EU Report Card

Serbia's cooperation with the war crimes tribunal in The Hague, Netherlands, "marks a real turning point" away from its nationalist past, EU Enlargement Commissioner Olli Rehn said after talks with chief UN prosecutor Carla del Ponte. "A new European dawn is in the making in Serbia."

"I have decided to initial the stabilization and association agreement (SAA) with Serbia tomorrow here in Brussels," Rehn told reporters on Tuesday, upon the issuing of the bloc's annual enlargement report.

However, Serbia must turn in alleged war criminals Ratko Mladic and Radovan Karadzic before the final signing could occur, Rehn added. Prosecution of war crimes from the 1990s Balkan conflict has remained a tenuous issue in EU dealings with several of the Balkan states.

The SAA, which has been under negotiation since 2005, provides a framework of mutual commitments on a wide range of political, trade and economic issues and is intended to culminate in EU membership negotiations.

Serbia will be the third of the former Yugoslav republics to enter into a Stabilization and Association Agreement with the European Union, following Macedonia in 2004 and Croatia in 2005.

In addition to Serbia, Albania, Bosnia, and Montenegro hope to be declared formal EU accession candidates in the coming years.

The EU's report, however, pointed out that has been "steady, though uneven progress in the Western Balkans (toward membership) and the region continues to face major challenges." The implementation of judicial reforms and the fight against corruption and organized crime are key areas that continue to need addressing, according to the report.

Croatia is likely to be next EU member

The European Commission also said in its annual report that Croatia's bid for EU membership is on track, but that more progress is needed.

"The Commission expects substantial progress...in the course of the year ahead, provided that the country maintains the necessary reform momentum and meets the conditions," the report said.

Improvement is particularly needed in the judicial and administrative reform, minority rights, refugee return and the restructuring of the steel and shipbuilding industries, according to the report. The prosecution of war criminals was also emphasized.

"Many crimes remain unprosecuted, often due to a combination of a lack of evidence, unwillingness of witnesses to come forward and less than proactive approach of police and prosecutors," the EU report said.

Croatia started accession talks with the bloc in 2005, along with Turkey, and, according to EU diplomats, is the only country likely to join in the next five years.

EU slams rights situation in Turkey

Turkey is progressing too slowly, said Rehn on Tuesday.

"It's simply not acceptable that writers, journalists and other citizens are persecuted in a European democracy for critically and non-violently expressing their opinions," he said of the situation in Turkey.

The EU's report did not go into detail on the current political and military tension between Turkey and Kurdish militants in Iraq.

After two years of accession talks, the country still has to improve minority rights, amend a law restricting the freedom of speech and press, normalize relations with Cyprus and move ahead with other reforms before it can join the EU, according to the enlargement report.

Ankara on Tuesday pledged to step up the pace of its reforms.

"Our commitment to completing our shortcomings and efficiently implementing the reforms on the ground is not decreasing -- on the contrary it is increasing," a foreign ministry statement said. "We are determined to pursue reform until our country catches up with the highest levels of democracy and human rights."

Turkey also said its accession process should not be "shaped in line with the preferences of the political leaders of some member states."

Politicians in a number of European capitals, including Paris and Berlin, have come out against full membership for Turkey in the 27-member bloc.

While officially sticking to the European line of potential accession for Turkey, German Chancellor Angela Merkel has long said she is in favor of offering the country a "privileged partnership."