The European Union has issued its annual enlargement update, assessing the progress of seven candidate countries toward full membership in the 27-nation bloc. The E.U. concluded no country, with the possible exception of Croatia, will likely meet its membership goal for this decade. Teri Schultz reports for VOA from Brussels.

The European Union is holding Croatia up as a role model for the other Balkan countries of how to prepare for accession to the European Union. E.U. Enlargement Commissioner Olli Rehn says that's an important role.

"Croatia is increasingly becoming a positive benchmark for the other countries of the Western Balkan…demonstrating with its progress to the region as a whole that the European perspective is indeed real and tangible. It is doable," he said.

Despite reservations, Rehn has decided to initial the "Stabilization and Accession Agreement with Serbia, a first step on the road to membership.

Rehn calls this a "real turning point" for the country. "After a long nationalist night in the 90's, a democratic dawn broke in 2000 and now a new European dawn is in the making for Serbia," he said.

Just a year ago, E.U.'s negotiations with Serbia were suspended due to Belgrade's failure to apprehend and extradite indicted war criminals to The Hague. Chief Prosecutor of the war crimes tribunal, Carla del Ponte, accused Serbia of hindering her prosecution of those accused of atrocities in the Balkan wars.

Rehn said del Ponte has now given Belgrade a better grade after it transferred 20 of 24 indictees to the Hague and made information available to the tribunal.

But he said the E.U. expects Serbia to continue to cooperate with the war crimes court and speed up the pace of reforms. And, while emphasizing that the issue of Kosovo's independence is not directly linked to Serbia's membership, Rehn made it clear the E.U. expects Serbia not to destabilize the region over Kosovo's status.

The E.U. 's report on Turkey emphasizes that high among the improvements it expects are greater rights and freedom of religion and expression. It also said Ankara must improve its relations with Cyprus.

Rehn said the E.U. was particularly concerned about Article 301 of Turkey's penal code, which makes it a crime to insult the government or Turkish identity. "It is simply not acceptable in a European democracy that writers, journalists or any citizen for that matter are prosecuted for simply expressing a critical but completely non-violent opinion," he said.

Other candidate countries, including Albania, Bosnia and Herzegovina, Macedonia and Montenegro, were told by the E.U. they must step up reforms to build what Rehn called "modern democracies" and develop a culture of political dialogue.