The European Union's executive arm said yesterday that Croatia could wrap up EU entry talks next year and recommended that the bloc start membership negotiations with Macedonia.

The European Commission said other EU hopefuls including Turkey had a lot more to do, criticising corruption, weak administrations and making clear that it would take many years before the bulk of them could join the now 27-country EU.

"If Croatia meets all outstanding benchmarks in time, the accession negotiations could be concluded next year," the Commission said in an annual report on enlargement.

Croatia's accession was made possible after it settled this month a border dispute with EU member Slovenia, which had frozen entry talks for a year.

The report did not cover Iceland, which applied to join the EU only recently after being hit hard by the economic crisis, but EU Enlargement Commissioner Olli Rehn said the north Atlantic island could join the bloc at the same time as Croatia.

"Once we are sure that Croatia and Iceland are ready, they should join. If they are ready more or less at the same time, if it is a difference of a few months, then from the EU point of view, it makes sense to have those countries join at the same time," Mr Rehn said.

The report said Turkey must step up political and economic reforms, improve the rights of minorities, women and trade unions as well as normalise relations with Cyprus.

Ankara recognises the northern Turkish-dominated part of Cyprus and refuses to normalise ties the southern part, which is an EU member. The island was split by a Turkish invasion triggered by a brief Greek-inspired coup in the early 1970s.

The French government opposes Turkey's full membership and Germany has doubts.

The Commission also recommended that EU governments open membership talks with Macedonia, another ex-Yugoslav country.

"The country has made convincing progress and substantially addressed reform priorities," Mr Rehn told a news conference.

Diplomats say a dispute with EU member Greece over Macedonia's name could jeopardise the plan. Greece has vetoed Macedonia's accession to Nato, saying the country's name implied territorial claims to Greece's own province of Macedonia.

Macedonian Prime Minister Nikola Gruevski welcomed the Commission's announcement, saying: "It's a historic day for Macedonia and its citizens. This report will serve as a signpost for our future steps."

The Commission said other hopefuls Serbia, Albania, Bosnia, Montenegro and Kosovo were making uneven progress towards membership. The situation was especially grave in Bosnia, where leaders of ethnic communities fail to cooperate on reforms.

The report gave no entry date for Croatia. Diplomats say the former Yugoslav state of 4.4 million could become the EU's 28th member in 2012 after ratification of its accession treaty. But before Croatia can wrap up entry talks, it still needs to improve its fight against corruption and organised crime, boost its judicial system and increase cooperation with the United Nations war crimes tribunal for the former Yugoslavia.

"There is more effort to be made but this is probably the last such report as we will certainly wrap up this job by mid-2010," Croatian Prime Minister Jadranka Kosor said.

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