EU sets talks on 2 new policy areas with Turkey

BRUSSELS, June 25 (Reuters) The European Union agreed today to extend membership talks with Turkey to two new policy areas but stopped short of opening discussions on the key area of economic and monetary policy.

France blocked opening of talks on the so-called negotiating chapter in that area, which is central to EU membership, to mark President Nicolas Sarkozy's opposition to eventual Turkish entry into the EU, diplomats said.

''We decided on two chapters -- statistics and financial control,'' a diplomat involved in preparatory talks said. EU ambassadors were due to rubber-stamp the deal later today.

The EU also agreed at the same session to open negotiations with Croatia, a less controversial candidate for EU accession, on six new areas of policy, they said.

There was no reaction on Turkish financial markets to the largely expected opening of the two new chapters of talks.

A Turkish foreign ministry official said Ankara was unhappy with the fact that the bloc did not open talks on the more important area of economic and monetary policy.

''We are not very happy because the German (EU) Presidency had said they would try to open three chapters,'' the official told Reuters in Istanbul.

''If it is technical we will tackle any problems and move on (with opening of the third chapter), but if the decision is politically motivated we could not welcome that,'' said the official, who requested anonymity.

EU diplomats said France had argued that allowing Turkey to open the negotiating chapter on economic and monetary policy, one of 35 into which EU law is divided, could prejudge the final outcome of the negotiations.

TURKEY SAYS TO PUSH ON The EU last year suspended negotiations on eight chapters after Turkey failed to meet a requirement to open its ports and airports to traffic from Cyprus.

EU sources said last week they were concerned about how Turkey, in the midst of a general election campaign, would react to limiting the talks to statistics and financial control.

Speaking just before news of the EU decision, Turkish Economy Minister and chief EU negotiator Ali Babacan said Ankara would push ahead to meet conditions to join the EU regardless of whether talks in some areas were kept on hold by Brussels.

''Regardless of what chapters are opened, regardless of what chapters are closed, we will integrate our legislation as soon as possible, and we will wait (until the EU is ready for Turkish membership),'' Babacan told an investor conference in Istanbul.

EU diplomats also agreed reports monitoring Turkey's state of play on company law and financial services, a first step in the process to opening talks on in these policy areas, an EU official said.

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