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Tirana has been negotiating a Stabilisation and Association Agreement with the EU since January 31, 2003. The Commission considers that the progress achieved so far paves the way for the closure of these negotiations.

Overall, the political situation has improved. Albania's democratic, judicial and public administration institutions have been reinforced. Serious efforts have been made to fight corruption and to improve respect for human rights. However, Albania needs to improve the implementation of legislation, media freedom, the efficiency and independence of the judicial system, and the enforcement of property rights.

The economy of Albania operates to some degree within the framework of functioning market principles. Growth has remained strong, fiscal consolidation has continued and the budget deficit has declined. The privatisation of small- and medium-sized enterprises has been completed, although the privatisation of large enterprises has been delayed. However, public sector governance remains weak. The performance of the financial sector, the enforcement of property rights, and the business environment all need to improve.

Albania has made some progress towards meeting European standards, but administrative capacity needs further strengthening. Albania notably needs to intensify its efforts on free movement of capital, competition, agriculture and fisheries, the visa system and environment, and fight against organised crime.

EU financial assistance to the country in 2004 at 2005 amounts to euro 107.2 million.

Bosnia and Herzegovina.

On October 21, 2005, the Commission recommended the opening of negotiations on an SAA with Bosnia and Herzegovina and presented draft negotiating directives for adoption by the Council.

At the political level, the country is urged to improve the functioning of its institutions, in spite of recent progress (local elections, cooperation with the TPIY).

There have been some positive developments in the economic field: economic growth rebounded in 2004, inflation remained low and some steps were taken to improve the business climate. However, the country's economy operates only to a limited degree according to market principles. The privatisation process needs to accelerate and the capacity of the judicial system to handle bankruptcies and property rights must be strengthened.

Progress has been made towards meeting European standards, notably through adoption of new legislation and the establishment of new institutions. However, efforts need to be seriously enhanced.

EU financial aid for 2004 at 2005 amounts to euro 121.4 million.

Serbia and Montenegro.

The EU opened negotiations with Serbia Montenegro on October 10, 2005, with a view to concluding a Stabilisation and Association Agreement (SAA).

Regarding the political situation, the report notes the entry into force of a revision of the Constitutional Charter, the pursuit of public administration reform and establishment of the administrative structures necessary for the SAA. The country has made significant progress in its cooperation with International Criminal Tribunal for the former Yugoslavia and this progress must continue. The country must make further efforts to respect fully the Constitutional Charter, reform the public administration and the judiciary, fight against corruption, and ensure effective democratic control over the military.

In both republics, the economies are partly market based although significant reform efforts are still needed to fill the gaps in terms of competitiveness. In Serbia, inflation and salary pressures have risen and the business economy is battling. In Montenegro, external debt continues to grow and development in the private sector is blocked by an inefficient legal system.

In terms of the internal market, the two republics have made satisfactory progress although they need to continue striving to improve their legislative and administrative capabilities to be able to deal with future obligations stemming from the SAA. In the same way, no visible progress has been made with respect to visas, border controls, asylum or immigration.

Financial aid provided by the EU is not negligible, a sum of euro 427 million was provided in 2004 and 2005.

Moving on to Kosovo, as yet to be given a definitive statute, the report states that in general, the provisional auto-administration institutions have demonstrated greater commitment to implementing UN standards. On the other hand, the country has shown little progress with respect to the return of refugees, free circulation and property rights. Kosovo is also establishing a regulatory framework of functioning market principles and the privatisation process is underway although further efforts are needed to address issues such as property rights, the weakness of the judiciary and inadequate infrastructure. Kosovo has made progress in implementing European standards, notably in the areas of taxation and to strengthen Kosovos law enforcement agencies.

The European Commission will continue to provide significant financial assistance to support Kosovo. For the years 2004 and 2005, euro 138.4 million is available for Kosovo.

For the full texts of the three European partnerships consult our website: EISnet: > Advance Search > Reference= EURE;3005;404
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Publication:European Report
Geographic Code:4E
Date:Nov 11, 2005

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