By Justyna Pawlak
BRUSSELS (Reuters) - The European Commission said on Wednesday Serbia was not ready to start accession talks with the EU because of its tensions with Kosovo, and criticized Turkey for its human rights record and insufficient reforms.
In its annual report on countries lining up to join the EU, the EU executive said Belgrade also had to make more effort to reform its justice system and protect the independence of its central bank.
Serbia won the coveted status of EU candidate in March but needs the Commission's green light to start actual talks, in a process likely to take years.
"Steps leading to the normalization of relations between Belgrade and Pristina should also be addressed in the context ... of further accession negotiations with Serbia," EU Commissioner for Enlargement Stefan Fule said.
Serbia has tried hard to shed the pariah status it acquired in the Balkan wars of the 1990s. It has reformed its economy and institutions and arrested war crime suspects.
But tensions with Kosovo, which seceded from Serbia in 2008, are holding Belgrade back. It lost control over Kosovo in 1999 after NATO mounted an air war against Serbian forces.
More than 90 countries, including the United States and most EU members, have recognized the new country as a sovereign state. Belgrade has vowed never to do so, but is under pressure to improve cooperation with Kosovo in fields ranging from trade to state institutions and security.
Serbian Prime Minister Ivica Dacic said he was disturbed by EU remarks about "visible and sustainable" improvement of relations with Kosovo, mentioned in the 2012 Enlargement Strategy Paper which sets out the way forward for each candidate country in the coming year.
The document says normalization of predominantly Serb northern Kosovo, which refuses to recognize Pristina's rule, should be achieved "while respecting the territorial integrity of Kosovo and the particular needs of the local population".
Dacic said such remarks could jeopardize dialogue with Pristina and showed "lack of (EU) understanding" for Serbia's efforts to speed up its EU bid.
"Serbia will not help Pristina wrap up Kosovo's independence," he told a news conference in Belgrade.
Dacic, who is also the head of the ruling Socialist Party, led during the Kosovo war by late strongman Slobodan Milosevic, said "it could have been more honest to ask Serbia to recognize Kosovo's independence".
Sentiment in the EU is lukewarm towards further expansion, with citizens focusing on their own economic difficulties and governments struggling with a debt crisis. Aspiring states in the Balkans are struggling to meet reform criteria.
Macedonia's progress is stuck because of a row with Greece over its name and Montenegro only won approval to start entry talks this year. Bosnia and Albania are even further behind.
Croatia is scheduled to join in July 2013, and Slovenia is already a member not only of the EU, but the euro.
The Commission said in the same report it was increasingly worried over reforms in the largest EU candidate - Turkey.
"The situation regarding the respect of fundamental rights on the ground continues to be the source of serious preoccupation," it said.
It listed the rights to liberty and security and to a fair trial, as well as the freedom of expression, assembly and association, as areas of particular concern.
As a consequence of government policies, it said, self-censorship by the media was increasingly widespread.
The Commission criticized Ankara for poor cooperation with the EU during the second half of this year, as EU member Cyprus has held the bloc's rotating presidency.
Turkey's EU path is complicated by Cyprus, divided between Greek Cypriot and Turkish parts. Only Ankara recognizes the northern part of the island as a sovereign state.
(Additional reporting by Aleksandar Vasovic in Belgrade; Editing by Zoran Radosavljevic and Andrew Roche)