The draft version -- part of a reform effort driven by Turkey's bid for European Union membership -- contained provisions making it easier for minority groups to operate and reacquire properties that had been confiscated by the state.
But after a heated debate on the measure, with many parliamentarians objecting to its liberal approach, the version that passed Parliament offered little improvement over the past. In any case, the bill was then vetoed by President Ahmet Necdet Sezer, who felt it gave minority foundations too much freedom.
The debate illustrates Turkey's continuing struggle with the issue of its non-Muslim minorities. But since Turkey must harmonize its laws with the European Union's if it hopes to gain admission to the 25-member union, the question of minority foundations and how to regulate them is certain to come up again, and could prove yet another sticking point in the currently troubled relations between Ankara and Brussels.
Turkey's Jewish community, for example, has had 22 of its foundations -- synagogues and other property in Istanbul and in parts of Turkey where Jews no longer live -- taken away.
Like the old law, which was filled with bureaucratic hurdles and burdens, the proposed one would have forbidden minority communities from joining international organizations.
Now that Sezer, a staunch secularist who often is critical of E.U.-inspired legislation, has vetoed the new bill, it goes back to Parliament or must be shelved. Still, most disturbing for some was the tone of the debate in Parliament, much of it centering on whether allowing minority groups greater rights would give foreign powers more influence in Turkey.
The legal thinking behind the proposal was the same as that behind the older, more restrictive version, said Ester Zonana, a lawyer who advises Turkey's Jewish community -- "approaching minority foundations with a lack of trust."
For example, the law offered no way for minority groups to reclaim or seek restitution for the thousands of properties -- schools, synagogues and churches, cemeteries and other real estate -- confiscated by the state in recent decades.
When the question of property restitution came up, some parliamentarians asked whether allowing Turks of Greek origin to reclaim property could force Turkey to hand back Istanbul's historic Hagia Sophia, the Byzantine church turned into a mosque by the Ottomans and then a state museum in 1935.
A member of the government even came to Parliament to report that Turkey holds documentation that proves the monument rightfully belongs to it.
"I was very angry during the debate," said Mihail Vasiliadis, editor of Apoyevmatini, a daily Greek newspaper based in Istanbul. "They were not treating us as citizens. Why should I be treated differently than a Muslim?"
The government, which is led by the liberal Islamic Justice and Development Party, argued that reform is needed when it comes to how minority foundations are handled.
"We are a nation that believes everyone has rights," Deputy Prime Minister Mehmet Ali Sahin told Parliament.
Pope Benedict XVI's four-day visit to Turkey last week shone a spotlight on the question of religious freedom in the country. Some 3,000 Orthodox Christians remain in Turkey, with another 70,000 Armenians and 25,000 Jews.
The pope offered his support for Christians in Turkey, whom he called "a small minority which faces many challenges and difficulties daily." The pope's visit also included a meeting with Turkey's chief rabbi, Ishak Haleva, at the Vatican's consulate in Istanbul.
Though they are guaranteed the same rights as Muslim citizens, Christians and Jews in Turkey long have complained about the legal hurdles they face.
The Orthodox patriarchate -- which has been in Istanbul for 1,700 years, since the city was known as Constantinople, capital of the Byzantine Empire -- is the frequent target of nationalist protests. Grenades have been lobbed over its walls.
In recent decades the patriarchate has seen numerous properties, including schools and cemeteries, confiscated by the state. Its theological seminary was closed down in 1971 and has yet to be reopened, leaving the patriarchate unable to train clergy.
Ankara also refuses to recognize the patriarchate's status as ecumenical, or global, saying it is responsible only for tending its dwindling flock in Turkey.
"Minority rights of non-Muslims is the issue that we have had the least progress on over the last six or seven years," said Ioannis Grigoriadis, an assistant professor of political science at Isik University here. "It's a common theme in all the" reports on Turkey's E.U. membership bids.
"Other difficult issues have been dealt with more successfully, while with the issue of non-Muslim minorities that has not been the case," he said.
Turkish historians trace suspicion of minority communities back to the tumultuous period after World War I, when Greece invaded the nascent Turkish state and other Western powers tried to carve up what remained of the decaying Ottoman Empire. At the time, the minorities were seen as being allied with the West.
In the early days of the Turkish republic, efforts were made to bring all religious foundations, Muslim and non-Muslim, under the government's control, according to Elcin Macar, a professor at Istanbul's Yildiz Technical University who specializes in minority issues.
But in the 1960s and '70s, particularly as the Cyprus conflict became more tense, the Turkish government moved toward greater restrictions on non-Muslim communities, with Turkish courts issuing decisions that allowed for the large-scale confiscation of minority properties.
"I believe that these decisions were not made in harmony with the law," Macar said. "They were discriminatory."
Although he believes there has been some improvement in minority communities' legal standing, Macar said the underlying suspicion of them continues.
"The minority is still seen as a dangerous thing for us," he said.