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Ukraine

Real estate in Ukraine (land issues)

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© Arthur A. Nitsevych

International law offices & Veritas Legal advisers
Odessa – Kiev – Nikolaev – Ilyichevsk

February 3, 2005

1 General overview

On October 25, 2001 the Parliament of Ukraine adopted a new land Code which came into effect on January 1, 2002. In keeping with the new Land Code land is finally deemed as an object of private ownership rights. So, landowners have the right to sell, exchange, donate or pledge their plots.

Finally investors can feel more secure. First, now they can deal with actual owners of land. Second, land, unlike movable property, is extremely difficult to hide or move. So, foreign investors are also able to receive something of real value if their Ukrainian counterparts fail to fulfill their contractual obligations.

No doubt, the adoption of the above Code together with other vital performances gave a strike to foreign investment into Ukraine. For instance, on May 17, 2004 Bunge Limited, an integrated, global agribusiness and food company, founded in 1818 and headquartered in White Plains, New York, announced that its European operating arm, Bunge Europe, had entered into a 50-50 joint venture with Estron Corporation to build an oilseed crushing plant in the port of Ilyichevsk, Ukraine. The new plant is adjacent to the grain export terminal owned by Estron Corporation. The plant's projected crushing capacity is 600,000 tons per year, and it is expected to be operational in early 2005. The plant, as a client of the terminal, will have access to the terminal's expanded capacity of 240,000 tons of storage space with two panamax vessel loaders. Who would think it is possible if the land matter cannot be solved?

The most progressive innovation of the above Code is the concept of private ownership of land. Under the previous Code, private land ownership was limited to Ukrainian individuals and the land sale-purchase was permitted under very limited circumstances.

The concepts related to land use classifications and zoning are taken from the previous Code. Lands are divided into a few major categories: residential, industrial and agro-industrial. Residential land includes land plots used for construction of residential buildings within populated areas, public constructions and other structures of public use. Industrial land includes lands provided for the allocation and exploitation of principal and auxiliary buildings and structures of industrial, mining, transportation and other enterprises, including their means of access, communication networks, administrative-infrastructure buildings and other structures.

Another innovation introduced by the Code is the right to pledge (mortgage) privately owned land. However, only Ukrainian banks may act as pledgees (mortgagees), and then only if they comply with the requirements established by law.

The Code also introduces some new concepts in land relations: landed servitudes and good-neighborliness. As for landed servitudes, they may be given to a landowner or user with regard to the limited free or paid use of another land plot. Under the concept of good-neighborliness, land owners and users are required to use land in accordance with its designated purpose to provide the least nuisance to neighboring land plots.

2 Private Ownership and transfer limitations

Although the most progressive concept is full private ownership of land, the Land Code establishes a moratorium on the sale-purchase of agricultural lands until January 1, 2007. Also until January 1, 2015, the area of an agricultural land plot, that may be privately owned, may not exceed 100 hectares. Moreover, until January 1, 2007, land ownership and use rights cannot be contributed to the authorized fund (charter capital) of legal entities.

 

3 Nonagricultural Land

After January 1, 2002, any legal entity or individual can acquire nonagricultural land, except for beaches, roads, and strategically important state-owned lands (e.g., lands of railways, airports, pipelines, atomic energy). No significant limitations are imposed on a nonresident's ownership of nonagricultural land other than those imposed on Ukrainian residents.

 

4 Agricultural Land

The new Code strictly prohibits foreign citizens, legal entities and governments from acquiring agro-industrial lands. Lease arrangements are the only way foreign investors may get an access to agricultural land. Agricultural land inherited by foreigners must be sold within one year after the inheritance. So, agricultural land may be privately owned by legal entities and individuals, with the exception of foreigners.

Only members of farmer organizations and former members of collective agricultural enterprises enjoy the right to privatize agricultural land. However, even after January 1, 2007, agricultural land may only be sold to Ukrainian citizens with a degree in agriculture or work experience in agriculture or who conduct agricultural production activity as well as to Ukrainian legal entities engaged in such activity.

5 Rights of Nonresidents

Ukrainian citizens may acquire ownership rights to land by way of:

  1. a sale- purchase, gift, barter or other civil agreement;
  2. gratuitous transfer from state or communal ownership;
  3. privatization of land plots previously allocated to them for use;
  4. inheritance;
  5. an in-kind share to which they are legally entitled.

Foreigners may acquire non-agricultural land plots by way of:

  1. sale-purchase, gift, barter and other civil agreements;
  2. buyout of land plots on which real estate under their private ownership is located;
  3. inheritance.

However, foreign citizens may only acquire ownership rights to a non- agricultural land plot outside the limits of populated areas if they have privately-owned real estate already located on such land plot.

Foreign legal entities may acquire ownership rights to land plots of non-agricultural designation: (a) within populated areas, when the property acquisition of real estate will be improved by buildings or other objects related to the companies business activities in Ukraine; or (b) outside the limits of populated areas in the case of the acquisition of real estate.

When the moratorium on the sale of land is lifted, foreign investors will have the right to purchase the land under their privately owned production and storage facilities, provided, however such land is not designated as agricultural or other land restricted for foreign citizens and businesses.

Foreigners are also entitled to participate in the privatization of land. However, sales of state-owned land to foreigners must be carried out by the Cabinet of Ministers and agreed to by the Parliament. As for municipal land, sales to foreigners must be carried out by the appropriate local Council and agreed to by the Cabinet.

Further, the sale of state-owned and municipal land is allowed on condition that the foreigner registers a permanent representative office in Ukraine. Foreign countries desiring to acquire state owned or municipal land (e.g. for embassies and consulates) must apply to the Cabinet of Ministers.

To avoid the above long procedure we advise our clients to use a "legal maneuver". First, foreign entities create a Ukrainian legal entity A. Then, the above Ukrainian resident creates another Ukrainian legal entity B which can purchase land plots without any limitations as it is not considered as a foreign company. If desired, after the purchase of land it's possible to change shareholders in B on foreign members.

6 Right to use the land

The Land Code permits two basic rights to land use: (i) the right to permanent use; and (ii) lease rights. The right to permanent use gives the right holder the right to possess and use a land plot under state or communal ownership without an expiration term. Unfortunately, this right may only be acquired by enterprises, institutions and organizations, which are related to state or communal ownership.

Fortunately, the right to lease plots of land is a viable alternative for foreign investors, international organizations and foreign governments. Under the Land Code, leases may be other short-term (no more than five years) or long-term (no more than50 years). The Land Code also allows the lessee to sublet the land plot upon consent from the lesser. All other issues in connection with the lease of land are regulated by law of Ukraine.

7 State registration

Article 210 of the Civil Code effective as of 1 January, 2004 stipulates a general rule that an agreement on real estate shall be registered. An agreement subject to state registration is considered valid as of the moment of state registration that is performed usually by a notary. Registration of title to real estate is carried by the State Registry of rights to Real estate and their limitations.

8 Conclusion

The new Land Code, which came into effect on 1 January 2002, represents a fundamental change to Ukrainian real estate law. It introduces new rights to private land ownership and use as well as the principle that land can be freely bought and sold. The adoption of the Land Code is a significant step forward in Ukraine's efforts to bring its legislation into compliance with international standards. Although the Land Code contains a number of deficiencies and discrepancies of a mostly technical character, it introduces a number of important concepts and principles. These will now govern legal relations in the field of land ownership and related rights, such as the private ownership of land in Ukraine, the right of foreign citizens and legal entities to own certain types of land in Ukraine, servitudes and rights of third parties.

The Code may be considered a revolutionary legal enactment that will lead to the development of a functioning land market in which transactions involving the alienation of land will eventually become commonplace. But, at this stage, the Code is mainly viewed as a basic legal framework for land ownership, with implementation to a large extent dependent on supplementary legal enactments to be adopted. Some steps in this trend have been already made (for example, on December 11, 2003 the Law On land appraisal was adopted).

The Author

Arthur A. Nitsevych, attorney-at-law within International law offices & Veritas legal advisers from Ukraine focused on shipping and commercial law mostly.


Arthur A. Nitsevych, Attorney-at-law (Odessa Kiev Nikolaev):
„Investors can feel more secure in Ukraine“.

Born in 1971. He was educated at the Odessa State University
as a philologist (English language and literature). Then he continued his education
at the Odessa State Legal Academy. He also graduated from the Interregional Academy
of Personnel Management in Kyiv and subsequently obtained a Degree of Master of
science in accounting.
He has got 10 years of practical experience.
Fluent
in English and Spainish.
His areas of practice include investment legislation
and settlement of tax disputes, maritime law.

International law offices & Veritas Legal advisers
15/6, Uspenska St, 65014,
Odessa, Ukraine
Tel. +38 048 7155855
Fax +38 0482 496925
Internet: http://www.murs.com.ua

Slowakei

The World Bank assist Slovak Republic in modernizing its systems for employment

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The World Bank approved a US$ 6 million Human Capital Technical Assistance Project for Slovak Republic. The Project will assist the Government in modernizing its systems for employment, education and social cohesion by developing an effective policy infrastructure to implement, manage and evaluate reforms in these sectors in the Ministry of Labor, Social Affairs and Family (MoLSAF) and in the Ministry of Education (MOE).

The Human Capital Technical Assistance (HCTA) Project is the first technical assistance project to be presented under the new Social and Institutional Development and Economic Management Technical Assistance Program that establishes a provision for up to US$100 million of technical assistance during FY2005-2007 available to the EU8 Poland, Czech Republic, Hungary, Slovakia, Slovenia, Lithuania, Latvia, and Estonia countries as a group.

„The Bank is seeking to introduce new ways of working with the EU8 countries to work more closely in partnership in addressing their development constraints and this is a step in this direction“, said Roger Grawe, the World Bank Country Director for Central Europe and Baltics.

The Human Capital Technical Assistance Project has three main components:

Creation of a Policy Capacity Framework. The objective of this component is to create a framework within which policy making and the design and implementation of components of reform in the two Ministries and associated institutions can be coordinated. The component will provide technical assistance to: (i) assess the current inter-institutional arrangements for policy-making and implementation for social and educational policy making and implementation among the two participating Ministries and their associated institutions; and (ii) develop a consistent and sustainable strategy to increase technical capacity for implementation and monitoring of the reforms.

Investment in Human Resources. The objective of this component is to achieve a significant improvement in the quality of human resources available for policy making and implementation in the two participating Ministries and associated institutions, through training and development of existing staff in policy and reform impact analysis and hiring of new staff through targeted recruitment strategies.

Building and Upgrading Institutional Capacity. The objective of this component is to create and implement an integrated policy management system to structure and guide the various steps in the policy cycle in both the participating Ministries, and in the network of associated institutions. The component will: (i) develop effective mechanisms to improve evidence-based policy making, including the development of important national social and educational action plans and reports; (ii) improve the quality and quantity of internationally comparable data available to policy makers in both MoLSAF and MOE; and (iii) will develop social policy monitoring and evaluation indicators in the field of employment, education and social cohesion.

„Despite the rapid implementation of key reforms in the Slovak Republic in the course of the last few years, there is still a lack of policy-making capacity. In part the problem is one of institutional coordination. There is also a shortage of public employees trained in the field of policy making“ said Mary Canning, head of the World Bank team working on the Project: „Without needed capabilities, skills and knowledge, there is a danger that important social reforms might be reversed or distorted. The current civil service legislation offers the legal basis to enhance the capacity of the civil service to implement and sustain various social reforms, but actual investment in human resources and their management is still lacking.“

The Human Capital Technical Assistance Project will contribute to development of the human resources involved in policy-making; strengthening the management systems and processes governing policy preparation and ensuring the capacity for evidence based policy monitoring.

The World Bank loan has a maturity of 5 years with a 4.5 years of grace period. The Human Capital Technical Assistance Project will be implemented over the next 3 years and will be completed in 2008.

Rumänien

World Bank Supports Romania Energy Sector Privatization

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The World Bank approved om Dec. 21, 2004, a Partial Risk Guarantee (PRG) for the privatization of the Banat and Dobrogea Electricity Distribution Companies (Discoms) in the amount of EURO 60 million (USD 76.7 million equivalent). The PRG represents a new use of the World Bank’s guarantee instrument in support of privatization transactions.

The PRG aims to support Romania’s energy sector privatization by enabling the Government of Romania and Enel S.p.A. of Italy to implement their Privatization Agreements for the Banat and Dobrogea Discoms.

The PRG will backstop the Government of Romania’s debt obligation to a commercial bank to compensate the Banat and Dobrogea Discoms for loss of revenues resulting from a change or repeal by the Government or the National Energy Regulatory Authority (ANRE) of, or non-compliance by ANRE with, the provisions of the agreed regulatory framework.

The importance of the PRG project is two-fold: it supports Romania’s privatization program in the energy sector and assists the Government and ANRE in the implementation of the regulatory framework. The risk mitigation through the PRG also yielded an additional benefit: it resulted in Enel’s agreement to reduce its return on investment requirement by 2% per annum, translated into a positive impact on the final tariffs. Savings will continue to be realized also after the five-year PRG. This reduction will also be applied by ANRE in the other six distribution companies – all six are to be privatized under the World Bank’s Programmatic Adjustment Loan (PAL) program. Negotiations to privatize the next two electricity distribution companies were completed last week with EON of Germany and CEZ of the Czech Republic.

The International Finance Corporation (IFC) has received a mandate from Enel to provide financing for the Banat and Dobrogea Discoms investment programs.

Enel’s initial investment to acquire a 51% share in the two companies is EURO 112 million. In addition, Enel projects capital expenditure of about EURO 171 million in the 2005-2009 period.

The Partial Risk Guarantee covers a maximum of seven years. The PRG would be priced at 1% per annum on the guaranteed amount payable six months in advance. In addition, there would be a Front-end Fee of 0.50%, an Initiation Fee of 0.15%, and a Processing Fee of up to 0.50%. Of the 1% of the Guarantee Fee, the Bank would refund to the Government that portion of the fee that corresponds to any waiver to Romania of the Bank’s lending spread, subject to there being no breach of the Bank-related Agreements. The above is consistent with the pricing policy for IBRD Guarantees.

The World Bank has been a committed partner in Romania?s development process since 1990, with loans totaling over US$4.2 billion. The 2004-2005 lending program is likely to be the highest amounting to almost US$ 850 million.

Kroatien

World Bank Doubles Assistance to Croatia In Next Four Years

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December 21 2004 the World Bank’s Board of Executive Directors discussed a new Country Assistance Strategy (CAS) for Croatia. The CAS details the Bank’s objectives, strategy, and work plan to assist client countries in achieving their development goals. It outlines the Bank’s planned operations in the country lending, analytical work and technical assistance. The new CAS for Croatia covers 2005-2008 and envisages a four year lending program of up to USD 1.5 billion, depending upon performance, compared to USD 660 million for the previous CAS.

The main objective of the CAS is to support the government’s growth and reform strategy for successful EU accession and integration, while ensuring broad participation in growth and sustainable natural resource management. The strategy calls for a shift in the sources of growth from public sector expenditures and consumption to private sector investment and productivity.

„The goal of the new CAS is to support much of the effort Croatia needs to undertake during the next four years to meet challenging EU accession requirements, and thus we welcome the proposed start of negotiations in March,“ says Anand K. Seth, World Bank Country Director for Croatia, „However, the CAS goes beyond supporting harmonization initiatives required by the Acquis and focuses on accelerating important structural and institutional reforms to ensure faster and equitable growth and enhance Croatia’s ability to cope with competitive pressures in the EU.“

Since the 1999 recession, Croatia has enjoyed solid but moderate economic growth with low inflation. However, the current growth pattern, mainly driven by public sector investment and consumption, is not sustainable. Croatia’s top priority is to enter the EU with a competitive and growing economy and the institutional capacity to meet the demands of membership. The new government’s strategy emphasizes reforms that would lead to accelerated and sustained growth within a framework of social cohesion.

The CAS is organized around four central themes:

  1. Improving macroeconomic sustainability through more efficient public spending,
    together with strengthened budget management. Reduced subsidies to the enterprise sector, a road financing strategy, and efficiency gains in health and social benefits programs will significantly improve fiscal sustainability. This, combined with strengthened debt management, will in turn improve Croatia’s macroeconomic sustainability.
  2. Sustainable private sector-led growth through enforcement of financial discipline and competitive conditions in the enterprise sector; linkage of energy and other infrastructure to the EU market; lower administrative and regulatory barriers and simplified business registration procedures; and rationalization of the public administration and judicial system.
    The new CAS will support Croatia in building the capacity needed to take on the challenge of accession negotiations, maximize effective use of pre-accession resources available from the EU, and implement structural reform.
  3. Broad participation in growth through modernization of the education system; improved targeting and delivery of health care, social benefits and mitigation measures, and pensions; and implementation of a social and economic recovery program as well as a regional development strategy. While Croatia’s poverty rates are low overall, some groups are still highly vulnerable, especially in war-affected areas and among the 40 percent of Croatia’s population that has eight years or less of schooling.
  4. Sustainable natural resource management through strengthening of environmental management capacity, upgrading of wastewater and water supply infrastructure, and investment and policy measures to improve energy efficiency. Given the importance of the tourism sector to the Croatian economy, sustainable natural resource management is a key factor in the country’s future economic growth.

The previous CAS for Croatia covered 1999-2003 and envisaged a lending program of about USD 660 million. In the framework of this strategy, the Bank helped the government to: (i) implement reforms in fiscal sustainability and financial sector stability; (ii) improve governance and strengthen market institutions and competitiveness; (iii) facilitate infrastructure investment, including post-war reconstruction; and (iv) help improve social protection programs. In particular, under the 2002 Structural Adjustment Loan, the government began to tackle loss making public enterprises, upgraded the functioning of labor markets, and improved the insolvency process and corporate governance to accelerate enterprise restructuring.

Investment projects financed under the previous CAS included the construction of four border crossings facilitating traffic links with Europe and benefiting business development; construction of a wastewater treatment plant and sewage pump stations in the Adriatic Kastela Bay; construction of new roads and rehabilitation of infrastructure, as well as mine clearance, to revitalize war-affected areas; and modernization of 80 Land Registry offices to reduce case backlogs.

The new CAS was prepared in partnership with the government of Croatia and in consultation with representatives of civil society organizations in the cities of Zagreb, Osijek, Knin, Split and Cakovec. The goal of the consultations was to seek their feedback on the World Bank’s proposed strategy of assistance to the country. Priorities expressed during these consultations (including the need for an improved education system) are reflected in the CAS.

Türkei

World Bank on accession negotiations with Turkey

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The World Bank welcomes European Council decision on December 17th, 2004 to start accession negotiations with Turkey in October 2005. „The World Bank applauds the decision and commits itself to helping Turkey implement the economic and social reforms which are central to its quest to become a member of the European Union,“ said Shigeo Katsu, Regional Vice President for Europe and Central Asia. He added, „In developing our strategy to support Turkish membership, we will apply the experience gained in supporting the countries of the Baltics and Central Europe in pursuing essential pre-accession reforms.“

The World Bank commends Turkey on the progress made leading up to the Council’s decision and congratulates the government on the comprehensive and sound Pre-Accession Economic Program (PEP) submitted to the European Commission which sets out the further structural changes that will be required as Turkey pursues its EU agenda.

During the accession process, the World Bank will focus its technical and financial support on public sector reforms, improvements in the business climate and Turkey’s social programs to help create the conditions for sustained growth and better living standards which will pave the way for full integration into the EU. Further support will include advice on use of EU financial assistance during the negotiation process as well as building capacity to meet EU standards.

„The decision of the EU Heads of States and Governments is a historic turning point for Europe, for Turkey and for the Turkish economy. While much work and a number of years lie ahead for Turkey to meet the economic criteria for EU membership, the accession process set to start in October 2005 has the potential in Turkey, as it did in the ten EU members which joined on May 1, to increase investor confidence as harmonization reforms continue and to bring lasting benefits to the citizens of Turkey, as well as to Europe as a whole. The World Bank stands ready to assist Turkey in this important process towards integration with Europe,“ said Andrew Vorkink, Country Director for Turkey.

Ungarn

Kommission setzt Defizitverfahren gegen Ungarn fort

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Aufgrund einer Bewertung der ungarischen Haushaltslage hat die Europäische Kommission dem Rat heute empfohlen, festzustellen, dass die von Ungarn zur Korrektur seines übermäßigen Haushaltsdefizits getroffenen Maßnahmen nicht wirksam waren. Auch wenn eine gewisse Konsolidierung erreicht wurde, dürften die Defizitziele von 4,6 % des BIP für 2004 und 4,1 % des BIP für 2005 doch um 0,9 Prozentpunkt verfehlt werden.

Weitere Maßnahmen scheinen geboten, um sicherzustellen, dass das von der ungarischen Regierung gesteckte und vom Rat empfohlene Ziel, nämlich das Defizit bis 2008 unter die 3 %-Marke zu senken, auch tatsächlich erreicht wird.

Trotz ehrgeiziger Pläne waren die Maßnahmen, die Ungarn zur Korrektur des übermäßigen Defizits entsprechend dem im Konvergenzprogramm vom Mai 2004 abgesteckten Anpassungspfad getroffen hat, doch nicht wirksam. Im Jahr 2005 und den darauf folgenden Jahren sind weitere Korrekturmaßnahmen erforderlich, damit das Land noch eine Chance hat, das öffentliche Defizit 2008 unter 3 % des BIP zu senken“, so Wirtschafts- und Währungskommissar Joaquín Almunia.

Nachdem das öffentliche Defizit 2003 nachweislich bei etwa 6 % und damit deutlich über dem Referenzwert von 3 % des BIP gelegen hatte, entschied der Rat am 5. Juli 2004 auf Empfehlung der Kommission, dass in Ungarn ein übermäßiges Defizit bestand, und richtete gemäß Artikel 104 Absatz 7 EG-Vertrag eine Empfehlung an die ungarischen Behörden mit dem Ziel, das übermäßige Defizit zu beenden.

Der Rat empfahl Ungarn, das übermäßige Defizit in einem mehrjährigen Rahmen bis spätestens 2008 zu korrigieren, was auch dem ungarischen Konvergenzprogramm vom Mai 2004 entsprach. Im Einklang mit dem Stabilitäts- und Wachstumspakt setzte der Rat Ungarn eine Frist von vier Monaten, d.h. bis zum 5. November 2004, um wirksame Maßnahmen zur Erreichung des Defizitziels 2005 zu ergreifen. Er empfahl den ungarischen Behörden außerdem, nötigenfalls zu zusätzlichen Maßnahmen bereit zu sein, um das Defizitziel von 4,6 % des BIP für 2004 zu erreichen.

Nach Einschätzung der Kommission wurde im Jahr 2004 zwar eine gewisse Konsolidierung herbeigeführt, doch reichen die von den ungarischen Behörden seit Juli getroffenen Maßnahmen (ein Korrekturpaket im Umfang von 0,2 % des BIP und eine Maßnahme zur Vermeidung weiterer Ausgabenüberschreitungen) nicht aus, um das für 2004 gesteckte Ziel zu erreichen, das nach der Herbstprognose der Kommission um 0,9 Prozentpunkt verfehlt werden dürfte.

Außerdem hat die ungarische Regierung das Defizitziel für 2005, das im Konvergenzprogramm vom Mai und in der Empfehlung mit 4,1 % des BIP angesetzt worden war, auf 4,7 % des BIP heraufgesetzt. Auch wenn der Haushalt 2005 neue Maßnahmen zur Ausgabenkontrolle vorsieht, könnten sich diese doch als unzureichend erweisen. Auch auf der Einnahmenseite bestehen Risiken. Dementsprechend rechnet die Kommission in ihrer Herbstprognose mit einem Defizit von 5,2 % des BIP, womit das ursprüngliche Ziel um über einen Prozentpunkt verfehlt würde.

Obgleich seit Juli eine Reihe von Maßnahmen getroffen wurde, hat Ungarn die Empfehlung des Rates doch nicht befolgt. Nach Artikel 104 Absatz 8 EG-Vertrag, der durch den Stabilitäts- und Wachstumspakt geklärt wurde, muss die Kommission dem Rat empfehlen, förmlich festzustellen, dass Ungarn aufgrund der Empfehlung des Rates nach Artikel 104 Absatz 7 keine wirksamen Maßnahmen getroffen hat. Da Ungarn noch nicht zum Euro-Gebiet gehört, finden die weiteren Schritte des Defizitverfahrens nach Artikel 104 Absatz 9 und Artikel 104 Absatz 11 wohlgemerkt keine Anwendung, d.h. es können keine Sanktionen verhängt werden.

Die von der Kommission vorgenommene Bewertung ist hier abrufbar: Bewertung.

Türkei

European Parliament Calls for Talks With Turkey

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The European Parliament called on European Union leaders to open membership talks with Turkey as soon as possible even as it urged Ankara to carry out more democratic reforms and move toward recognizing Cyprus, reports The Wall Street Journal Europe.

The European Parliament, meeting in Strasbourg, France, voted 407 to 262, with 29 abstentions, to pass the resolution, which is nonbinding but nevertheless likely to influence leaders on the eve of a historic summit in Brussels on Turkey’s membership application. During a two-day summit Thursday and Friday, the 25 EU leaders are expected to approve opening membership talks with Ankara sometime next year. The 25 leaders likely will agree to open membership talks without setting a deadline on when the negotiations should end. Many say they could last as long as 15 years.

The Associated Press further reports that unlike the addition of 10 mostly eastern European member states in May, the mere consideration that Turkey could join and that a predominantly Asian, overwhelmingly Muslim nation flush with cheap labor could one day become one of the EU’s biggest nation has touched the rawest of political nerves in many EU nations. But Turkey has the most powerful of backers in Germany and Britain while the most problematic nations are expected to be smaller nations like Austria, Slovakia, Denmark and Cyprus. Yet all EU leaders agree Turkey needs to go further down the path of much-needed political and economic reforms. When the European Parliament backed the membership talks, it also urged Ankara to carry out more democratic reforms and move toward recognizing Cyprus. The parliament and EU leaders want Ankara to meet demands for a „zero-tolerance“ approach to torture, which many still say is still being carried out by authorities in Turkey.

The Financial Times explains that France, Denmark and Austria want to include a phrase in the summit communiqué stressing that the talks are not guaranteed to succeed. Jacques Chirac, French president, is working with Gerhard Schroeder, German chancellor, to find a compromise, and last night explained his support for Turkish membership in a televised address to the French people, who largely oppose his stand. „The question we have to ask is whether Europe and, notably, France have an interest in having Turkey join them,“ Chirac said. „My answer is yes, if. Yes, if Turkey meets all conditions that are imposed on all candidates to our union. A senior aide to Schroeder said: „There should be just one goal for these negotiations: membership. This is why you will not find any reference to a privileged partnership as a second option.“

The Irish Times adds diplomats said yesterday that a consensus was forming among the 25 member-states in favor of a decision to start talks in October or November next year but to specify that the negotiations are „open-ended“. Austria’s chancellor, Wolfgang Schüssel, who is skeptical about Turkey’s membership bid, said yesterday he could accept such a compromise. „It has to be in there that the result will come from an open process, and that this result cannot be guaranteed in advance. And this will only be credible if another sentence is added that says if there is no positive result on the membership option, then there will be a firm anchoring of Turkey in European structures,“ he said.

The International Herald Tribune finally notes that EU leaders on Friday will also give final blessing to end accession talks with Bulgaria and Romania and set a date for signing an accession treaty with each. This would pave the way for them to join the EU in 2007 or 2008. The EU is also likely to agree to start accession negotiations with Croatia, probably in April, that are likely to be conditional on Croatia’s cooperation over war crimes investigations.