Turkey Receives a Mixed Progress Report

The Wall Street Journal
EUROPE NEWS
OCTOBER 15, 2009

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 A12