CROATIA

Croatia is the clear front-runner in the EU’s current enlargement process. Zagreb opened its membership talks in October 2005 and is likely to be able to conclude them by the end of 2009. However, for that to happen, the country must still address a number of outstanding issues. Some of these fall within the realm of competition policy (restructuring of shipyards), while others belong to the justice and home affairs area, such as the country’s cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY). Croatia’s 18-year-old border dispute with Slovenia also requires immediate resolution. Failure by Zagreb to settle these outstanding issues would jeopardise the country’s ambitious end-2009 EU accession target.

Restructuring of shipyards: According to a source from the European Commission, “some progress has been made over the last months in the field of competition, including the restructuring of shipyards”. In order to open talk in this area, Zagreb has to “adopt individual restructuring plans for each shipyard in difficulty”. Each such plan “must then be adopted by the Commission”. “We are now approaching the final stage of the discussions” on the restructuring process, says an internal EU document on the current state of play obtained by Europolitics.It says that agreement has been reached on all but two of the “cornerstones,” namely the dates associated with this restructuring process, the own contributions and the compensatory measures. Agreement has yet to be reached on the “change of activity as capacity reduction requested by Croatia and the Croatian insistence on following a different privatisation model for the yard of Uljanik that EU Competition Commissioner Neelie Kroes does not accept”. “The Commission is currently waiting for the Croatian authorities to confirm if it is possible for them to follow the same privatisation model for Uljanik as for the other yards,” the document says.

Croatia has a total of six shipyards, five of which have been loss-making for years despite receiving large amounts of state subsidies, totalling HRK400 million a year. Only one shipyard, Uljanik, which is located in the northern Adriatic town of Pula, has been profitable. In spite of that, the government in Zagreb has been postponing the introduction of restructuring measures, such as immediate privatisation, mostly out of fear of social unrest, as the shipyards employ some 15,000 people.

In order to keep accession negotiations on track, Croatia had to eventually move forward with privatisation. To this end, the government has decided to sell each shipyard, except for Uljanik, for a token of one kuna (US$0.188). But it said that buyers will be required to assume a certain part of the restructuring costs, covering government subsidies, investments in environmental protection and modernisation of technology, as well as the possible costs of providing for redundant labour, and the costs of cutting down production capacity. The Commission insists that 50% of the restructuring costs should be covered by the company itself and its strategic partner.

Previous plans, which were turned down by EU officials last year, envisaged restructuring through modernisation before the sale.

ICTY cooperation: Last year’s mafia-style killings of 26-year-old Ivana Hodak, the daughter of a well-known Croat lawyer, as well as Ivo Pukanic and Niko Franjic, prominent members of Croatia’s media community, have cast doubts on the quality of reforms in the justice and home affairs area. The Commission and the member states have both been especially sensitive about this field due to their experiences with Bulgaria, which after its accession in 2007 was hit by a wave of mafia-style killings. Sofia’s inability to stop the contract killings has elicited strong criticism from the EU and made it more vigilant towards the newcomers, including Croatia. “We do not want to repeat the same mistake,” say EU officials, commenting on the need for thorough reforms in Croatia.

In order to address the EU’s concerns, the government in Zagreb has stepped up the implementation of relevant judicial and police reforms in order to strengthen its fight against organised crime and corruption. The acceleration of work resulted in a positive benchmark report for the chapter on justice and fundamental rights that was put on the Council’s agenda in December 2008. However, the opening of talks in this area has been put on hold due to Croatia’s lack of full cooperation with the ICTY on the case of Croat General Ante Gotovina – who is being tried for war crimes committed against Serbs during Zagreb’s 1995 offensive to recapture lands previously taken by rebel Serbs. According to an EU document obtained by Europolitics, the Netherlands, the UK, Belgium, Finland and Denmark are determined to maintain their reserves on the chapter until after Zagreb proves that it fully cooperates with the Hague tribunal. Based on his ongoing consultations with the Croatian government, the ICTY’s Chief Prosecutor, Serge Brammertz, is due to issue a report this summer assessing Zagreb’s progress in cooperation on the Gotovina case.

Border dispute with Slovenia:Alongside the above issues of concern, Zagreb has to immediately settle its border dispute with Slovenia in order for it to be able to wrap up its EU accession talks by the end of this year. In 2008, Ljubljana resorted to an unprecedented move and vetoed progress in Croatia’s accession talks (11 chapters have been blocked from either opening or closing). The row centres on a stretch of coastline in the Piran Bay, and the two sides have been unable to hammer out any sort of a compromise. Faced with this impasse, the Commission has offered to mediate. However, the prospects for a lasting solution appear remote, given the profound differences between the two sides.

FORMER YUGOSLAV REPUBLIC OF MACEDONIA

Alongside Croatia and Turkey, Macedonia is the third country to have achieved official candidate status. However, the start of its formal membership negotiations is being informally held up by neighbouring Greece, due to the two countries’ long-running dispute over Macedonia’s name. Athens insists that the name Macedonia, which Skopje wants to adopt to replace the temporary international name of former Yugoslav Republic of Macedonia, belongs uniquely to its own northern province. Skopje rejects this view. In their quest for a compromise, the two countries have been conducting negotiations under the auspices of the United Nations. However, no breakthrough has been achieved up to now. The sides have until the autumn to reach a deal. In early November, the European Commission is scheduled to present its annual report on Macedonia’s EU reform progress, including a recommendation on opening accession talks. The document is expected to assess whether Macedonia has “good relations” with all its neighbours, including Greece, and evaluate whether the country has duly met the eight benchmarks established last year for opening negotiations.

In January 2008, the Commission presented a set of conditions, which the country has to meet before accession talks could start. The benchmarks cover such areas as political dialogue, implementation of police laws, fight against corruption, judiciary and public administration reform and measures to boost employment and business. Following the June 2008 parliamentary elections, which were seriously disrupted by violent incidents, the Commission added to the list of eight conditions a request for appropriate measures to be taken by Skopje to investigate all electoral irregularities and prevent their occurrence in the future. The recent presidential and municipal elections held in April were regarded by the Commission as a litmus test for Macedonia’s ability to align with this particular benchmark. The comments issued by the EU executive after the vote were fairly positive, praising the country for the “overall satisfactory conduct” of the elections. The Commission made it clear, however, that in order to get fully ready to open accession talks, Macedonia still needs to “deliver results on judicial reform, the fight against corruption and reform of the civil service”.

MONTENEGRO

Montenegro – an integral part of Serbia until June 2006 – hopes to be the next Western Balkan country after Croatia and Macedonia to obtain EU candidate status. Its official application for EU membership, submitted to the Council in December 2008, has recently been transferred to the European Commission, with a request for an opinion on Montenegro’s readiness to obtain candidate status. A decision to this end came after Germany and the Netherlands, under pressure from majority of member states, lifted their veto. Unlike Finland, Estonia, Greece, Slovakia, Romania, Cyprus, Spain, Luxembourg, the UK and Austria, which spoke in favour of moving to the next stage, Berlin and the Hague insisted on Montenegro’s application process to be put on hold. They argued that a request for an opinion is a political rather a purely technical step, especially in the context of the upcoming European Parliament elections, in June. Meanwhile, other member states and the Commission were of the opinion that a political debate on Montenegro’s membership application should start after rather than before a formal opinion on the matter is issued. On average, the Commission needs 12 to 18 months to prepare such a document.

ALBANIA

To avoid being left behind, Albania decided to submit its application for EU membership at the end of April. However, the request has received rather a cold welcome, as it was put forward against the Commission’s recommendation. Enlargement Commissioner Olli Rehn has publicly suggested that Tirana “should not rush” and should submit its application only after the general elections in June. Hoping for an increase in popularity ahead of the vote, the government in Tirana decided otherwise. Given these circumstances, it is rather unlikely that Albania’s application process will be moved forward before the June elections. The EU on many occasions has said that holding a fair and transparent vote is a crucial condition for a positive assessment of Tirana’s application at this stage.

Furthermore, the request would need to be endorsed by all member states, including Germany and the Netherlands – main opponents of further EU enlargement. Although the decision to proceed with the application does not formally require unanimity among the member states, the Czech Presidency and then Sweden, which is taking over the EU helm as of 1 July, are expected to seek consensus on the issue in the Council following the precedent set in the case of Montenegro (see above). Hence Tirana may need to wait for a green light from the member states even longer than Podgorica. Should the elections not be conducted according to international standards, the process could get blocked for a long time.

SERBIA

Unlike Montenegro and Albania (ratification process of the SAA with Montenegro is pending, SAA with Albania entered into force on 1 April 2009), Serbia has not achieved much progress over the recent months in its stabilisation and association process, which serves as the gateway to EU membership negotiations. Due to Belgrade’s failure to fully cooperate with the ICTY, the launch of the ratification process in the EU of the stabilisation and association agreement (SAA), signed in April 2008, has been put on hold indefinitely. Although the Serbian government started to unilaterally implement the accord as of 1 February 2009, the country has been de facto blocked from moving forward on its integration path. Without the SAA being unfrozen by the EU, there is no point for Serbia to put forward its request for candidate status. If submitted, the application would hardly stand a chance of being endorsed by the member states. According to the EU rules of procedure, a track record of successful implementation of the SAA is required for any Western Balkan country to move to the next stage in the integration process. Belgrade is therefore intensively trying to improve its cooperation with the ICTY, including stepping up efforts to arrest the remaining fugitives at large, Ratko Mladic and Goran Hadzic. Their arrest and transfer to The Hague is a sine qua non condition set by the Netherlands for its veto on the implementation of the SAA to be lifted. The issue has been under consultation between Serbia and the ICTY’s Chief Prosecutor, Serge Brammertz, who is due to present his report to the UN Security Council in June. The document, assessing Belgrade’s progress in cooperation with the tribunal, is expected to be taken into account by the EU while deciding whether to start implementing the interim trade agreement with Serbia and possibly also to unfroze the SAA ratification process (the interim agreement – the trade part of the SAA - is being implemented until the SAA enters into force).

Meanwhile, Belgrade says it intends to apply for EU membership immediately after the SAA is unblocked, possibly in the second half of 2009.

KOSOVO

Pristina has not made much progress towards EU membership since it declared independence from Serbia, on 17 February 2008. Although almost a year ago the European Council recalled the EU’s ‘willingness to assist the economic and political development of Kosovo through a clear European perspective, in line with the European perspective of the region, the new-born country remains de facto blocked from moving forward in its integration process. This paradoxical situation is the result of the Union’s internal division. Five out of the 27 member states have refused to recognise Kosovo’s independence and have been objecting to any decisions that could legitimate its new status. Kosovo therefore remains in limbo, with the application of Community instruments, such as a visa policy, being frozen indefinitely. Some sort of a breakthrough is expected in the autumn of this year, when the Commission is due to present a ‘study’ on how Kosovo’s political and social-economic development can be furthered and how the country could and should progress, together with the rest of the region, along the stabilisation and association process. However, the low-profile status of this document suggests that no much progress should be expected after its publication. It is hardly likely that any of the five countries opposed to Kosovo’s independence will change their mind in the near future, leaving Kosovo somewhere in between an international protectorate and an independent state.

BOSNIA AND HERZEGOVINA

Due to its strong internal political divisions, Bosnia’s progress towards EU membership has been stalled for years now. The requirements set in 2008 for ending the international protectorate in the country have not yet been met. Despite signing the SAA with the EU, in June 2008, the country has no chance to progress in the near future on its integration process. Before applying for EU membership, Sarajevo has to deliver on EU-related reforms and on the benchmarks for closing the Office of High Representative (OHR), paving the way for the EU to reinforce its presence in the country. Last November, the EU member states had expressed their readiness to “step up” the bloc’s role in Bosnia and to work on progressively achieving a “transition from the OHR to a stronger European Union presence” by mid-2009. It is foreseen that the OHR will be replaced by the “reinforced EU Special Representative (EUSR) office” supported by the European Commission Delegation to Bosnia, according to an internal Commission document seen by Europolitics. The office would comprise around 80 people located in the main office in Sarajevo, with a small presence in Banja Luka and in Brussels. The document to be submitted to the member states in the coming weeks suggests that the EUSR office and the EC Delegation in Sarajevo would “remain distinct institutions, but work as a team”.

However, due to the high level of tensions between Bosnian leaders following the filing of criminal charges against Bosnian Serb Prime Minister Milorad Dodik in February and the lack of progress on the issue of state property (one of the benchmarks for closing the OHR), it is not clear when the transfer of power could take place in Bosnia. There is also the question whether after taking over the supervision in Bosnia the EUSR should retain the plenipotentiary ‘Bonn powers’ of the OHR that have been the international community’s primary tool to overcome obstruction.

TURKEY

Over three years after the start of its accession talks, Turkey remains at the early stages of the process due to its slow progress in reforms. The snail’s pace of talks has been especially evident since the beginning of 2009. Preoccupied with the local elections held at the end of March, the government in Ankara has made hardly any progress in implementing the required EU-related reforms. As a result, no new chapter has been opened or closed since December 2008 and it is still not certain if any progress at all would be possible by the end of the Czech EU Presidency. The adoption of laws necessary for two chapters to be opened in the first half of 2009 - on social policy and employment (Chapter 19) and taxation (16) – remains blocked in the parliament. To move forward in talks, Turkey has to adopt unpopular and politically as well as socially painful reforms, including a new law on trade unions (19) and an action plan on substantially reducing the discriminatory taxation of alcoholic products, imported tobacco and imported cigarettes (16). “It is technically possible that Turkey will fulfil these conditions in due time,” an EU official told Europolitics. “In practice, however, only little time has been left before the accession conference, scheduled for 26 June,” he added. Two other chapters are ‘technically’ ready for opening: energy (15) and education and culture (26). However, both areas have been blocked by Cyprus for certain political reasons.

The current stalemate does not augur well for the second half of 2009 either. Four other chapters (public procurement; competition; food safety, veterinary and phytosanitary policy; and environment) identified by the Commission as ready for opening provided Ankara meets certain conditions are also in a limbo. “No progress has been made by Turkey on those areas over recent months,” the EU official said.

Since the start of accession talks, in October 2005, Turkey has opened ten chapters and managed to provisionally close only one out of 33 areas subject to negotiation.

ICELAND

Alongside Albania and Serbia, Iceland is also mulling over applying for EU membership in the near future. This island state of 300,000 people has never formally knocked on the EU’s doors, mainly over fears that accession would negatively affect its prosperous fisheries sector. It was enough for the Icelanders that as a member of the European Economic Area since 1994 their country has been allowed to fully participle in the EU single market without being a member. Iceland is also a member of the Schengen border-free zone.

The debate over the country’s EU accession has taken on a new dimension after the eruption of the global financial crisis, in October 2008, which has thrown Iceland into one of the worst economic recessions in its modern history. These new circumstances have prompted the political leaders to reconsider EU membership as one of the options to drag the country out from its current financial difficulties. According to experts, accession to the EU and the subsequent adoption of the euro could bring Iceland back on a stable economic track. However, the public and the political elite remain divided over the issue.

Following the early elections of 25 April, Iceland is now widely expected to make a swift application for EU membership. The newly elected government coalition of Social Democrats and Left-Greens, headed by the Europhile Johanna Sigurdardottir, holds an absolute majority in parliament. Sigurdardottir has said that she wanted to begin the EU application process “within weeks” of the election. She said she was confident that her country, whose currency lost nearly 44% of its value last year, could adopt the euro within for years as Iceland meets 70%-75% of the EU criteria. The Left-Green movement remains opposed, primarily to protect the country’s fisheries sector. However, the leader of the Left-Greens, Steingrimur Sigfusson, has recognised the urgency to discuss the issue.

SPECIAL CASE: NORTHERN PART OF CYPRUS

Although Cyprus as a whole was admitted to the EU in May 2004, the acquis communautaire remains ‘suspended’ in the northern part of the island, which is controlled by the Turkish Cypriot community. The suspension, which has been in effect for five years, could only end if the two parts of the island manage to reunify after almost 35 years of division. Since last November, the Greek leader, Dimitris Christofias, and his Turkish Cypriot counterpart, Mehmet Ali Talat, have been carrying out reunification talks. Despite holding some 30 meetings to date, they are far from a final agreement. During the ongoing first phase of discussions, the leaders will try to reach consensus on six main issues: governance and power sharing; property; EU matters; economic matters; security and guarantees; and territory. The items on which no agreement could be reached during this first round of talks will be the subject of a cross chapter give-and-take in the endgame of the negotiations. To date, the leaders have managed to conclude discussions on three issues: governance and power sharing, property, and EU matters. On 6 April, they launched negotiations on economic matters, to be followed later on by talks on security and guarantees and territory.

Whereas some progress has been made on the chapters on governance and power sharing as well as EU matters, “fundamental disagreement persists on property,” an internal EU document obtained by Europoliticssays. It also emphasises the fact that “there are different perceptions among the leaders as to the way the united Cyprus will come into existence”. The Greek Cypriot side considers the future settlement as a kind of constitutional reform of the existing Republic of Cyprus, which will just be federalised. The Turkish side, on the contrary, considers the future united Cyprus as a new entity created by two founding states. In addition, Turkish Cypriots seek a looser federation with more decision making power going to constituent states, to prevent domination by the majority Greek Cypriots, while the latter want a stronger federal government to ensure a well-functioning state and prevent any deal leading to permanent partition.

If the two leaders manage to reach a settlement it will be subject to separate simultaneous referenda in both communities. “In an optimistic scenario, the settlement could enter into force at the end of 2009,” the document says. However, as recent opinion polls show, there is still much scepticism with regard to the settlement process on both sides. A recent poll carried out by the Turkish Cypriot CADEM Research Institute asked Turkish Cypriots what their response would be if the 2004 referendum was repeated: 54% replied ‘no’ and only 28% said ‘yes.’ In addition, after the victory of the opposition National Unity Party, which favours a two-state solution, in Northern Cyprus’ parliamentary elections, held on 19 April, Talat’s reunification efforts were put in jeopardy.

The chapters

To date, Zagreb has opened 22 out of 33 chapters subject to accession negotiations. Seven chapters have already been provisionally closed. Twelve other chapters are under negotiation in the Council. Nine chapters are still to be opened (justice, freedom and security; taxation; capital; environment; regional policy; CFSP; food safety; fisheries and agriculture), while three are being prepared for closing (trans-European networks, customs and company law). However, eleven chapters awaiting either opening or closing are being blocked by Slovenia over the two countries’ border dispute. The Commission’s road map on the conclusion of accession talks with Croatia foresees the closure of nine additional chapters to the three already under discussion in the Council during the Czech EU Presidency’s term of office (by the end of June). According to an EU internal document seen by Europolitics, at least two of these chapters will likely not be closed. Due to the delay in reforms, Croatia will not be able to provisionally conclude negotiations on transport and services, the document says.

An application for membership is submitted by an applicant country to the Presidency of the EU, which in due time forwards it to the Council. The Council then asks the Commission for a recommendation. In order to prepare such a recommendation, the Commission sends a questionnaire, including numerous, mostly technical, questions to the applicant country. After receiving the answers, it assesses the applicant’s preparedness for being granted candidate status. The opinion of the Commission analyses the country’s application on the basis of its capacity to meet the criteria set by the Copenhagen European Council of 1993 and the conditions set for the stabilisation and association process for the Western Balkans. After receiving the Commission’s opinion, the Council, by consensus, decides on the application. In the case of Macedonia, which was granted candidate status in December 2005, the whole process took one and a half years.

Procedural rules

An application for membership is submitted by an applicant country to the Presidency of the EU, which in due time forwards it to the Council. The Council then asks the Commission for a recommendation. In order to prepare such a recommendation, the Commission sends a questionnaire, including numerous, mostly technical, questions to the applicant country. After receiving the answers, it assesses the applicant’s preparedness for being granted candidate status. The opinion of the Commission analyses the country’s application on the basis of its capacity to meet the criteria set by the Copenhagen European Council of 1993 and the conditions set for the stabilisation and association process for the Western Balkans. After receiving the Commission’s opinion, the Council, by consensus, decides on the application. In the case of Macedonia, which was granted candidate status in December 2005, the whole process took one and a half years.