited the Commission to report as soon as the necessary progress had been achieved, also taking into account the further action taken by Albania to fight corruption and organised crime, including by proactive investigations and prosecutions of such cases. In this regard, Albania has adopted the remaining key judicial, public administration and parliamentary reform measures with cross-party consensus. The parliamentary elections in June were assessed by the international election observation mission led by OSCE/ODIHR as competitive with active citizen participation throughout the campaign and genuine respect for fundamental freedoms. In the fight against corruption and organised crime, Albania has taken initial steps towards improving the efficiency of investigations and prosecutions and strengthening cooperation between law enforcement bodies. The number of convictions in corruption and in money laundering cases has increased, as has the number of investigations into the trafficking of people and drugs. All of the Council of Europe’s recent recommendations concerning financing of political parties and legal provisions on corruption have been satisfactorily addressed. The new government in Albania has made a strong commitment to fighting corruption and has prioritised this issue in its programme.

In view of Albania having achieved the necessary progress, the Commission recommends that the Council should grant Albania the status of a candidate country on the understanding that Albania continues to take action in the fight against organised crime and corruption.

Further to the Commission’s 2010 Opinion, Albania needs to meet the following key priorities for the opening of accession negotiations:

1. continue to implement public administration reform with a view to enhancing professionalism and depoliticisation of public administration;

2. take further action to reinforce the independence, efficiency and accountability of judicial institutions;

3. make further determined efforts in the fight against corruption, including towards establishing a solid track record of proactive investigations, prosecutions and convictions;

4. make further determined efforts in the fight against organised crime, including towards establishing a solid track record of proactive investigations, prosecutions and convictions;

5. take effective measures to reinforce the protection of human rights, including of Roma, and anti-discrimination policies, as well as implement property rights.

The Commission stands ready to support Albania’s efforts towards meeting these key priorities by engaging in a high level dialogue with the country.

Constructive and sustainable dialogue between the government and the opposition on EU-related reforms will be vital in securing Albania’s EU future. Albania’s constructive engagement in regional cooperation remains essential.

15. Bosnia and Herzegovina is at a standstill in the European integration process. The country needs to implement without further delay the Sejdic-Finci judgement of the European Court of Human Rights in order to move forward on the EU path. Addressing this judgement is not only crucial for the country to advance on the EU path but also for the legitimacy and credibility of the Presidency and the House of Peoples of Bosnia and Herzegovina which are to be elected in 2014. Bosnia and Herzegovina also needs urgently to establish a co-ordination mechanism on EU matters so that it can speak with one voice on the EU agenda.

Without the consensus necessary to move forward on the EU path, there is a strong risk that pre-accession assistance will not produce the expected results. Given that no solution has yet been found on the implementation of the Sejdic-Finci ruling and that the EU co-ordination mechanism has not been established, the same level of EU pre accession funds cannot be maintained.

The Commission has decided to postpone further discussions on IPA II until the country is back on track in the EU integration process. In the absence of tangible progress, Bosnia and Herzegovina risks losing significant IPA funds.

The EU is firmly committed to supporting Bosnia and Herzegovina and its citizens to fulfil their hopes and ambitions of making progress on their EU path. Further progress depends on the ability of the political leaders to work together and to agree on a compromise that unlocks the path to the EU. Agreeing such a compromise will help renew the trust of citizens in the capacity of the leadership to deliver on EU integration. This would pave the way for the entry into force of the Stabilisation and Association Agreement and thereafter for a credible membership application.

While there has been limited progress in the overall reform of the judicial system, a number of recommendations issued by the Commission in the framework of the Structured Dialogue on Justice are being implemented. This dialogue shows the potential of the enlargement agenda and the benefits of effective engagement. Some progress was also made in reducing the backlog of war crimes cases. Thorough preparations at all levels, supported by the EU and other international organisations, also made it possible to carry out the long awaited census. The country is faced with major challenges, however. Increased attention is needed on the rule of law, including judicial reform and the fight against corruption and organised crime, public administration reform, freedom of expression, including to address intimidation of journalists, and on tackling discrimination, including of Roma. Further economic reforms are needed to improve the weak business environment and create a single economic space in the country.

Following Croatia’s accession, the Commission finds it unacceptable that Bosnia and Herzegovina has to date refused to adapt the Interim Agreement/Stabilisation and Association Agreement to take into account its traditional trade with Croatia. The Commission calls on Bosnia and Herzegovina to revise its position urgently so that an adaptation based on traditional trade flows can be finalised as soon as possible.

16. Kosovo: 2013 has been a historic year for Kosovo on its path to the European Union. The decisions of the Council in June authorising the opening of negotiations for a Stabilisation and Association Agreement (SAA) represent the start of a significant new phase in EU-Kosovo relations. This is recognition for the progress made on key reforms and the substantial efforts made by Kosovo towards normalisation of its relations with Serbia. The negotiations on the Agreement will be formally opened this month. The Commission aims to complete these negotiations in spring 2014, to initial the draft agreement in summer and thereafter to submit the proposals for the Council to sign and conclude the Agreement.

Kosovo has actively and constructively worked towards a visible and sustainable improvement of relations with Serbia. In April, Kosovo’s engagement in the EU-facilitated dialogue resulted in the landmark ‘First agreement of principles governing the normalisation of relations’ with Serbia (the First Agreement), which was complemented in May by an implementation plan. Implementation has continued and has already led to a number of irreversible changes on the ground. The parties also reached agreement on energy and on telecommunications. Kosovo needs to remain fully committed to the continued normalisation of relations with Serbia and implementation of all agreements reached in the dialogue. The Commission will provide additional IPA funds to help the implementation of the April agreement in the communities concerned.

The rule of law continues to be a key priority for Kosovo. It is also a cornerstone of the Stabilisation and Association Process of which Kosovo is a part. The Structured Dialogue on the Rule of Law will therefore continue to support and guide Kosovo in this area, including in the discussions on the future of the EU rule of law mission in Kosovo, EULEX. Kosovo continues to take measures to address the priorities set out in the visa road map and the Commission will report in the first half of 2014.

Kosovo now needs to focus on the implementation of the reforms to meet its obligations under a future SAA. Particular attention should be paid to tackling organised crime and corruption, pursuing judicial and public administration reforms, ensuring the rights of persons belonging to minorities – including the Roma - and addressing trade issues. Kosovo needs to urgently address unemployment and the structural weaknesses that affect its labour market.

The Commission also calls on all people eligible to vote to participate in the upcoming municipal elections in November. This is an important opportunity for the local community in northern Kosovo to assert its democratic rights and to play a full part in the future development of Kosovo. The Commission expects that the authorities will ensure that the elections are inclusive and fully respect democratic principles.

17. Turkey is a candidate country and a strategic partner for the European Union. Turkey, with its large, dynamic economy, is an important trading partner for the EU and a valuable component of EU competitiveness through the Customs Union. Turkey has a strategic location, including on energy security, and plays an important regional role. The Commission underlines the importance of ongoing cooperation and dialogue on foreign policy issues. The Positive Agenda, launched in 2012, continues to support and complement accession negotiations with Turkey but is not a substitute for negotiations. The full potential of the EU-Turkey relationship is best fulfilled within the framework of an active and credible accession process, where the EU remains the anchor for Turkey’s economic and political reforms. More high level contacts between Turkey, the EU and its Member States would further strengthen cooperation.

Important progress on reforms has been made during the last twelve months. The fourth judicial reform package strengthens the protection of fundamental rights, including freedom of expression and the fight against impunity for cases of torture and ill-treatment. The government has started an historic peace process aimed at ending terrorism and violence in the Southeast of the country and paving the way for a solution of the Kurdish issue. Announced measures in the democratisation package presented in September 2013 foresee further reforms on a range of important issues, including the use of languages other than Turkish, rights of persons belonging to minorities and addressing the current high thresholds for representation in parliament and budget support to political parties. Implementation in cooperation with stakeholders and in line with European standards is key. The cross-party conciliation committee of the parliament, which was set up to draft a new constitution, has achieved agreement on a number of articles. With the adoption of a comprehensive law on foreigners and international protection, an important step has been taken towards adequate protection of asylum seekers. The Ombudsman Institution has been established and is already actively working to fulfil its role. Public debate on topics previously considered sensitive has grown. Turkey has also provided vital humanitarian assistance to large numbers of Syrians fleeing their country. Other positive developments include the ratification by Turkey of the Trans Anatolian Pipeline Agreement aimed at connecting with the Trans Adriatic Pipeline, bringing natural gas to the EU from the Caspian via Turkey.

The excessive use of force by police and the overall absence of dialogue during the protests in May/June have raised serious concerns. This underlines the urgent need for further reforms and the promotion of dialogue across the political spectrum and in society more broadly, as well as for respect of fundamental rights in practice. A number of administrative and judicial investigations have been launched into police conduct during the protests. These should be followed through in accordance with European standards and those responsible brought to account. The Ministry of Interior has issued two circulars aimed at improving procedures for police interventions during demonstrations. It is important to proceed with plans to establish a law enforcement monitoring mechanism so as to ensure the independent supervision of police conduct. Further changes are needed in the Turkish legal system, especially to strengthen freedom of expression and of the media, and freedom of assembly and of association; judicial practice should systematically reflect European standards. The fourth judicial reform package should be implemented in full. The wave of protests in June is also the result of the broad democratic reform that has taken place in the past decade and the emergence of a vibrant and diverse civil society that needs to be respected and consulted more systematically at every level of decision making, irrespective of who holds the majority in parliament.

All of these developments underline the importance of EU engagement and of the EU remaining the benchmark for reform in Turkey. To this end, accession negotiations need to regain momentum, respecting the EU’s commitments and established conditionality. In this regard, the opening of chapter 22 on regional policy represents an important step; the Commission looks forward to the IGC taking place at the earliest opportunity. Turkey has made progress in a number of other chapters. Turkey can accelerate the pace of negotiations by the fulfilment of benchmarks, meeting the requirements of the negotiating framework and by respecting its contractual obligations towards the EU.

Progress in the accession negotiations and progress in the political reforms in Turkey are two sides of the same coin. It is in the interest of both Turkey and the EU that the opening benchmarks for chapter 23: Judiciary and Fundamental rights and 24: Justice, Freedom and Security are agreed upon and communicated to Turkey as soon as possible with a view to enabling the opening of negotiations under these two chapters so as to enhance the EU’s dialogue with Turkey in areas of vital mutual interest and to support ongoing reform efforts. The signature of the EU-Turkey readmission agreement and the simultaneous start of the visa dialogue towards visa liberalisation would give a new momentum to EU-Turkey relations and bring concrete benefits for both. It is important that these two processes move forward and that the signature and ratification of the readmission agreement in Turkey be swiftly finalised. Further strengthening of EU-Turkey energy cooperation and progress in the accession negotiations would facilitate the interconnection and integration of the energy markets of the EU and Turkey.

The Commission stresses all the sovereign rights of EU Member States which include, inter alia, entering into bilateral agreements, and to explore and exploit their natural resources in accordance with the EU acquis and international law, including the UN Convention on the Law of the Sea. In line with the repeated Council and Commission positions from previous years, it is now urgent that Turkey fulfils its obligation of fully implementing the Additional Protocol and makes progress towards normalisation of relations with the Republic of Cyprus. This could provide new momentum to the accession process, allowing in particular progress to be made on the eight chapters covered by the Council conclusions of December 2006. The Commission also urges the avoidance of any kind of threat, source of friction or action that could damage good neighbourly relations and the peaceful settlement of disputes. Turkey’s commitment and contribution in concrete terms to a comprehensive settlement to the Cyprus issue is crucial.

18. As regards the Cyprus issue, the Commission expects the Greek Cypriot and Turkish Cypriot communities to resume fully-fledged negotiations on a comprehensive settlement under the auspices of the United Nations. The Commission expects both sides to quickly move into substance with the aim of swiftly reaching a successful conclusion. All parties are encouraged to contribute to establishing a positive climate between communities, through steps that benefit Cypriots in their daily lives, and to prepare the public for the necessary compromises. The Commission considers that the benefits of reunification will outweigh any concessions that may need to be made to this end. In particular, all Cypriots would fully profit from the exploitation of hydrocarbon resources. The Commission stands ready to further strengthen its support for the process, should the two parties request it and UN agree.

19. Iceland: Iceland had reached an advanced stage of accession negotiations when the new government decided to put the negotiations on hold, and the accession process has come to a standstill. The government has stated that it will undertake an assessment of the negotiations to date as well as on the developments in the European Union, which will be submitted to the Icelandic parliament for discussion in the coming months. The Commission has suspended preparatory work on IPA II. Under all circumstances, Iceland remains an important partner for the EU.

ANNEX

Conclusions on Montenegro, Serbia, the former Yugoslav Republic of Macedonia, Albania, Bosnia and Herzegovina, Kosovo, Turkey and Iceland

Montenegro

The opening of EU accession negotiations with Montenegro in June 2012 marked the beginning of a new and intensive phase for Montenegro on its path to the EU. The deep and lasting political reforms necessary to implement the new approach to chapter 23 on judiciary and fundamental rights and chapter 24 on justice, freedom and security will require strong political will and enhanced administrative capacity. The accession process needs to be inclusive, with strong involvement of civil society throughout.

During the reporting period Montenegro focused on the preparation of comprehensive action plans which will guide the country’s reform process on the rule of law. In June, the government adopted these action plans, which constitute the opening benchmarks for chapters 23 and 24. Following the adoption of the action plans the Commission in August recommended the opening of these chapters and, in September, the Council invited Montenegro to submit its negotiating positions. Work is proceeding in line with the new approach to these chapters set out in the framework for negotiations with Montenegro.

Screening meetings for all negotiating chapters were completed at the end of June 2013. So far, negotiations on two chapters (science and research; education and culture) have been provisionally closed. Opening benchmarks have been set for six chapters (free movement of goods; right of establishment and freedom to provide services; competition policy; agriculture and rural development; food safety, veterinary and phytosanitary policy; regional policy and coordination of structural instruments).

Public administration reform is a priority to ensure Montenegro has the capacity to apply the acquis, to tackle politicisation and increase transparency and professionalism of the civil service. Events over the last months, in particular the alleged use of public funds for party political purposes, have highlighted the importance of strengthening citizens’ trust in public institutions. In this context, it is important to ensure that investigations are completed thoroughly and rapidly and that any appropriate action is taken. Adequate follow-up of the work of the parliamentary group on the electoral process is also needed. Montenegro also needs to ensure an adequate follow-up to the long-standing OSCE/ODIHR recommendations on its election legislation and establish a clear, broadly-accepted delineation between public and party interests. Montenegro continues to sufficiently meet the political criteria for membership in the EU. Parliamentary and presidential elections of October 2012 and April 2013, respectively, have not altered the strategic priority given by the country to the objective of EU accession. While these elections were qualified by the OSCE/ODIHR as professionally and efficiently administered, some shortcomings were also identified. Non-recognition of presidential election results by the opposition resulted in a two-month boycott of parliament by the largest opposition group. The boycott was ended when a cross-party agreement was reached to form two parliamentary bodies to investigate allegations of abuse of public funds for election purposes and to draft recommendations to improve the electoral process. The parliamentary inquiry committee on the alleged misuse of public funds completed its work in July. The parliament failed to agree on conclusions that would, inter alia, establish political responsibility and limited itself to a technical report. Judicial follow-up remains to be ensured.

A working group on building trust in the electoral process has already adopted a draft law on a single voters’ list, to replace the law on voters’ register, as well as draft amendments to the law on personal identity cards. In the area of rule of law, parliament adopted the long awaited amendments to the constitution on strengthening the independence of the judiciary, which are broadly in line with the recommendations of the Venice Commission.

Montenegro is actively involved in regional and international police and judicial co-operation. While some verdicts related to drug smuggling were issued, only a few cases referred to crimes such as trafficking in human beings and money laundering. Some first-instance convictions in cases of organised crime and corruption have been overturned. Impunity in relation to cases of ill-treatment of detainees remains a serious concern.

Montenegro has taken a leading role in promoting regional cooperation, notably through its proposal for the establishment of the ‘Western Balkans Six’ initiative.

As regards the International Criminal Court, Montenegro still maintains a 2007 bilateral immunity agreement with the United States, granting exemptions from the jurisdiction of the Court. Montenegro needs to align with the EU position.

Looking ahead, Montenegro needs to ensure the political and judicial follow-up to the alleged misuse of public funds for party political purposes. It also needs to carry through the work of the parliamentary group on the electoral process, by adopting legislative and other measures to broaden political support and enhance public trust in the electoral process and state institutions.

Enhancing public trust in the state is closely linked to further strengthening the rule of law. The effective and timely implementation of Montenegro´s action plans in these areas will therefore play a central role. Particular focus should be given to reforms improving the independence, accountability and professionalism of the judiciary, through reinforcing integrity safeguards, as well as merit-based appointments. The implementation of the constitutional amendments will play an important role in this regard. In parallel, Montenegro needs to develop its track record regarding the systematic investigation and prosecution of cases of corruption and organised crime, including high level cases, as well as regarding the imposition of sanctions that are commensurate to the gravity of the crimes committed.

Freedom of expression needs to be strengthened, including by properly investigating all cases of violence and threats against journalists and bringing perpetrators to justice. Increased attention is required to tackle the shortcomings in the protection of human rights by judicial and law enforcement authorities, especially as regards vulnerable groups. Roma face discrimination, especially in terms of social and economic rights, and remain under-represented at political level. Lesbian, gay, bisexual, transgender and intersex (LGBTI) activists are still exposed to discrimination, attacks are rarely reported and penalties still need to be reinforced.

The adoption of the plan for the reorganisation of the public sector and the entry into force of the new law on civil servants and state employees are positive steps. Fair and competitive recruitment of civil servants is a precondition to develop a professional administration. The undated resignation letters are an issue of concern and should be returned to the staff who signed them.

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

After entering in recession in 2012, the country came out of recession in 2013. The resilience of tourism and foreign direct investments (FDI) together with an increase of electricity exports supported the recovery, compensating for a weak domestic demand. The current account deficit is declining, but still remains very high. In July, the aluminium producer KAP was put into bankruptcy procedure, which represents a risk to public finances, in view of the considerable size of contingent liabilities. Unemployment remained very high. Credit growth turned positive after four years of contraction, but the high levels of non-performing loans still weigh on bank capitalisation and hence, on credit supply.

To cope with the existing economic challenges and to reduce external imbalances, Montenegro needs to strengthen competitiveness, by improving productivity and attracting further FDI into more sectors than tourism and real estate. The establishment of a sound business environment continues to be hampered by the weak rule of law and corruption. The high unemployment rate requires bridging the gap between supply and demand of labour skills and allowing more independent wage setting at company level. It also requires the strengthening of the public employment service in order to implement the activation policies and establish an inclusive and efficient labour market. Authorities should consider objectively the viability of the aluminium conglomerate under market conditions and the best possible solution without exacerbating the pressure on public finances. The path of fiscal consolidation should be continued, including efforts to collect tax arrears. The high level of non-performing loans remains a matter of concern and calls for a reinforced banking supervision enforcing adequate provisioning. The informal sector remains an important challenge.

As regards the ability to take on the obligations of EU membership, Montenegro is at varying degrees of alignment. Strengthening of administrative capacities is a cross-cutting challenge in many areas. In chapters such as public procurement, company law, intellectual property law, information society and media, taxation, and enterprise and industrial policy, Montenegro is sufficiently advanced for the Commission to have recommended the opening of accession negotiations.

In other areas, such as free movement of goods; right of establishment and freedom to provide services; agriculture and rural development; food safety, veterinary and phytosanitary policy; and regional policy and coordination of structural instruments, opening benchmarks – often including strategies for alignment with the acquis – have been set. These benchmarks should now guide Montenegro’s work in the coming months. For the competition policy chapter, elaborating a restructuring plan for the aluminium producer KAP is particularly urgent, in order to bring Montenegro in line with its obligations under the Stabilisation and Association Agreement. In the area of environment and climate change, considerable efforts, including more strategic planning, are needed to ensure alignment and implementation of the acquis.

Serbia

2013 has been a historic year for Serbia on its path to the European Union. Serbia has actively and constructively worked towards a visible and sustainable improvement of relations with Kosovo. In April, Serbia’s engagement in the EU-facilitated dialogue resulted in the landmark ‘First agreement of principles governing the normalisation of relations’ (the First Agreement), which was complemented in May by an implementation plan. The two parties have in particular agreed that neither side will block, or encourage others to block the other side’s progress on their respective EU paths. This represents a fundamental change in the relations between the two sides. Implementation of the First Agreement has continued and has already led to a number of irreversible changes on the ground. The parties have reached agreements on energy and on telecommunications. There has also been progress in the implementation of agreements reached in the technical dialogue and Serbia’s cooperation with EULEX has continued to improve in a number of areas.

Serbia has reinvigorated the momentum of reforms and has stepped up high-level contacts with neighbouring countries in an effort to ensure a positive contribution to regional cooperation. Serbia has taken some steps to consolidate its fiscal situation and to improve the business environment. It continued aligning its legislation to the requirements of the EU legislation in many fields, which are now monitored within the National Plan for the Adoption of the Acquis for the period 2013-2016. The Stabilisation and Association Agreement between the EU and Serbia entered into force on 1 September.

As a result of the significant progress achieved, a new phase has been opened in relations between Serbia and the European Union. The European Council decided to open accession negotiations on 28 June, following the Commission’s recommendation of 22 April. The Commission submitted its proposal for a framework for negotiations to the Council on 22 July. The Commission also started the analytical examination of the EU acquis (‘screening’) in September. The negotiating framework is due to be adopted by the Council soon and confirmed by the European Council with a view of holding the first inter-governmental conference on Serbia’s accession in January 2014 at the very latest.

In this new, demanding phase of EU-Serbia relations, Serbia will need to further intensify its efforts to achieve full compliance with all membership criteria. It will also be crucial to communicate regularly on the benefits and opportunities the accession process creates for all citizens in Serbia, all the way to accession.

Among the key challenges it faces, Serbia will need to pay particular attention to the key areas of rule of law, particularly the reform of the judiciary, fight against corruption and fight against organised crime, public administration reform, independence of key institutions, media freedom, anti-discrimination and protection of minorities.

Serbia needs to remain fully committed to the continued normalisation of relations with Kosovo and implementation of all agreements reached in the dialogue, including by cooperating with EULEX as appropriate. Serbia needs to complete the implementation of the First Agreement in particular on police, justice and municipal elections in Kosovo. It is important that Serbia continues to encourage wide participation of Kosovo Serbs in the forthcoming lo