TABLE OF CONTENTS

1........... Introduction. 3

1.1........ Preface. 3

1.2........ Context 3

1.3........ Relations between the EU and Turkey. 3

2........... Political criteria and enhanced political dialogue. 5

2.1........ Democracy and the rule of law.. 5

2.2........ Human rights and the protection of minorities. 13

2.3........ Regional issues and international obligations. 17

3........... Economic criteria. 18

3.1........ The existence of a functioning market economy. 18

3.2........ The capacity to cope with competitive pressure and market forces within the Union. 23

4........... Ability to take on the obligations of membership. 24

4.1........ Chapter 1: Free movement of goods. 24

4.2........ Chapter 2: Freedom of movement for workers. 26

4.3........ Chapter 3: Right of establishment and freedom to provide services. 26

4.4........ Chapter 4: Free movement of capital 26

4.5........ Chapter 5: Public procurement 27

4.6........ Chapter 6: Company law.. 28

4.7........ Chapter 7: Intellectual property law.. 28

4.8........ Chapter 8: Competition policy. 29

4.9........ Chapter 9: Financial services. 30

4.10...... Chapter 10: Information society and media. 31

4.11...... Chapter 11: Agriculture and rural development 32

4.12...... Chapter 12: Food safety, veterinary and phytosanitary policy. 33

4.13...... Chapter 13: Fisheries. 34

4.14...... Chapter 14: Transport policy. 35

4.15...... Chapter 15: Energy. 36

4.16...... Chapter 16: Taxation. 37

4.17...... Chapter 17: Economic and monetary policy. 38

4.18...... Chapter 18: Statistics. 39

4.19...... Chapter 19: Social policy and employment 39

4.20...... Chapter 20: Enterprise and industrial policy. 41

4.21...... Chapter 21: Trans-European networks. 42

4.22...... Chapter 22: Regional policy and coordination of structural instruments. 43

4.23...... Chapter 23: Judiciary and fundamental rights. 44

4.24...... Chapter 24: Justice, freedom and security. 64

4.25...... Chapter 25: Science and research. 68

4.26...... Chapter 26: Education and culture. 69

4.27...... Chapter 27: Environment and climate change. 70

4.28...... Chapter 28: Consumer and health protection. 72

4.29...... Chapter 29: Customs union. 73

4.30...... Chapter 30: External relations. 74

4.31...... Chapter 31: Foreign, security and defence policy. 75

4.32...... Chapter 32: Financial control 76

4.33...... Chapter 33: Financial and budgetary provisions. 77

1. Introduction 1.1. Preface

This report largely follows the same structure as the Commission’s previous regular reports to the Council and the Parliament on progress made by Turkey in preparing for EU membership. The report:

– briefly describes the relations between Turkey and the European Union;

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

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

– reviews Turkey’s capacity to take on the obligations of membership, i.e. the acquis expressed in the Treaties, the secondary legislation, and the policies of the Union.

This report covers the period from October 2012 to September 2013. Progress is measured on the basis of decisions taken, legislation adopted and measures implemented. As a rule, legislation or measures which are under preparation or awaiting parliamentary approval have not been taken into account. This approach ensures equal treatment across all reports and enables an objective assessment.

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

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

1.2. Context

The European Council of December 1999 granted Turkey the status of candidate country. Accession negotiations with Turkey were opened in October 2005. The Association Agreement between Turkey and the then EEC entered into force in December 1964. Turkey and the EU formed a Customs Union in 1995.

1.3. Relations between the EU and Turkey

The Positive Agenda launched in 2012 continued to support and complement the accession negotiations through enhanced cooperation in a number of areas of joint interest: political reforms, alignment with the acquis, dialogue on foreign policy, visas, mobility and migration, trade, energy, counter-terrorism and participation in EU programmes. The Commission assessed progress made in the framework of the working groups and informed Turkey and the Member States which benchmarks it considers to be met. The Commission also acknowledged progress achieved on important requirements as regards the judiciary and fundamental rights.

The Commission prepared a roadmap for visa liberalisation in line with the Council conclusions of 21 June 2012 inviting it to take steps towards visa liberalisation as a gradual and long-term objective in parallel with the signing of the readmission agreement between Turkey and the EU. Signing the readmission agreement to allow for an effective start of the process and improved cooperation in this key area in EU‑Turkey relations remains crucial.

Turkey and the Commission continued efforts to enhance their cooperation on energy, focusing mainly on electricity and gas.

Turkey’s readiness to start accession negotiations on individual chapters was assessed on the basis of screening reports. Of a total of 33 reports, eight are pending in the Council, while one has yet to be delivered. Work has been interrupted over the years on a number of negotiating chapters due to lack of consensus amongst Member States.

So far, accession negotiations have been opened on 13 chapters (Science and research; Enterprise and industry; Statistics; Financial control; Trans-European networks; Consumer and health protection; Intellectual property law; Company law; Information society and media; Free movement of capital; Taxation; Environment; and Food safety, veterinary and phytosanitary policy), one of which (Science and research) was provisionally closed. In June 2013, the Council agreed to open Chapter 22 — Regional policy and coordination of structural instruments, negotiations on which will begin in the autumn.

The conclusions on Turkey adopted by the Council (General Affairs and External Relations) on 11 December 2006 and endorsed by the European Council on 14/15 December 2006 remain in force. They stipulate that negotiations will not be opened on eight chapters[3] relevant to Turkey’s restrictions regarding the Republic of Cyprus and no chapter will be provisionally closed until the Commission confirms that Turkey has fully implemented the Additional Protocol to the Association Agreement. As long as these restrictions remain in place on vessels and aircraft registered in Cyprus or whose last port of call was in Cyprus, Turkey will not be in position to fully implement the acquis relating to these eight chapters.

The enhanced political dialogue between the EU and Turkey has continued. A political dialogue meeting at political directors’ level was held in January 2013. In line with the call in the December Council conclusions for further intensification of the foreign policy dialogue, regular discussions were also held on inter alia the Western Balkans, Syria, North Africa, the Middle East, Afghanistan, Pakistan, Russia, South Caucasus, Central Asia, and on counter-terrorism and non-proliferation. Turkey continues to be actively involved in its wider neighbourhood and is an important regional player. The Council recognised Turkey’s role on Syria, in particular with regard to support provided to Syrians fleeing violence across the border. A number of high-level visits to the European institutions took place during the reporting period.

Turkey froze its relations with the Presidency of the Council of the EU during the second half of 2012 and during that period did not align itself with EU positions or statements in international fora. Recalling the European Council conclusions of 9 December 2011, the Council underlined that the Presidency of the Council of the EU is provided for in the Treaty on European Union, and called for full respect of its role.

Progress on the reform priorities is encouraged and monitored by the bodies set up under the Association Agreement. The Association Committee met in April 2013 and the Association Council in May 2013.

Turkey participates in the multilateral economic dialogue with the Commission and the Member States to prepare the country for participation in multilateral surveillance and economic policy coordination under the EU’s Economic and Monetary Union.

The Commission also launched an evaluation of the EU‑Turkey Customs Union, 18 years after its entry into force in 1996. Its aim is to assess the impact of the Customs Union on both parties and the opportunities arising were it to be updated. The final report from the evaluation is expected by end 2013. Bilateral trade between the EU and Turkey totalled €123 billion in 2012. Turkey continues to be the EU’s sixth biggest trading partner, while the EU is Turkey’s biggest. 38% of Turkey’s total trade is with the EU and almost 71% of foreign direct investment in Turkey – with a strong high-technology component – comes from the EU. However, Turkey maintains legislation that violates its commitments under the Customs Union and a number of Turkey’s commitments on removing technical barriers to trade remain unfulfilled. The EU has urged Turkey to remove all remaining restrictions on the free movement of goods, including on means of transport regarding Cyprus, and to implement the Customs Union fully. Turkey has also expressed concerns, pointing inter alia to serious difficulties in concluding free trade agreements with some of the countries with which the EU has signed or is negotiating such agreements and stressing that the resulting asymmetry disrupts the proper functioning of the Customs Union.

As regards financial assistance, around €903 million have been earmarked for Turkey for 2013 from the Instrument for Pre-accession Assistance (IPA). In view of the next Multi-annual Financial Framework (2014-20), some changes have been introduced in a shift towards a more sectorally integrated approach to programming IPA financial assistance. Substantial parts of IPA 2013 Component I have been programmed through sectoral intervention in the priority sectors of justice, home affairs and fundamental rights, energy, and agriculture. The government and the Commission are currently preparing a comprehensive Country Strategy Paper for the period 2014-2020, which will provide a coherent and strategic framework for financial assistance under the new Instrument for Pre-Accession Assistance (IPA II). Turkey will need to continue strengthening its administrative capacity in order to make best use of IPA funding in 2014-20.

Turkey participates actively in the following EU Programmes: the Seventh Research Framework Programme, Customs 2013, Fiscalis 2013, the Competitiveness and Innovation Framework Programme (including the Entrepreneurship and Innovation Programme and the Information Communication Technologies Policy Support Programme), Progress, Culture 2007-13, Lifelong Learning and Youth in Action. IPA funds are used to meet part of the costs of participation in most of these programmes. Turkey also cooperates actively with the European Environment Agency. The agreement on the participation of Turkey in the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) has been ratified but still needs to be officially notified to the EU. Participation of Turkey in Union Programmes is important for both Turkey and the EU.

2. Political criteria and enhanced political dialogue

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

2.1. Democracy and the rule of law

In late May, protests started against an urban development project in Gezi Park in the centre of Istanbul. The protests grew, encompassing broader demands and spreading to other cities. Overall, the demonstrations were peaceful, despite the involvement of a small number of violent protestors. At several instances the police used excessive force against demonstrators. Six people died, including one policeman, thousands were injured, some of them severely, over 3 500 were taken into police custody, of whom over 112 remained in detention on judge’s decision, including members of NGOs participating in the Taksim Solidarity Platform (a grouping of associations active on the Gezi Park issue). Out of that figure 108 persons were detained on suspicion of being a member of a terror organisation.

Following the alleged violations of human rights during the demonstrations and complaints lodged in this context, based on information provided by the Turkish authorities, the Ministry of the Interior has so far launched administrative investigations into 164 law enforcement officers including 32 police chiefs and 30 police officers have been suspended from duty. Some cases were transferred to the courts and the cases are ongoing.

Procedures to adopt a draft law establishing a Law Enforcement Monitoring Commission as an independent supervisory body for police offences remain pending. With an independent body, it would be possible to conduct independent, impartial and effective investigations, with the involvement of victims, into all allegations of misconduct by security forces, in accordance with the case law of the European Court of Human Rights.

In June and July the Ministry of the Interior issued two circulars which improve procedures for intervention during demonstrations. Turkish legislation and its implementation concerning the right to assembly and intervention by law enforcement officers are still to be brought further in line with European standards, which focus on the peacefulness of demonstrations. Improvements in the legal framework need to be complemented with appropriate training for law enforcement officers.

The new Ombudsman has received 23 complaints relating to the protests and has started inquiries in line with the institution’s mandate. The National Human Rights Institution has set up an ad hoc Commission tasked to draft a report on alleged human rights abuses during the protests.

On 30 September 2013 the government announced a democratisation package. For the implementation of the package both legislation and decrees will need to be adopted by the parliament and government, respectively. The package opens the perspective for changes to the current 10% threshold for representation in parliament and provides for the decrease of the threshold for budget support to political parties, the easing of conditions for the establishment of political parties and the removal of restrictions on political party membership. It would also allow the conduct of political activity in languages and dialects other than Turkish, education in languages and dialects other than Turkish in private schools, the removal of criminal sanctions for the use of the letters Q, X and W used in Kurdish and the change of names of villages back to the versions which preceded the 1980 military coup. The package also provides for criminal sanctions for non-respect of lifestyles, the increase of punishment for hate crimes and foresees the establishment of an equality and anti-discrimination body.

As regards freedom of assembly, the democratisation package provides that the authorities will consult stakeholders before making decisions on rallies and demonstrations, extends the time periods within which rallies and demonstrations can be held, and gives authority for monitoring and terminating the rallies to an ad hoc body including representatives of demonstrators. It also provides that data protection legislation will be submitted to parliament and that an institute on Roma language and culture will be established within a university. On 7 October 2013 the property of Mor Gabriel Monastery was returned to the Monastery Foundation. Since 8 October 2013 the school oath is no longer recited by primary school pupils.

These measures hold out the prospect to address concerns covered in more detail below. Implementation in cooperation with stakeholders and in line with European standards will be key.

Constitution

Work on a new Constitution was carried out in the Parliamentary Conciliation Committee, on which all four political parties were represented equally. In an initial phase of public consultation, Members of the Committee took part in public events arranged by civil society organisers around Turkey, which stimulated debate.

The Committee reached consensus, in principle, on close to 60 articles, including a number of provisions regarding the protection of fundamental rights and freedoms. The parties also agreed on a number of contentious issues, most notably the attachment of the Chief of General Staff to the Ministry of Defence and the replacement of the current Higher Education Board as a constitutional institution with a more independent structure.

The Conciliation Committee’s negotiations focusing on the proposals of the four political parties took place in closed sessions. No records were published of discussions or of submissions to the Committee. The Committee has not yet consulted the Venice Commission.

There was no consensus on key political issues such as the separation of powers or a new definition of citizenship without ethnic references, a central demand of the pro-Kurdish Peace and Democracy Party (BDP). Other contentious subjects were mother tongue education, equality and non-discrimination, issues related to the link between state and religion, the possible amendment of the first three ‘irrevocable’ articles of the current Constitution and decentralisation.

Implementation of the 2010 constitutional amendments proceeded, with legislation providing for the right of individuals to petition the Constitutional Court entering into force in September 2012 and a law on collective bargaining, strikes and lockouts for private sector employees adopted in October. However, the adoption of key implementing laws on the protection of personal data and military justice, and laws introducing affirmative action measures to promote gender equality, are still pending.

Overall, the work the cross-party Parliamentary Conciliation Committee continued. However, consensus was limited to 60 articles and clarity and transparency on procedure and follow-up was lacking. The Constitution will need to provide for adequate checks and balances fully guaranteeing freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. The work would benefit from consultations with the Venice Commission. Steps were taken to implement the 2010 constitutional amendments.

Parliament

A number of important reforms, including the 4th Judicial Reform Package, were adopted in the legislative term in moves towards compliance with EU standards.

Work was re-launched on a comprehensive reform of rules and procedures which had been abandoned twice since 2008 due to lack of consensus among the political parties.

However, work on political reforms and parliament’s ability to perform its key functions of law-making and oversight of the executive continued to be hampered by a persistent lack of dialogue and spirit of compromise among political parties. There was a pattern of insufficient preparation and consultation — within and outside parliament – prior to the adoption of key sensitive legislation. There was no progress in the long-standing discussion on the need for systematic consultation with civil society and other stakeholders in law-making.

There was no progress in improving parliament’s capacity to monitor performance and audit public expenditure (see Public Administration). This generated criticism from the opposition and civil society regarding a lack of government accountability. Furthermore, parliament’s oversight functions continued to suffer from the weakness of other scrutiny instruments at its disposal.

While the scope of parliamentary immunity in relation to corruption charges is particularly wide, shortcomings in anti-terror legislation and a restrictive interpretation of Article 14 of the Constitution continued to pose a risk to MPs’ freedom of expression. (See Chapter 23 — Judiciary and fundamental rights)

The 10% national threshold for a party to obtain seats in parliament remains the highest among Council of Europe member states. This raised criticism by the Council of Europe in the Parliamentary Assembly’s Resolution on Post-monitoring Dialogue with Turkey in April. There was no progress on alignment with European standards of laws on the closure of political parties or on the financing of political parties and election campaigns. The democratisation package announced on 30 September by the government opens the perspective for changes to the 10% threshold for representation in parliament and provides for the decrease of the threshold for budget support to political parties.

Overall, it is positive that a comprehensive reform of rules and procedures of the parliament was launched to move beyond a confrontational approach and to improve parliament’s functioning. Still, more attention needs to be paid to the adoption of an inclusive approach to law-making, with systematic consultation of all stakeholders, including on sensitive issues. The overall scope and arbitrary interpretation of parliamentary immunities remained a major concern. The legal framework on elections and political parties needs to be aligned with European standards.

President

The President maintained his conciliatory role across Turkey’s political spectrum and society, warning against polarisation, including during the demonstrations in May and June, when he defended the right to peaceful assembly and dissent.

He also continued to stress the need to pursue political reforms in line with Turkey’s EU accession perspective.

The President lent active support to the peace process aimed at ending terrorism and violence in the Southeast of the country, the ultimate purpose of which he defined as raising the democratic standards of Turkey.

Government

The government maintained its overall commitment to further democratisation and political reforms. The ministerial Reform Monitoring Group, in which key Ministers coordinate policies for EU integration, met twice.

Nevertheless, a divisive political climate prevailed; the government notably adopted overall an uncompromising stance during the protest late May and early June, including a polarising tone towards citizens, civil society organisation and businesses.

The government did not conduct sufficient consultations with stakeholders on the adoption of key policies and legislation and failed to carry out adequate impact assessments. Examples included the Law on Metropolitan Municipalities, the draft Law on the Court of Accounts, and legislation restricting the advertisement and sale of alcoholic beverages. An exception was the Law on Foreigners and International Protection, which saw extensive consultation.

There was some progress in devolving power to local governments. The Law on Metropolitan Municipalities, adopted in November, extended the scope of the municipalities’ competences, thus partially addressing Council of Europe criticism of some small municipalities’ weak capacity to deliver public services. It did not, however, implement Council of Europe recommendations on strengthening municipalities through devolution of powers or enabling them to raise their own revenue.

Decentralisation and the devolution of powers to local government were discussed in the context of work on a new Constitution and in relation to the peace process. While all parties except the Peace and Democracy Party (BDP) advocate centralised public administration, there emerged a growing consensus on the need to lift Turkey’s reservation on the Council of Europe’s European Charter of Local Self-Government. There was discussion on introducing a system of elected governors, without firm commitment at this stage.

Formal introduction of an announced arrangement to legalise the provision of public services in languages other than Turkish, notably Kurdish, as recommended by the Council of Europe’s Congress of Local and Regional Authorities, is pending.

Numerous investigations into the Union of Communities of Kurdistan (KCK), the alleged urban wing of the Kurdistan Workers’ Party (PKK), which is on the EU list of terrorist organisations, continued to lead to the arrest and detention of many BDP-affiliated Kurdish politicians, party activists, locally elected mayors and members of municipal councils, adversely affecting the exercise of regional and local democracy. (See Situation in East and Southeast)

Overall, the government continued to express its commitment to further democratisation and political reforms. A polarising political climate prevailed, marked by a lack of dialogue and of a spirit of compromise, as illustrated by the government’s handling of major civil protests in May-June. The pattern of adopting key policies and proposing legislation without sufficient consultation was broadly maintained. There was some progress in devolving powers to local government.

Public administration

A civil service reform aiming to improve public sector human resources management and ensure merit-based advancement is still needed. Ministerial powers over independent regulatory authorities, which run counter to EU legislation, remained in place. Administrative simplification and work on providing basic public services online (e-government) continued. The government has launched a series of projects and actions aiming at increasing efficiency of public administration.

No progress was made with developing regulatory impact assessments with a view to increasing the quality of legislation. In particular, no regulatory impact assessment was conducted prior to the adoption of key legislation.

Parliamentary deliberations on the 2013 general budget were held in December without proper feedback on previous public expenditure management. This was due to a government-sponsored amendment to the Turkish Court of Accounts (TCA) Law adopted in July 2012, which weakened the TCA's legal mandate and working procedures, including parliamentary oversight. This amendment was repealed by the Constitutional Court in December 2012 and a subsequent draft law, which might result in a distortion of the TCA’s mandate and its ability to carry out independent and effective audit, was submitted to parliament in April 2013. Although the new law mandates the TCA to carry out all types of government auditing, performance audits, which would be an important element to boost public administration reform, do not seem to be carried out.

Implementation of the Law on Public Financial Management and Control continued with the introduction of strategic planning and performance budgeting. All line ministries and major public agencies prepared performance programmes and accountability reports. However, such planning activities need to be better coordinated with the respective budgets. The internal audit system is not effective and continues to suffer from confusion between the objectives, roles and responsibilities of internal audit and inspectorate functions.

Overall, external audit and public financial management and control need to be strengthened, but recent proposals for amending the TCA Law raise serious concerns as to the independence and effectiveness of TCA audit and control. Efforts need to be made to increase transparency and accountability in all public institutions. A comprehensive civil service reform is still needed.

Ombudsman

Parliament elected Turkey’s first Head Ombudsman in November 2012 and subsequently appointed five Ombudsmen. The Ombudsman Institution became operational and began receiving complaints in April 2013. The regulation establishing the modus operandi of the Institution follows the recommendations of the European Ombudsman and provides for final decision-making power to remain with the Head Ombudsman. It also provides for a simple application procedure and the admissibility of applications in languages other than Turkish. Discussions are ongoing on draft amendments encompassing the right of own initiative, on-the-spot checks and the follow-up of Ombudsman’s recommendations by the parliament. As of July 2013, the Institution had received more than 3 400 applications concerning alleged violations relating to human rights, the rights of the disabled, civil service-related matters, social security, property rights, financial, economic and tax issues and the conduct of local administrations. As regards administrative acts of the Turkish Armed Forces, the Ombudsman considered eligible a number of complaints on dismissal and mistreatment during military service. The Ombudsman received 23 complaints relating to the Gezi Park protests, which were found eligible, without requiring prior exhaustion of administrative remedies. The Ombudsman has engaged with the EU and European Ombudsman Institution, and confirmed his participation in the European Network of Ombudsmen. He should systematically seek to identify best practices in colleague institutions belonging to this Network with a view to benefiting from these and adapting them to the situation in Turkey.

Overall, the fact that the Ombudsman Institution became operational so quickly was an important step towards safeguarding citizens’ rights. The Institution took a number of steps in the right direction. However, further efforts are needed to consolidate the trust of civil society in the Ombudsman Institution, to grant the Ombudsman the right of own initiative and of conducting on-the-spot checks, and to provide for parliamentary follow-up of his recommendations.

Civilian oversight of the security forces

Civilian oversight of the security forces was further consolidated. The General Staff abstained from exerting pressure on political issues beyond its remit. A law overhauling the Turkish Armed Forces’ disciplinary system, adopted in January 2013, provides for the conversion of disciplinary tribunals into administrative disciplinary committees, the abolition of solitary confinement and the strengthening of appeal mechanisms for disciplinary punishments.

The report of an inter-party Parliamentary Commission tasked with investigating coups and alleged ‘deep state’ networks was published in December. Judicial investigations into the 1980 coup and the ‘Postmodern Coup’ of 28 February 1997 continued. In November, a Court heard the two surviving perpetrators of the 1980 coup via video-conference. 103 suspects have been charged with involvement in the 28 February ‘Postmodern Coup’ of 1997.

Amendments made to the Law on Provincial Administrations, which is used as the legal basis for the use of military force upon request of governors in domestic security incidents, gave civilian authorities a broader oversight of military operations. In July, the Internal Service Law of the Turkish armed forces, which broadly defined the duties of the military and contained one article to justify military intervention in politics, was amended. Military service has been re-defined and the amendment also clarified that members of the Turkish Armed Forces cannot engage in political activities. Civilian oversight of the Gendarmerie’s law enforcement activities, in particular, remained insufficient.

There was only limited access to the Turkish Court of Accounts audit reports on security, defence and intelligence agencies.

Military and civilian judicial investigations into the December 2011 Uludere incident in which 34 civilians lost their lives as a result of a military airstrike remained subject to a secrecy decision and were not finalised. No administrative measure was taken to punish any individual for the incident. A parliamentary investigation report was published — with dissenting opinions — but did not clarify political or operational responsibility.

The civilian and military court systems continued to run in parallel. Increasing civilian control of the military requires the amendment of legal provisions on the composition and powers of the Supreme Military Council. Pending the finalisation of a new constitution, the Chief of the General Staff continued to report to the Prime Minister rather than the Minister of Defence.

Overall, progress was made in consolidating civilian oversight, in particular with the parliamentary investigation into past military coups and legislative amendments, confirming the profound shift in the balance of civil-military relations in favour of the civilian authorities. However, further reforms are needed, particularly as regards the military justice system and civilian oversight of the Gendarmerie.

Civil society

There is a growing and active civil society in Turkey. The Gezi Park protest in Istanbul and related protests across Turkey from May-June reflected the emergence of vibrant, active citizenry.

Civil society in Turkey needs to overcome a number of challenges. As illustrated during the Gezi Park events, it is still not widely considered by those traditionally involved in politics as a legitimate stakeholder in democracy. Government-civil society and parliament-civil society relations should be improved through systematic, permanent and structured consultation mechanisms at policy level, as part of the legislative process and with regard to non-legislative acts at all levels of administration. The Ministry of the Interior has launched consultations with civil society actors in the preparation of a law on the collection of aid for associations. Legislation, including social and tax legislation, needs to facilitate the funding of civil society organisations and guarantee freedom of association according to European standards.

The legal framework hampers the functioning of civil society organisations (CSOs) and the extensive bureaucracy often still discourages civil society participation. There are no inherent participatory mechanisms whereby CSOs can voice demands and be involved in policy-making; rather, the approach can be ad hoc and often limited to specific phases of policy design as opposed to the entire policy cycle (including the monitoring of implementation). The legislation on associations and foundations should be implemented so as to empower the former more. Currently, problems arise in the areas of penalties and auditing. Other legislation continues to be interpreted restrictively vis-à-vis CSOs. (See Freedom of association).

Some civil society activities are regulated by restrictive primary and secondary legislation, e.g. limiting the right to publish press statements and requiring advance notification of demonstrations, which are often confined to a limited number of designated sites and dates.

CSOs’ financial environment is characterised by insufficient tax and other incentives for private donations and sponsorship, making many of them dependent on public (often international) project grants. Public funding for CSOs is not sufficiently transparent and rule-based. Public funds are allocated to CSOs via ministries and through project partnership mechanisms, rarely through grant allocations or service contracts. Tax exemption and public benefit status are granted to a very limited number of CSOs by Council of Ministers decision. Social enterprises are not defined in legislation as a separate form of legal entity. CSOs need support to enhance their lobbying power and broaden their appeal to Turkish society.

The EU-Turkey Civil Society Dialogue programmes continued and have now involved more than 1 600 CSOs in Turkey. They contributed to civil society development and a greater recognition of CSOs at local level and helped to increase the capacities, partnerships and visibility of individual CSOs. Still, more effort is needed if the programmes are genuinely to promote sustainable contacts between EU and Turkish CSOs.

Judicial system

The High Council of Judges and Prosecutors continued with the implementation of its 2012‑16 strategic plan, broadly promoting the independence, impartiality and efficiency of the judiciary. Criticisms of the legislation on the High Council, including of the role given to the Minister of Justice and to the Under-Secretary of the Ministry, have, however, not been addressed as yet. In any constitutional reform, Turkey needs to consolidate the achievements of the 2010 constitutional amendments, in particular that more than half of the members of the Council are judges chosen by their peers from all levels of the judiciary, and address the shortcomings such as the role given to the Minister of Justice and to the Undersecretary of the Ministry.

The 3rd Judicial Reform Package, adopted in July 2012, started to produce results, in particular as regards detention (including its length). The 4th Judicial Reform Package provides judicial remedies for a number of issues on which Turkey had been condemned by the European Court of Human Rights. It narrowed the scope of terror-related crimes by removing the link between the imparting of ideas through publications, statements, speeches, etc., and the use or threat of use of coercion or violence. If implemented in line with European standards, these changes should have a positive impact on freedom of expression. The 2009 judicial reform strategy is still being revised. Further efforts are needed to consolidate the independence, impartiality and efficiency of the judiciary, including the criminal justice system.

Concerns about legislation and practice in the criminal justice system remained, in particular as regards the capacity of prosecutors to lead investigations, limited access by the defence to prosecution files, poor implementation of cross-examination at trial, and the poor quality or lack of reasoning in indictments. There was no significant change in the gender balance in the profession, with women making up approximately a quarter of the judiciary and underrepresented in particular in prosecutorial and managerial positions. The scope and quality of legal aid is inadequate and there is no effective monitoring that would contribute to remedying long-standing problems.

For a detailed analysis of developments in the judicial system, see Chapter 23 — Judiciary and fundamental rights.

Fight against corruption

Implementation of the National Anti-Corruption Strategy continued. Further efforts are needed to fully implement the Strategy, to follow up policy proposals from working groups on corruption–related issues and to engage effectively with civil society. The institutional set-up needs to be strengthened. Greater political will is needed to achieve concrete results. Alignment with the recommendations of the Group of States against Corruption (GRECO) also remains a priority. In this context, the financing of political parties needs to be addressed, including provisions on prohibited funding sources, donation ceilings, and obligations on candidates to disclose assets and submit financial information during a campaign. Measures are required to reduce the broad scope of parliamentary immunity in corruption cases and to define objective criteria for the lifting of immunity. Arrangements to verify assets declared by political figures and public officials need to be strengthened. Turkey collects certain statistics on court decisions in corruption cases, but efforts are required to develop a thorough track record of investigation, indictment and conviction. Concerns remain about impartiality in the processing of anti-corruption cases. Turkey needs to ensure dissuasive penalties in all corruption cases.

For a detailed analysis of developments in the area of anti-corruption policy, see Chapter 23 — Judiciary and fundamental rights.

Fight against organised crime

Turkey adopted a new Action Plan against Organised Crime (2013-15), implementing the National Strategy against Organised Crime (2010-15). Turkey signed but has not yet ratified the Council of Europe Convention on Cybercrime. Data collection and analysis capacity need to be improved. Further efforts are also needed as regards trafficking in human beings. The framework anti-trafficking law has still to be adopted. A comprehensive, multi-disciplinary and victim-oriented approach to trafficking needs to be developed and identification of victims needs to be improved.

For a detailed analysis of developments in the fight against organised crime, see Chapter 24 — Justice, freedom and security.

2.2. Human rights and the protection of minorities

Good progress was made in terms of establishing Turkey’s human rights mechanisms and institutions. However, these institutions have still to develop a track record as regards effectiveness and impartiality. Pressure on human rights defenders continued.

Excessive use of force, notably during the demonstrations in May and June, continues to be a matter for concern. Steps were taken to tackle impunity, including lifting the statute of limitations for offences of torture. Judgments were issued in a limited number of high-profile cases. More efforts are required to tackle the security forces’ long-standing practice of lodging counter-allegations, promote independent and impartial investigations into allegations of torture and ill-treatment by the police and establish the truth about the numerous cases of extrajudicial killings in the 1990s.

Reform of the prison system continued, with improved detention conditions and efforts to combat overcrowding by increasing prison capacity and the use of probation, but further reforms remain necessary.

The 4th Judicial Reform Package improved the legal framework on freedom of expression. A consistent track record of implementation is required, as are further changes, including as regards Article 314 of the Turkish Criminal Code on membership of an armed organisation. Problems remained, including continued pressure on the media by state officials, widespread self-censorship, the firing of critical journalists, frequent website bans and the fact that freedom of expression and media freedom are in practice hampered by the approach taken by the audio-visual regulator and the judiciary.

Regarding freedom of assembly, Newroz[4] and some Kurdish celebrations took place peacefully. However, there is a need to revise and introduce clarity to the application of the law on demonstrations and meetings, The democratisation package announced in September by the government provides for changes to the law on demonstrations. Substantial efforts are necessary to reduce disproportionate use of force by law enforcement officers, which culminated during the protests in May and June.

More efforts are needed to eliminate obstacles to the development of associations such as trade unions and to prevent the launch of closure cases against public workers’ unions. Fundraising rules remain restrictive and discretionary. There were no developments regarding legislation on political parties.

As regards freedom of thought, conscience and religion, there were efforts to intensify dialogue with non-Muslim religious communities, with positive results. New religious education textbooks were more inclusive. In practice, though, citizens professing a faith other than that of the majority, or with no faith, continued to experience discrimination. An ECHR-compatible legal framework has yet to be established on matters of faith and conscientious objection.

Legislation and action plans continued to be implemented in the field of women’s rights and gender equality. The authorities, in particular the Minister responsible, took a strong line in addressing domestic violence. However, further sustained work is needed to turn legislation into political, social and economic reality. Gender equality, including access to education and the labour market, political representation, combatting violence against women (including honour killings) and early and forced marriages, remains a major challenge for Turkey.

On children’s rights, greater effort is needed to further improve enrolment rates, in particular for girls, throughout the period of compulsory education and address absenteeism and dropping-out. Further sustained efforts are needed to address regional disparities in education. The same applies to combatting child labour and improving health, administrative capacity and coordination.

Substantial efforts are needed to effectively guarantee women’s rights and protect vulnerable groups, including children and lesbian, gay, bisexual and transgender individuals, from abuse, discrimination and violence. There is a need for concrete legal and practical steps to address violence and discrimination based on sexual orientation and gender identity.

A new law on trade unions and collective agreements in the private sector was adopted. The law has removed some obstacles to the establishment and internal functioning of trade unions, though important shortcomings remain, in particular as regards the right to collective bargaining at all levels and to action including strike.

As regards property rights, a constructive approach was taken and progress made on property restitution, with the implementation of the revised Law on Foundations. The political commitment to resolve ongoing cases against the Mor Gabriel Syriac Orthodox monastery needs to be translated in practice and the cases are still a cause for concern. Turkey needs to ensure full respect for all property rights, including those of non-Muslim religious communities.

Dialogue between the authorities and minorities intensified and there has been progress including on minorities’ educational and religious matters. Apart from the non-Muslim minorities recognised by Turkey under the Treaty of Lausanne, the Turkish authorities consider Turkish citizens as individuals with equal rights before the law rather than belonging to the majority or a minority. However, this approach, which provides for full equality for all citizens, should not prevent Turkey from granting specific rights to certain citizens, in line with European standards, on the basis of ethnic origin, religion or language, so that they can preserve their identity.

Turkey made progress on cultural rights with the introduction, notably, of the right of the accused to use a language of their preference other than Turkish at certain stages of judicial proceedings, even if they can express themselves adequately in Turkish. There was clear engagement from state officials and institutions on Kurdish issues. Whereas the democratisation package announced by the government in September provides for education in languages and dialects other than Turkish in private schools, no consensus emerged from discussions on the general right to mother-tongue education, including in the context of work on a new Constitution. Legislation that restricts the use of languages other than Turkish, including the Constitution and the Law on Political Parties, should be amended.

For a detailed analysis of developments in the area of human rights and the protection of minorities, see Chapter 23 — Judiciary and fundamental rights. For developments in the areas of trade union rights, anti-discrimination and equal opportunities, see also Chapter 19 — Social policy and employment.

Situation in the east and south-east

The government’s initiative for a peace process was a turning point and met strong engagement from Kurdish actors. The Kurdish issue and options for a solution were widely discussed, along with the hope that it would facilitate economic and social development in the south-east. The government expressed determination to bring an end to terrorism and to provide safe passage for PKK members leaving the country. Parliamentarians were allowed to hold contacts with imprisoned PKK leader Abdullah Öcalan. Öcalan called for an end to the armed struggle and the PKK announced its withdrawal from Turkey, and began to withdraw. The government established a civic commission of wise persons tasked to boost public backing for the peace process, which has been significant and is growing. The international community, including the EU, also expressed its support.

The peace process coincided with the 4th Judicial Reform Package and the release pending trial of some defendants accused in cases relating to the Kurdish issue, such as trade-unionists, local politicians and human rights defenders. The right to make one’s defence before a court in one’s mother tongue at some stages of judicial proceedings was introduced in January.

The clearance of landmines continued, as did the South-East Anatolia Project (GAP), which is aimed at improving the socio-economic development of the region, although dam projects that are part of the GAP are criticised by local NGOs and citizens for destroying historical heritage, natural habitats and agricultural land.

Before the announcement of the peace talks, military operations and terrorist attacks had continued, with tension peaking during a hunger strike launched by Kurdish prisoners and joined by hundreds of family members and local politicians in late autumn and many demonstrations, clashes and violent confrontations between demonstrators and the police.

No steps were taken to abolish the village guard system, a paramilitary force of more than 50 000 paid and armed by the state. Some village guards, while expressing their support for the peace process, also noted concerns for their future and the need for severance pay, a pension scheme and social security.

Many journalists, academics, students and human rights defenders remained in prison on criminal charges, including under Article 314 of the Turkish Criminal Code on armed organisations, which was not amended by the 4th Judicial Reform Package.

There were isolated protests against members of the civic commission of wise persons.

The opposition objected to the investigative report by the parliamentary Human Rights Inquiry Committee on the 2011 Uludere incident, which fell short of identifying responsibility for the death of 34 civilians.

The 4th Judicial Reform Package does not lift the statute of limitations for cases of missing persons and extrajudicial killings dating from the 1990s, some of which are therefore still covered by it.

Overall, the launch of the peace process raised considerable hope. The tension, violence and terrorist activity of 2012, peaking with the hunger strikes between September and November, virtually ceased. The peace process moved forward in parallel with a number of confidence-building measures. A vast number of KCK court cases continued but with a number of releases pending trial. The village guard system remained a cause for concern.

Refugees and internally displaced persons (IDPs)

The adoption of the Law on Foreigners and International Protection represents significant progress in the area of refugees and asylum seekers, introducing a comprehensive legal and institutional framework on migration and asylum with a view to bringing Turkey into line with EU and international standards. The adoption of implementing legislation is crucial. The Law provides for judicial remedies and legal aid for migrants, in turn creating a need for greater resources. (See also Chapter 24 — Justice, freedom and security)

Detailed provisions on the management of removal centres are needed, as well as structured psycho-social services for irregular migrants staying in the centres.

Turkey has maintained an open border policy with Syria and is granting temporary protection to more than 200 000 Syrians living in well-run and well-equipped camps. Turkey is currently registering a further sizeable number of refugees from Syria not residing in the camps, estimated at 200 000 – 400 000, who are particularly vulnerable in terms of access to education and psycho-social care. It has also provided Syrians in Syria with humanitarian assistance at the border. Turkey joined the UN Regional Response Plan in late 2012. The formal registration of international NGOs is difficult, slow and sometimes blocked.

Apart from the Syrian population, Turkey also hosted other asylum-seekers and refugees, including children. The number of asylum applications filed by non-Syrians increased sharply in the first half of 2013 as compared with 2012. Some of the children received social assistance and healthcare and were able to attend school, but others faced difficulties due to poverty, language competence or issues relating to identity documents and compulsory places of residence. Cases were reported of difficulties in accessing UNHCR services and of asylum procedures being blocked. Individuals involved in asylum procedures experienced problems with access to adequate accommodation, work, health services, education and integration support.

The situation of internally displaced persons (IDPs) has not changed. The process of compensating IDPs continued, but there is no comprehensive national strategy in place to address the needs of IDPs or those who wish to return to their homes.

Overall, significant progress can be reported on the legislative framework on refugees and asylum seekers, with the adoption of the Law on Foreigners and International Protection. The adoption of the implementing legislation is now crucial. Detailed provisions on the management of removal centres are needed. Turkey has maintained an open border policy with Syria and has been providing considerable assistance to an increasing number of Syrian refugees living in camps. The situation of the refugees staying outside the camps requires attention. There is still no comprehensive national strategy in place to address the needs of internally displaced persons.

2.3. Regional issues and international obligations

Cyprus

Turkey continued to express public support for the negotiations between the leaders of the two communities in Cyprus under the good offices of the UN Secretary-General, for a fair, comprehensive and viable solution. Turkey granted the Committee on Missing Persons increased access to a fenced military area in the northern part of Cyprus, and is encouraged to build on this welcome step and be more accommodating of the Committee’s requirements to access relevant archives and military zones for exhumation.

However, Turkey continued to issue statements challenging the Republic of Cyprus’ rights to exploit hydrocarbon resources in Cyprus’ Exclusive Economic Zone for the benefit of all Cypriots, and announced retaliatory measures against one EU company awarded an exploration licence by Cyprus. The EU stressed 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.

As emphasised in the negotiating framework and Council declarations, Turkey is expected to actively support the negotiations aimed at a fair, comprehensive and viable settlement of the Cyprus issue within the UN framework, in accordance with the relevant UN Security Council resolutions and in line with the principles on which the EU is founded. Turkey's commitment in concrete terms to such a comprehensive settlement is crucial.

Despite repeated calls by the Council and the Commission, Turkey has still not complied with its obligations as outlined in the declaration of the European Community and its Member States of 21 September 2005 and in Council conclusions, including those of December 2006 and December 2010.

It has not fulfilled its obligation to ensure full and non-discriminatory implementation of the Additional Protocol to the Association Agreement and has not removed all obstacles to the free movement of goods, including restrictions on direct transport links with Cyprus. There was no progress on normalising bilateral relations with the Republic of Cyprus.

Turkey has not lifted its veto of Cyprus’ membership of several international organisations. Turkey issued a circular to all its multilateral embassies instructing them to avoid contacts with the EU Council Presidency in the second half of 2012, when it was held by Cyprus.

Peaceful settlement of border disputes

Turkey and Greece intensified their relations. High-level visits took place in October 2012 and February 2013, followed by a second meeting of the High-Level Cooperation Council at Prime Ministerial level (three years after the first one) in Istanbul in March 2013. Several cooperation agreements were signed. Since 2002, 55 rounds of exploratory contacts have been held to find common ground for the start of negotiations on the delimitation of the continental shelf.

Greece continued to object to Turkey’s launch of a tender for offshore oil and gas exploration, including part of the continental-shelf off the Greek island of Castellorizo.

The threat of casus belli in response to any extension of Greek territorial waters, as made in a Turkish Grand National Assembly resolution in 1995, still stands. In line with the Negotiating Framework and previous European Council and Council conclusions, the Council has reiterated that ‘Turkey needs to commit itself unequivocally to good neighbourly relations and to the peaceful settlement of disputes in accordance with the United Nations Charter, having recourse, if necessary, to the international Court of Justice. In this context, the Union expresses once again serious concern, and urges Turkey to avoid any kind of threat or action directed against a Member State, or source of friction or actions, which could damage good neighbourly relations and the peaceful settlement of disputes.’ Greece and Cyprus made formal complaints about violations of their territorial waters and airspace by Turkey, including flights over Greek islands.

Regional cooperation

Relations with other enlargement countries and neighbouring EU Member States have been positive. Turkey has continued its policy of engagement in the Western Balkans.

In the framework of the common security and defence policy, Turkey is continuing to contribute to the EU-led military mission in Bosnia and Herzegovina (EUFOR/ALTHEA) and to the EULEX mission in Kosovo.*

Turkey supports Kosovo’s integration into the international community, European institutions and regional initiatives. Turkey maintained strong ties with the former Yugoslav Republic of Macedonia and supported its efforts to join NATO and the EU.

As regards the International Criminal Court (ICC), see Chapter 31 — Common foreign and security policy.

3. Economic criteria

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

3.1. The existence of a functioning market economy

Economic policy essentials

The Pre-Accession Economic Programme (PEP) for 2013-15, submitted to the Commission in January 2013, is based on the assumption of relatively moderate growth and a further reduction of the current account deficit. However, even in this relatively optimistic scenario, the external deficit remains large. Combined with a precarious external debt structure, it makes Turkey vulnerable to capital flow reversals, either in the context of increasing global risk aversion regarding emerging market assets, or as a result of a rise in perceived country-specific risks. The fragmentation of responsibilities between government bodies continues to complicate the coordination of budgeting and medium-term economic policy-making. However, it seems that economic policies have not been affected by internal conflicts and tensions in recent times. Overall, the consensus on economic policy essentials has apparently been preserved.

Macroeconomic stability

In 2012, the Turkish economy continued a slowdown which had started in the middle of the previous year. Year-on-year growth rates declined gradually from 5.3% in the fourth quarter of 2011 to 1.4% in the fourth quarter of 2012. In seasonally adjusted quarter-on-quarter terms, real GDP barely grew in the second half of 2012. Annual GDP growth dropped from 8.8% in 2011 to 2.2% in 2012. The slowdown was combined with a rebalancing of growth from domestic demand to export-led growth. Private consumption and investment declined by 0.6% and 4.8%, respectively. Export volumes, on the other hand, accelerated to an annual growth rate of 16.7%. Most of this impressive rise was, however, accounted for by extraordinary exports of non-monetary gold to Iran. Import volumes stagnated as a consequence of the retrenchment in domestic demand. The only domestic demand component which added to GDP growth in 2012 was public spending. Public consumption and investment expanded by 6.1% and 9.3%, respectively.

In the first half of 2013, overall domestic demand started to recover, not least due to strongly increasing public spending, particularly investment. Private investment, however, continued to contract. Consumer spending returned to a moderate growth path helped by some decline in interest rates. Export growth fell back to 3.2% year-on-year as gold exports declined sharply from the previous year’s levels. Import growth of 9.5% reflects to a large extent surging gold imports. The net result from the contributions of the various components was 3.7% year-on-year GDP growth in the first half. In seasonally adjusted quarter-on-quarter terms, GDP growth increased from 0.2% growth in the fourth quarter of 2012 to 1.5% in the first quarter and to 2.1% in the second quarter of 2013. In 2012, the per capita GDP of Turkey (PPP adjusted) amounted to 56% of the EU average, up from 52% in 2011. Overall, the economic slowdown has ceased and economic activity has re-accelerated in the first half of 2013.

The current account has continued to register a large deficit, which leaves the Turkish currency vulnerable to sudden loss of investor confidence. In conjunction with the softening of domestic demand and strong export growth, the current account narrowed significantly from 9.7% of GDP in 2011 to 6.0% in 2012. Most importantly, imports of goods declined by 1.5%, while exports of goods surged by 13.9% in value terms. The balance of payments data for the first half of 2013 suggest a reversal of this trend, as goods exports increased much more moderately (2.8% year-on-year) while goods imports recovered strongly (7.1%). The 12-month cumulative current account deficit has risen back up to 6.6% of GDP. However, Turkey’s foreign trade data have been distorted by strong fluctuations in exports and imports of non-monetary gold in recent years. Net exports of gold in 2012, corresponding to 0.7% of GDP, were succeeded by large net imports in the first six months of 2013.

The bulk of the current account deficit was financed by portfolio investments in 2012, while net inflows of foreign direct investments covered a relatively small proportion (17.8%) of the deficit. The high degree of dependence on shorter-term capital inflows exposes Turkey to changes in global risk appetite. The central bank’s foreign exchange reserves increased from €56 billion at the end of 2011 to €78 billion at the end of 2012 and further to €94 billion at the end of June 2013 (16% of GDP). The gross foreign debt rose by 10.8% in the course of 2012, but expressed as a proportion of GDP it fell by 1.8 percentage points to 42.5%. Overall, the external imbalances have remained significant and their short-term financing makes the country vulnerable to sudden changes in global investor sentiment.

The labour market performed relatively well in 2012 despite the economic slowdown. For the population aged 20-64, the annual unemployment rate fell from 8.8% in 2011 to 8.2% as employment rose by 3.0%. The employment rate increased by 0.6 percentage points to 52.8% while the labour force participation rate increased by 0.2 percentage points to 57.4%. When economic growth picked up in the first six months of 2013, average employment accelerated to a growth rate of 4.1% year-on-year. Nevertheless, the average unemployment rate was 0.4 percentage points higher year-on-year in this period because the labour force rose even faster than employment.

While the employment rate was 75.0% for men in 2012, it was as low as 30.9% for women. Despite the low proportion of the female population actively looking for work, the female unemployment rate is higher than the male unemployment rate. In addition, about one third of women who are considered as employed are unpaid family workers in the agricultural sector. The efficient functioning of the labour market continues to be impeded by a lack of flexibility, regarding labour contracts for instance, and undeclared work remains a widespread practice. Overall, employment has continued to grow at a robust rate and unemployment edged down in 2012, but the female employment rate has remained very low.

In the context of a generally strengthening currency and the slowing down of the economy, consumer price inflation decreased from 10.5% at the end of 2011 to 6.2% at the end of 2012. This outcome was above the central bank’s year-end target of 5% but within its tolerance band of +/- 2% around the target. While core goods inflation was trending downward in 2012, services inflation was relatively stable. In the first eight months of 2013, increases in unprocessed food prices, tax adjustments for tobacco products, and the lira depreciation over the summer months have pushed up inflation. Overall, inflation was reduced noticeably in 2012, but has picked up again more recently and remains above the central bank’s target.

The central bank has continued to apply and refine the unconventional monetary policy framework, adopted in late 2010, in which inflation and macro-financial stability are the main targets. In the conduct of monetary policy, the bank is attaching a reference value of 15% to credit growth, defined as the year-on-year change in bank credit to the non-financial sector. It also targets the floating exchange rate of the Turkish lira by aiming to dampen short-term volatility and by responding to exchange rate movements which are considered to constitute excessive appreciations or depreciations of the lira. As regards the instruments of monetary policy, a wide variety of tools is applied in a complex interplay, including reserve requirement ratios and a mix of various repo facilities. Following a period with a relatively tight monetary stance to cool down an overheating domestic economy, the central bank adopted a more accommodative stance in the second half of 2012, when economic activity had stabilised and the Turkish lira had appreciated noticeably. The interest rate corridor between the central bank’s overnight borrowing and lending rates has been moved gradually downward and narrowed from 5‑11.5% to 3.5‑6.5% between September 2012 and May 2013. Within the same period, the central bank’s policy rate (the one-week repo rate) was cut in three steps from 5.75% to 4.5% with a view to supporting the domestic economy and containing further currency appreciation. The Turkish lira appreciated by 7.8% in the course of 2012 in real effective terms and by a further 1.5% over the first five months of 2013. Since May, Turkey’s financial markets and the Turkish lira have come under severe downward pressure in the context of anticipated changes in international monetary conditions, domestic political unrest and the civil war in neighbouring Syria. Net capital inflows in the first five months of the year have been succeeded by significant net capital outflows. In response, the central bank has intervened directly in the foreign exchange market by selling foreign exchange reserves equal to €6.7 billion in June-August. It has also raised the upper band of the interest rate corridor (the lending rate) by a combined 125 basis points to 7.75%. Overall, the central bank continued to pursue multiple objectives within an unconventional and complex monetary policy framework that hampers transparency and predictability. The policy stance was adjusted frequently in response to changing domestic and international conditions.

In contrast to the preceding years, the fiscal target was missed in 2012 due to expenditure overruns and an economic slowdown which was faster than the authorities expected. The central government’s budget deficit widened from 1.4% of GDP in 2011 to 2.0% (the original target was 1.5%). The lack of timely information on the fiscal balance of general government continues to reduce the transparency of overall public finances. Central government revenues from indirect taxes fell short of budget, as private consumption contracted while central government expenditures, particularly for the compensation of public employees, rose faster than planned. The expenditure overruns were also caused by government transfers to state-owned enterprises as a result of delayed price adjustments in the energy sector. In the first six months of 2013, the fiscal performance improved, with the central government’s 12‑month rolling budget deficit falling to 1.3% of GDP in June, as compared with an unambitious 2013 deficit target of 2.2%. A surge in revenues reflects the recovery in economic activity and the indirect tax hikes from last September. Non-interest expenditures have also increased strongly, not least for public investment, in spite of a projected decline in capital spending as a proportion of GDP in 2013 in Turkey’s 2013-15 Pre-Accession Economic Programme. Part of the rise in non-interest expenditures has been offset by a decline in interest expenses. Although general government debt (for which data are available) increased marginally in absolute terms in 2012, the debt-to-GDP ratio fell from 39.1% at the end of 2011 to 36.2% at the end of 2012 due to high nominal GDP growth. Over the same period, the average maturity of the outstanding debt stock was extended from 55 to 69 months while the average borrowing rate was reduced from 9.8% to 6.4%. Overall, the fiscal performance suffered from continuing expenditure overruns, but was satisfactory regarding the sustainability of public debt. There was no progress on increasing the transparency of the fiscal framework and adopting a fiscal rule.

The tightening of monetary policy from the summer of 2011 onwards contributed to lowering output growth to a more sustainable level and to reducing inflation and the large current account deficit in 2012. The reorientation of monetary policy towards easing between mid-2012 and May 2013 seems to have been similarly helpful in stimulating a re-acceleration of economic activity in the first half of 2013. It remains to be seen how the renewed monetary tightening in the summer of 2013 will affect the real economy. Fiscal policy has been less responsive to macroeconomic needs in the recent past as public expenditures have become more rigid. This has reduced the ability of fiscal policy to contribute to a more balanced macroeconomic policy mix, thereby putting an excessive burden on monetary policy to deliver on multiple targets. The adoption of a strong fiscal rule would not only enhance budgetary transparency but also provide a fiscal anchor and enhance credibility. Fiscal policy also has an important role to play in increasing domestic saving and thereby reducing Turkey’s reliance on external financing. The dependence on capital inflows is a macroeconomic vulnerability which makes Turkey prone to boom-bust cycles. Overall, the Turkish economy remains vulnerable to bouts of financial uncertainty and changes in global risk sentiment and there is scope for improving the macroeconomic policy mix.

Interplay of market forces

The share of directly administered prices in the Consumer Price Index (CPI) basket has remained at the relatively low level of 4.5%. However, food and alcohol prices, which together make up more than 25% of the consumer basket, are highly sensitive to policy and administrative decisions. For transport and energy (natural gas and electricity), automatic pricing mechanisms are applied in principle, linking end-user prices to a cost-based methodology. In practice, however, the government continues to set end-user prices, thereby effectively suspending the automatic pricing mechanisms. There has been some reduction in cross-subsidisation between consumers in the wholesale and retail electricity markets.

There has been limited progress in the restructuring and transparency of state-owned enterprises related to the privatisation of energy generation and distribution assets. The private sector’s share in GDP decreased somewhat as private investment contracted while public investments continued to expand. As investors’ access to long-term external financing improved in 2012, the pace of privatisations increased, but remained below initial targets. The total volume of completed deals more than doubled, to €2.34 billion (0.4% of GDP), as compared with 2011, but was still less than half the average 2005-08 level. The secondary public offering of the state-owned Halkbank represented 65% of the privatisation revenue. The tender for the privatisation of highways and bridges was cancelled as the government refused offers. Privatisation tenders continued in early 2013, particularly in the energy sector. Overall, there has been no progress in price liberalisation as the government continues to interfere in the price-setting mechanism in key sectors. Privatisation has re-accelerated, but remains at a relatively low level.

Market entry and exit

In 2012, the number of newly-established businesses fell by 6.7% as compared with the previous year. Starting a business in Turkey requires six separate procedures, takes six days, and costs 10.5% of per capita income on average. Some fees are still not transparent, such as those for the official registration of a company’s articles and accounts. Trade registry fees remain significant. Obtaining a construction permit is still very cumbersome and time-consuming. The number of businesses closing down or being liquidated fell by 13.9% as compared with 2011. Closing a business remains expensive and time-consuming. Insolvency procedures take about 3.3 years and recovery rates — at 23.6% on average — remain very low. Overall, market entry conditions are satisfactory, while market exit remains costly and long, and insolvency proceedings are still heavy and inefficient.

Legal system

A reasonably well-functioning legal system, including in the area of property rights, has been in place for several years. Enforcement of commercial contracts is still a rather lengthy process, partly because commercial court judges are insufficiently specialised. Out-of-court dispute settlement mechanisms are seldom used, major exceptions being the insurance sector, tax and customs. The judicial system and administrative capacity could be further improved. Overall, the legal system continues to function relatively well, but no progress has been observed.

Financial sector development

Banks have continued to dominate the financial sector with their share of the sector’s total assets remaining at 88%, while the share of the relatively small insurance sector (including private pensions) increased from 4.0% in 2011 to 4.6% in 2012. The value of banking sector assets increased from 94% of GDP in 2011 to 97% in 2012. The share of state-owned banks in total banking sector assets decreased from 25.5% in 2011 to 23.1% in 2012. After the partial privatisation of Halkbank, the state’s share in the bank decreased from 75% to 51.1%. The share of foreign-owned banks (where international banks either have a controlling share or have an equal partnership with a local partner) decreased slightly from 41.6% in 2011 to 41.3% in 2012.

In tune with the monetary policy stance, credit expansion continued to slow down in the first three quarters of 2012. Following the switch to a more accommodative monetary policy, the foreign-exchange adjusted loan portfolio of banks started to accelerate again in November 2012 and reached a growth rate of 23.1% year-on-year at the end of June 2013. The banks’ loan-to-deposit ratio has increased by 7 percentage points year-on-year to 106% in May 2013.

The banking sector maintained an adequate profitability performance in 2012 and the first seven months of 2013. Its capital adequacy ratio decreased from 16.3% in July 2012 to 15.9% in July 2013, which is still significantly above the regulatory target of 12%. The share of non-performing loans in total banking sector loans has remained broadly stable at just below 3% (2.8% in July 2013). The Financial Stability Committee, established in June 2011 under the chairmanship of the Deputy Prime Minister in charge of the economy, has monitored the functioning of the financial system, including systemic risks and their management. Parliament adopted the long-awaited Capital Markets Law, which aims at further harmonising the legislative framework in securities markets and investment services. Overall, the financial sector has performed well and has continued to demonstrate resilience.

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

Existence of a functioning market economy

Turkey’s growth performance in a context of global economic volatility in recent years confirms the economy’s improved fundamentals and enhanced resilience to shocks. However, the large structural current account deficit and relatively high inflation indicate the persistence of significant underlying imbalances in the Turkish economy. Overall, the functioning of market mechanisms has remained appropriate.

Human and physical capital

The educational reform programme, which is a key component of the 2007-13 National Development Plan, is coming to an end. It sets two key priorities for education modernisation and reform: increasing the responsiveness of education to demand and enhancing the quality of the education system. Some progress can be recorded. The literacy rate increased from 88% in 2010 to 90.8% in 2011. The schooling ratios have increased at all levels of education, in particular at tertiary (university) level. Important gaps persist regarding the schooling ratios for girls, especially in secondary education. Participation in higher education remains low by international standards. The effects of extending compulsory education from 8 to 12 years as from the 2012-13 school year remain to be seen. Overall, reforms and increased spending on education have so far generated a positive impact on educational attainment and schooling rates, but significant problems remain with regard to gender equality and the quality of education.

Total investment decreased from 21.8% of GDP in 2011 to 20.3% in 2012, entirely due to the slump in private investments, which fell from 18.0% of GDP in 2011 to 16.4% in 2012. Public investments continued to increase and their share in GDP rose from 3.8% in 2011 to 3.9% in 2012. Gross foreign direct investment (FDI) inflows to Turkey decreased from €11.5 billion in 2011 to €7.7 billion in 2012. Although the official aim of the government is to increase expenditures on research and development to 2% of GDP, the actual outcomes remain much lower; R&D expenditure amounted to just 0.86% of GDP in 2011. Modest progress was made in the upgrading of the transport infrastructure, including a 1.9% extension of the motorway network between 2010 and 2011. Overall, improvements in the country’s physical capital have been modest.

Sectoral and enterprise structure

While output growth had clearly outstripped employment growth in 2011, overall employment in the Turkish economy increased by 3.0% in 2012, i.e. significantly faster than output growth. The sectoral breakdown of employment growth shows a clear shift towards the services sector, the share of which in total employment went up by 1.3 percentage points to 49.4%. The proportions of total employment accounted for by agriculture, industry and construction declined to 24.6%, 19.1% and 6.9% respectively. As a proportion of GDP, services increased by 1.2 percentage points, whereas all other sectors declined.

There has been some progress in the liberalisation of the network industries. A new electricity market law entered into force on 30 March 2013 which aims at improving market competition and alignment with the acquis. In the market for natural gas, the energy regulator granted import licences to four private companies, increasing the private sector’s market share to 20%. However, further progress is needed in the programme to liberalise the natural gas market by reducing the monopolistic market share of state-owned BOTAŞ. There was progress in the telecommunications market with the adoption of regulations to improve competition and transparency. Overall, the liberalisation of network industries gathered some pace.

State influence on competitiveness

The legislation implementing the State Aid Law, originally scheduled to be enacted by September 2011, has been postponed for a second time. The State Aid Authority still needs to establish a formal state aid inventory. It is also expected to enact an action plan for aligning all state aid schemes, including the 2012 incentives package, with the acquis. The legal framework for public procurement continued to comprise various exemptions and is still not in line with the EU acquis. Overall, there has been no progress in enhancing the transparency of state aid.

Economic integration with the EU

The openness of the economy, as measured by the value of exports and imports of goods and services as a percentage of GDP, increased from 56.6% in 2011 to 58% in 2012. The EU’s share in Turkey’s total trade decreased from 40.8% in 2011 to 37.7% in 2012. Its share in Turkey’s exports declined particularly strongly from 46.2% to 38.8%, mainly due to depressed demand conditions in the EU and the surge in Turkey’s gold exports to Iran. Its share in Turkey’s imports decreased more moderately, from 37.8% to 37%. The EU remained by far the largest source of FDI in Turkey, with a share of 71.3% in 2012. Foreign capital investment inflows originating from the EU countries — excluding real estate — fell from €8.2 billion in 2011 to €5.5 billion in 2012. Overall, trade and economic integration with the EU remained high.

Labour productivity declined in general in 2012, with employment increasing more than twice as fast as output. For industry, where sector data are available, production per hour declined by 2.0% between the fourth quarter of 2011 and the fourth quarter of 2012. Over the same period, hourly labour costs in industry increased by 8.0%. This implies a rise in unit labour costs of around 10%. At the same time, the Turkish lira appreciated by 7.8% in real terms. Overall, Turkey’s international price competitiveness declined significantly in 2012 due to rising unit labour costs and currency appreciation.

4. Ability to take on the obligations of membership

This section examines Turkey’s ability to take on the obligations of membership — that is, to adopt the Union acquis as expressed in the Treaties, its secondary legislation and its policies. It also analyses Turkey’s administrative capacity to implement the acquis. The analysis is structured according to the list of 33 acquis chapters. In each sector, the Commission’s assessment covers progress achieved during the reporting period, and summarises the country’s overall level of preparations.

4.1. Chapter 1: Free movement of goods

The Ministry of Economy extended the implementation of the general principles applicable to the free movement of goods to the remaining industrial products covered by the risk-based import control system, ‘TAREKS’ (which determines whether the imported product requires a conformity check). For products with an A.TR certificate, and thus in free circulation in the EU, import authorisation is provided irrespective of origin and without further checks. This formally solves the long-standing problem of conformity checks on products with third country origin entering Turkey via the EU.

The mutual recognition principle, which had been introduced in 2012, was applied in a Product Safety and Control Communiqué in 2013.

There are still technical barriers to trade in areas such as pharmaceuticals, textiles, second-hand or retreated goods, and alcoholic beverages. With regard to pharmaceuticals, EU Member States’ good manufacturing practice certificates are still not accepted by the Turkish Ministry of Health. Licences are still required for old goods, such as construction equipment and motor vehicles, including second-hand goods, for those considered as renovated or faulty – such as retreated tyres - and for alcoholic beverages. Exports of aluminium, paper, and copper scrap are subject to restrictions which constitute a de facto ban, contrary to Customs Union provisions.

As regards horizontal measures, in the area of standardisation, the Turkish Standards Institute (TSE), a full member of the European Committee for Standardisation (CEN) and the European Committee for Electro-technical Standardisation (CENELEC), has to date adopted a total of 17 395 CEN and CENELEC standards and a total of 392 European Telecommunication Standards Institute (ETSI) standards. The overall rate of harmonisation with European standards stands at around 99%.

In terms of conformity assessment, there are currently 20 Turkish Notified Bodies, following the expiry of the old construction products directive and the related notified bodies under this directive. The number of accreditations provided by the Turkish Accreditation Agency, TURKAK, increased by 26% since the previous year and reached 813. The Ministry of Science, Industry and Technology issued a communiqué ceasing the intermediary role of TURKAK as technical assessor for notified bodies.

The Ministry of Science, Industry and Technology released its 2012 market surveillance report. The Cabinet issued a decision specifying the responsibilities of surveillance agencies; this decision addresses several long-standing deficiencies. The Ministry issued a regulation on market surveillance for products in its area of competence. The Information and Communication Technologies Authority issued a similar regulation in the field of radio telecommunication terminal equipment. The regulations aimed to further refine market surveillance procedures in their respective fields. Market surveillance is an area where progress can be achieved in terms of the methods and resources used by the agencies, and of activities and visibility.

A decree was issued on technical regulations forming the inter-ministerial basis of legislation and policy coordination carried out by the Ministry of Economy in the technical field. The decree reflects a modern approach to import control based on risk analysis, a more institutionalised approach to coordination between import control and market surveillance authorities, and a clear mandate for the Ministry to notify technical legislation to the WTO and the EU. Alignment of horizontal measures is advanced. Full alignment with the General Product Safety Directive and the Regulation on accreditation and market surveillance is expected. Effective implementation of market surveillance has yet to be achieved.

As regards ‘Old Approach’ product legislation, new and amending legislation was adopted on motor vehicles and agricultural and forestry tractors. An amending regulation on cosmetics updated the annexes of the original regulation in accordance with the acquis.

In the already advanced area of ‘New and Global Approach’ product legislation, regulations were published on transportable pressure equipment and on construction products aiming align Turkey’s legislation to the relevant EU legislation.

As regards procedural measures, steps were taken on the actual number of notifications of technical legislation under Directive 98/34/EC. There has been no progress on cultural goods and firearms.

Conclusion

Good progress can be reported in the area of free movement of goods. However, some technical barriers to trade continue to prevent free movement of goods in violation of Turkey’s obligations under the Customs Union. Overall, the state of alignment in this chapter is advanced.

4.2. Chapter 2: Freedom of movement for workers

There were no developments as concerns access to the labour market, future participation in the EURES (European Employment Services) network or the European Health Insurance Card. As regards the coordination of social security systems, in June the Council of Ministers approved the social security agreement with Italy, which had been signed in 2012.

Conclusion

There has been limited progress in the area of freedom of movement for workers. Overall, preparations in this area are at an early stage. Turkey is encouraged to continue to conclude bilateral social security agreements.

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

As regards the right of establishment and the freedom to provide cross-border services, the alignment strategy has not been produced yet. Disproportionate requirements continue to restrict the right of establishment. In the field of the freedom to provide services, registration, licensing and authorisation requirements are still in place for providers established in the EU. Alignment with the Services Directive remains an outstanding issue; there is no ‘point of single contact’.

In the area of postal services, the new postal law was adopted. The law provides for further liberalisation, yet maintains a statuary monopoly for the incumbent, which is the designated universal service provider. It envisages the Information and Communication Technologies Authority as an independent regulator. Secondary legislation, covering issues such as cost accounting requirement, categories of operators required to obtain a license and to pay a universal service fee, authorisation conditions and the extent of the price regulation remains to be adopted.

The mutual recognition of professional qualifications and academic qualifications is not yet differentiated. Reciprocal recognition still applies to some regulated professions. Nationality and excessive language requirements persist.

Conclusion

Overall, limited progress can be reported. Alignment is at an early stage. The work on the alignment strategy with regard to the right of establishment and the freedom to provide services needs to continue.

4.4. Chapter 4: Free movement of capital

As regards capital movements and payments, Turkey’s legislative framework on the acquisition of real estate by foreigners is not in line with Article 63 of the Treaty on the Functioning of the European Union. The list of eligible countries whose citizens are allowed to acquire real estate is not public and based on a non-transparent assessment by the government of ‘national interests and bilateral relations’. Greek, Bulgarian and Cypriot citizens are subject to specific restrictions. Turkey needs to adopt and implement an action plan for gradually liberalising the acquisition of real estate by foreigners in line with the acquis. Sector restrictions on foreign ownership remain in place, namely in radio and TV broadcasting, transport, education and electricity generation and distribution.

As regards payment systems, a new Law has entered into force regulating settlement systems in securities and payments, and on electronic money. Implementing regulations will be adopted within a year. The current legislative framework on capital movements and payments needs to be aligned with the acquis.

As regards the fight against money laundering and terrorist financing, in February 2013 Turkey adopted the Law on the Prevention of Financing of Terrorism and in May a relevant implementing regulation. This Law addresses many of the shortcomings identified by the Financial Action Task Force (FATF) and creates the legal basis for the freezing of terrorists’ assets. This is an important step towards improving Turkey’s compliance with international standards in this field. However, the new Law does not address all the shortcomings identified by the FATF. As a result, the task force still keeps Turkey on its list of jurisdictions with strategic anti-money laundering/counter-terrorist financing deficiencies.

The number of suspicious transaction reports notified to the Turkish Financial Crimes Investigation Board (MASAK) in 2012 was 15318 as compared with 8 739 notified in 2011; they originated mostly from the banking sector. The number of suspicious transaction reports regarding the financing of terrorism increased to 332. Results concerning convictions, confiscations, seizures and the freezing of assets remain limited. Turkey has not yet ratified the Council of Europe’s Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism (CETS 198), which was signed in 2007.

Conclusion

Some progress can be reported in the area of free movement of capital. A new Law has entered into force on settlement systems in securities and payments, and on electronic money. Arrangements for real estate acquisition remain non-transparent, not aligned with the acquis and restrictive of the rights of a number of Member State nationals. Sector restrictions continue to exist in capital movements. The legal framework to counter the financing of terrorism has improved, although further alignment with the FATF recommendations is needed. Overall, preparations in this area are at an early stage.

4.5. Chapter 5: Public procurement

As regards general principles, the National Strategy and Action Plan for Public Procurement have existed in draft form for three years and have yet to be adopted. Exemptions and domestic preferences still need to be addressed. The domestic price advantage has been used more extensively despite increasing openness to international competition. In 2012, it amounted to 41% of the overall contract value, as compared with 34% in 2011. It was applied to 11% of all contracts above the threshold, as compared with 9% in 2011. The scope of the Public Procurement Law needs to be aligned with the acquis to ensure the consistency of the legislative framework.

As regards the award of public contracts, there has been a decrease in the value and number of contracts awarded outside the Public Procurement Law. The Public Procurement Authority (PPA) widened the scope of the electronic public procurement platform (EKAP), which enables publication of all tender notices, including those subject to exemption. The PPA takes an active part in the EU-funded Multi-beneficiary Programme for the Provision of Training on Public Procurement.

The Ministry of Finance is in charge of coordinating policy formulation and implementation. Administrative capacity in the Ministry of Finance, Public Procurement Authority and the Ministry of Development improved incrementally. Market functionality and competition are satisfactory in the majority of sectors. The level of preparedness in this area is high.

Several inconsistencies between Turkish public procurement legislation and the acquis persist. There is no separate legislation for utilities sectors, the rules for which are more restrictive than envisaged by the EU Utilities Directive. The 2013 thresholds and financial limits for public procurement continue to be higher than those in the EU. A more coherent legal framework for concessions and public-private partnerships and further alignment with the acquis is needed to enhance transparency and efficiency.

As regards alignment with the Remedies Directives, complaints were made in relation to 4.4% of all tenders, a similar level to previous years. Turkey needs to further align its legislation on review mechanisms with the acquis.

Conclusion

There has been limited progress in the area of public procurement. The institutions are operational, with sufficient administrative capacity. Turkey needs to adopt an alignment strategy with a time-bound action plan and further align its legislation, particularly on derogations, utilities, concessions and public-private partnerships. The organisation of the remedies system remains to be reviewed. Preparations in this area are moderately advanced.

4.6. Chapter 6: Company law

As regards company law, Turkey amended the Capital Markets Law in December 2012 with a view to align with the acquis (see Chapter 9 – Financial services). Preparations for online company registration continued. Some legislation has been adopted to implement the Turkish Commercial Code (TCC). The Capital Markets Board (CMB) has amended the corporate governance principles, including for financial institutions and banks. 704 judges, including Supreme Court members, received training on the new TCC and business organisations also organised such training. However, the corporate governance principles continue to give the CMB more power to control or influence companies, which allows the state involvement in the corporate governance.

In the area of corporate accounting, the legal framework for financial reporting is in place. Statutory corporate reports are publicly available. Turkey continued with the adoption of Turkish Accounting and Financial Reporting Standards (TAS/TFRSs) based on the corresponding International Financial Reporting Standards. As of January 2013, companies of large capitalisation applying TFRSs are audited by statutory auditors. The Turkish Public Oversight, Accounting and Auditing Standards Authority further improved its institutional capacity.

As regards auditing, in December 2012 a by-law on statutory audit was adopted with a view to aligning with the acquis on issues including qualifications of statutory auditors, approval of statutory auditors and audit firms, establishment of audit firms and the education and examination of auditors. However, a Ministerial Decree adopted in February 2013 reduced the scope of statutory audit excessively so that it applies to companies of large capitalisation only.

Conclusion

Some progress was made in the area of company law. The Public Oversight, Accounting and Auditing Standards Authority and commercial judiciary and business organisations improved their capacity. This needs further strengthening to deal with the changes made by the new legislation. Overall, Turkey is well advanced in this area.

4.7. Chapter 7: Intellectual property law

In the area of copyright and neighbouring rights, the restructured Directorate-General for Copyright in the Ministry of Culture and Tourism improved further its administrative capacity, awareness-raising and training activities, and online services. A new co