ALBANIA
While Albania is recognised as a country that continuously played a constructive role in regional stability, the European Commission considered that "political parties' lack of will to co-operate continued to hold back reforms, particularly in the electoral and judicial field". Judicial reforms have made very limited progress during the year and the judiciary's functioning has been of a poor standard because of "corruption and shortfalls in independence, transparency and efficiency".

The EC acknowledges that the fight against corruption and organised crime have been in the focus of the Albanian leadership's endeavours. However, it is considered that corruption remains widespread in the country.

While police response to serious crimes has improved, "efforts against organised crime remain hampered by corruption and a weak witness protection programme".
The report acknowledges that Tirana has continued to investigate and prosecute trafficking of human beings vigorously, and that border controls have been strengthened, however Albania remains a significant transit country for people trafficking.

Civil society in Albania is weak, and is not sufficiently involved in policymaking.

Albania is continuing to foster good relations with other western Balkans and neighbouring EU countries.

Albania's economy has been growing fast. Macro-economic stability has been maintained even while the external deficit has further widened, because of the crisis in the energy sector.

However, "inadequate implementation of the rule of law continues to impede the smooth functioning of the market economy and affects the business climate".

BOSNIA AND HERZEGOVINA
Bosnia and Herzegovina has been lagging behind in the reform agenda. This is blamed, in part, on "complex institutional arrangements, disregard of Dayton agreement and nationalist rhetoric".

Urgent measures are needed to ensure effective functioning of state level institutions, the report says.

The EC says it is not aware of any progress in improving co-ordination between the central state and its two entities, the Bosnian Serbs' Republika Srpska and the Federation that brings together mostly Bosniaks (Muslims) and Croats.

"Overall performance of executive and legislative institutions has remained poor. Discussions on constitutional reform have stalled", the report says.

Bosnia has made little progress in the fight against corruption.

Human rights and the protection of minorities remain problem areas, due, in part, to religious intolerance. "Further efforts are necessary to combat intolerance and ethnic discrimination", the report says.

Co-operation with the International Criminal Tribunal for the former Yugoslavia (ICTY) has improved and it "is now at a generally satisfactory level". However, it recalls that full co-operation with the ICTY is a precondition for signing a Stabilisation and Association Agreement as part of Bosnia's integration with the EU, and meet key European Partnership priorities.

Bosnia has made little progress in establishing a functioning market economy. The economy itself has expanded rapidly and overall macro-economic stability has been maintained, but there are still threats to fiscal sustainability.

CROATIA
Croatia as a candidate country engaged in accession talks with Brussels is generally viewed as maintaining its good track record on strengthening democracy and rule of law, as well as meeting the political criteria of membership.

"However there is considerable scope for further improvement in the judiciary, in public administration and in the fight against corruption", the report says.

Zagreb has made limited progress in reforming public administration, while the system remains inefficient.

Little progress has been made with regard to improving the accountability, impartiality, professionalism and competence of the judiciary.

In contrast to several other western Balkans countries, Croatia has notched up some successes in the fight against corruption, but the problem remains widespread and the EC considers that there is a need for greater efforts to prevent, detect and prosecute graft.

"No indictment or verdict has been issued in any high-level corruption case", the report says, adding that the concept of a conflict of interests is little understood in Croatia.
The position of minorities poses a serious problem for Zagreb. "Croatia needs to encourage a spirit of tolerance towards the Serb minority and take appropriate measures to protect those who may still be subject to threats or acts of discrimination, hostility, or violence".

Croatia has made little progress in finding definitive solutions to various pending bilateral issues with its neighbours, particularly as regards the demarcation of borders which has affected relations with Slovenia.

Croatia's economy has registered strong and accelerating growth, and the country is praised for maintaining macro-economic stability, including low inflation. Croatia is considered to be a functioning market economy, but external imbalances may affect macro-economic stability.

MACEDONIA
Frequent tensions and problems in achieving constructive dialogue between major political actors undermined the effective functioning of political institutions and led to a slowdown of reforms in Macedonia, according to the EC.

The absence of communication between key leaders in the country and the behaviour of the opposition have had a negative influence on the work of political institutions.

"The boycott of parliament by one of the major opposition parties as well as the poor quality of co-operation between the president and the prime minister hindered the effective functioning of the political institutions", the report says.

The fight against graft in the country has yielded some results, but "corruption is widespread and constitutes a very serious problem".

While large quantities of drugs have been seized, insufficient progress has been made in the area of tackling human trafficking.

The political deadlock in Macedonia has been affecting the proper functioning of the judicial system.

The country has made some progress in political criteria, while implementation of the 2001 Ohrid Agreement, which brought an end to a six-month conflict between ethnic Albanian guerrillas and the security forces, continues to contribute to the consolidation of democracy and the rule of law.

Human rights and the protection of minorities, including inter-ethnic relations, have improved in Macedonia, according to the document, which calls on all parties to further develop trust among ethnic communities.

Macedonia has maintained full co-operation with The Hague Tribunal, and Skopje is also praised for its constructive position towards the Kosovo status process. Macedonia has been fostering good relations with the other countries of the western Balkans.

It is said that the country has been gradually implementing administrative reform, while it is confirmed that the second phase which relates to fiscal decentralisation, has begun.

The economy in Macedonia has registered a markedly accelerated growth. Macro-economic stability has been maintained as structural reforms have made further progress.

"But, the persistence of very high unemployment remains major cause of concern", the report says.

The report concludes that Macedonia cannot, as yet, participate fully in EU policies because its institutional and administrative capacity is insufficient.

MONTENEGRO
The EC expects Montenegro to produce significant results in relation to improving administrative capacity and tackling corruption.

As the newest state in the region, Montenegro is praised for making good progress in establishing the necessary legal framework and institutions following its declaration of independence in June 2006.

"The parliament and government adapted to the requirements of independence. They continued improving their efficiency," the report says.

Nevertheless, the capacity of parliament needs to be improved.

The report recognises the government's attempts at reorganisation as strengthening the new institutions, with a focus on defence reform, foreign affairs as well as and justice and home affairs.

"However, the government's efficiency, in particular as regards implementation of legislation, needs to be further enhanced," the report says.

Corruption in Montenegro remains widespread and represents a serious problem.

Public administration in Montenegro is considered weak and inefficient. The EC requires further efforts in ensuring the impartiality of public administration and the strengthening of its capacity, including the training of personnel.

Podgorica has achieved some progress in administrative and legal reform, but there are still some obstacles in the completion of this process because of a lack of consensus on issues relevant for the constitution, in particular language and religion.

Lack of progress is noted also in the areas of border policing, asylum, and migration, and the EC recommends further efforts to deal with these.

Another serious problem in Montenegro is money laundering. Police capacity is limited and there is not yet proper monitoring of financial transactions outside the banking system, especially in real estate and foreign investment, the report says.

Some progress can be reported in the fight against drug smuggling, but it remains a serious problem.

Regarding human rights and the protection of minorities, Podgorica has made progress in establishing a necessary framework following independence. However, "the creation of a solid basis for minority rights protection requires the inclusion of appropriate provisions in the constitution."

Civil society "remains fragile and tensions between government bodies and non-governmental organisations persist".

Montenegro has maintained a satisfactory level of co-operation with The Hague Tribunal, and Podgorica has continued taking up international obligations since independence.

The economy has been growing fast and macro-economic stability has been improved. "Risks subsist in particular from the large current account deficit".

However, poor administrative capacity has been affecting the economy. "Though structural reforms were pursued, weak institutional capacities and deficiencies in the rule of law continue to hamper the proper functioning of the market economy," the report concludes.

SERBIA
Sharp divisions among political parties in Serbia have been affecting the overall pace of reform, which has slowed down, the report says.

"Nationalistic rhetoric remains strong and has negatively affected the political climate", the EC says. The Kosovo issue has continued to dominate the political agenda.

The Serbian government has managed to achieve early positive results in co-operation with The Hague Tribunal, which enabled the EC to finalise negotiations on a Stabilisation and Association Agreement (SAA).

"Serbia has still to meet its international obligations to fully co-operate with ICTY, before an SAA can be signed."

There is a need for further strengthening of democracy and the rule of law in Serbia. "The work of parliament has been hindered by the political situation."

Civilian oversight of the military is a key European Partnership priority and the emphasis in this area needs to be ensuring the effectiveness of parliamentary control and financial oversight.

Another key partnership priority, judicial reform, is viewed as lagging behind.

Although Serbia has adopted an action plan to implement the national strategy against corruption, graft remains widespread and constitutes a serious problem. "An anti-corruption agency needs to be established and the anti-corruption plans have still to be fully implemented".

Money laundering is another serious problem in Serbia, while the EC considers that implementation of the new legislative framework has been slow. Further legislation and a strategy to prevent money laundering and the financing of terrorism have still to be adopted.

While some progress has been made in the fight against organised crime, it poses a serious problem in Serbia and more concrete efforts are needed.

Advances are noted in combating the trafficking in human beings through improved regional co-operation and the adoption of a national strategy. However, "Serbia has been recognised as a source, transit, and destination country".

The overall condition of human rights and the protection of minorities have improved, and the EC considers that Serbia is relatively well advanced in meeting its obligations.

Improvements have been noted in minority representation in public services and in the use of minority languages. "The inter-ethnic situation in Vojvodina has continued to improve. The situation in South Serbia has remained stable but tense. However, tensions persist within the ethnic Albanian community and their relations with the Serbian population," the report says.

On minorities, the report says that the situation in the Sandzak has worsened, and there has been a deepening of religious divisions within the Muslim community, including even outbreaks of violence.

Serbia is praised for playing a positive role in improving regional co-operation across South Eastern Europe. However, Belgrade is criticised for its approach towards Kosovo, described in the report as not constructive.

The report notes that Serbia has rejected the proposal of Marti Ahtisaari while maintaining that Kosovo should remain an integral part of its territory. "Serbia has continued to discourage Kosovo Serbs from participating in the provisional institutions and self government elections in Kosovo." the report says, and remarks that Serbia has already called for a boycott of the forthcoming parliamentary and municipal elections in the province.

The Serbian economy has continued to grow strongly but progress in macro-economic stabilisation has been mixed. Serbia has made some progress towards establishing a functioning market economy.

"The new government places emphasis in its programme on European integration, but the results have been mixed," the EC says.

KOSOVO
Despite the delays determining its long-term status, UN-administered Kosovo has managed to maintain overall stability regarding democracy and the rule of law.

"The status issue has continued to dominate Kosovo's politics," noted the report - the third in a row to be published separately from the chapter on Serbia.

The main political challenges for Kosovo remain the strengthening of the rule of law, anti-corruption policy, the fight against organised crime and enhancing the dialogue between communities.

The assembly's work has shown improvement during the past year, but the EC says that the "assembly's law-making and administrative capacities need further strengthening".

The efficiency of the public administration has shown some improvement, but in the assessment of the report's authors, Kosovo's central and local administration remains weak and inefficient. Civil servants are still vulnerable to political influence, the report says.

The judicial system in Kosovo has also serious inadequacies, according to the document. "It is weak and vulnerable, while operating in a complex legal environment in which there is considerable uncertainty".

As elsewhere in the region, corruption in Kosovo is widespread and constitutes a serious problem.

Justice, freedom and security are fields where Kosovo has made uneven progress in bringing Kosovo's legislation and practices closer to European standards.

Responsibilities in the field of combating money laundering have been only partially transferred from the UN administration to Kosovo's provisional institutions.

Uneven progress can be reported in combating money laundering. Investigations in a number of cases were concluded, but no court sentences have been yet handed down. The report also notes the lack of specialised prosecutors to deal with money laundering, and says that economic crimes remain a major challenge.

Kosovo is one of the main traffic routes for drugs to Western Europe, according to the EC. However, the report notes also that there is no strategy to prevent or combat illegal transport and the use of drugs.

The report recalls that the number of cases of organised crime investigated increased substantially in the first half of 2007.

"Kosovo is still a destination and transit area for victims of trafficking of human beings. No special legislation on trafficking in human beings exists," the document says.

Kosovo has made some progress in co-operation with ICTY in The Hague, but the intimidation of witnesses remains a particularly difficult problem.

In the EC's assessment, little advance has been made in area of human rights and the protection of minorities. "Religious freedom is not fully respected, attacks on religious sites have persisted, and investigations are not always conclusive", the report notes, and adds that "the legal system is not yet fully functional".

Very little progress has been made in relation to returnees, refugees and internally displaced people. "The rights of minorities in Kosovo are guaranteed by law, but restricted in practice because of security concerns," the report says.

The economy has also been influenced by Kosovo's unresolved status. "Economic development continues to be seriously impeded by political uncertainties, insufficient rule of law, limited production capacity and weak infrastructure". The report concludes that Kosovo has made little progress towards establishing a functioning market economy.

Gjeraqina Tuhina is a Brussels correspondent for Kosovo`s public TV, RTK. Balkan Insight is BIRN`s online publication. www.birn.eu.com