• EUROPE NEWS
• OCTOBER 15, 2009

Turkey Receives a Mixed Progress Report

• Text

By MARC CHAMPION and ADAM COHEN

BRUSSELS — The European Union criticized a tax case against Turkey’s biggest media group as posing a threat to press freedom, but also praised the government’s foreign policies and its overtures to the country’s large Kurdish minority, in a progress report on the country’s EU membership talks.

The $4 billion in fines and penalties that Turkey’s tax authority is demanding from Dogan Yayin Holding AS in two cases, “potentially undermine the economic viability of the Group and therefore affect freedom of the press in practice,” the European Commission said in a mixed annual progress report on Turkey’s bid to join the 27-nation bloc.

Olli Rehn, the commissioner for enlargement, told reporters his team had analyzed the Dogan tax case. “I have asked the Turkish authorities to treat this matter very seriously,” he said. He added that with fines larger than the company’s annual turnover, the case “feels like a political sanction” as well as a fiscal one. Dogan controls about 50% of media outlets in Turkey and has been critical of the government.

Turkey’s government strongly denies that the Dogan case is politically motivated. Officials note the country has a large underground economy and say they are merely pursuing unpaid tax from Dogan and thousands of others.

Turkey’s chief EU negotiator Egemen Bagis welcomed the report, describing it as the most objective to date, in remarks to Turkish media.

The progress report on Turkey was one of three on EU candidate countries, along with Croatia and Macedonia, as well five on ex-Yugoslav nations, including Albania, Serbia and Bosnia Herzegovina, which the EU has agreed should eventually be allowed to join the bloc.

Talks with Croatia are nearing their final phase, the commission said, after the ex-Yugoslav republic resolved a border dispute with neighboring Slovenia. All member states countries have to approve a new member, and Slovenia joined in 2004.

Turkey faces a much tougher road. Eight so-called negotiating chapters have been blocked in a dispute with Cyprus over Turkey’s treatment of the divided island.

The commission praised Turkey’s recent signature of a deal with Armenia to reopen the border between the two countries and establish diplomatic relations. Turkey’s effort to improve relations with the Kurdish authorities in Iraq and with its own Kurdish minority also gained praise from the commission. So, too, did a law passed in June to demine Turkey’s border with Syria, and Turkey’s efforts to mediate in the Middle East.

But EU officials say Turkey’s EU bid isn’t helped by such high-profile cases as Dogan. Turkish authorities levied fines and penalties of 915 million Turkish lira ($633 million) on the Dogan group’s media unit in February, and a further 4.8 billion lira last month. The government on Tuesday put a lien on some of the company’s assets after rejecting collateral it offered to put up while fighting the tax charges.

Write to Marc Champion at marc.champion@wsj.com and Adam Cohen at adam.cohen@dowjones.com

Printed in The Wall Street Journal, page A2

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