The European Commission says Croatia is on track to finish EU entry talks next year and it could be ready to become a member in 2011.
The announcement comes in an annual report on the progress of member candidates.
But referring to recent mafia-style killings, it says Croatia must ramp up efforts to tackle corruption and organised crime to conclude talks.
European Commissioner of Enlargement Olli Rehn said: “It’s an encouragement but not a blank cheque. The ball is now firmly in Croatia’s court. Specifically, I will point out two issues. First, Croatia will have to work hard on judicial reform. Second, the restructuring of the shipyards also remains a necessary condition and requires substancial further efforts.”
There was praise for Croatia of its solid economic performance, but also concern for the rising inflation and its growing current account deficit.
The commission says Turkey must step up its reforms to join the EU.
Ankara needs to improve women’s rights and gender equality and strengthen press freedoms it says.
The report criticised Macedonia, because of a flawed election earlier this year. So it misses out on the green light to start talks to join the EU.
Serbia could become a candidate next year, however, if it hands over the fugitive Bosnian Serb general Ratko Mladic.