EU freezes millions in aid to Bulgaria over corruption

24/07/2008

The European Commission suspended nearly a half-billion euros in assistance to Bulgaria on Wednesday, citing its failure to manage European taxpayers' money soundly and to deal effectively with rampant corruption and organised crime.

(FT, The Guardian, Independent - 24/07/08; AFP, AP, Reuters, DPA, Euobserver, Dnevnik, Mediapool, Europe.bg, SNA, European Commission - 23/07/08)

The European Commission froze hundreds of millions of euros in aid to Bulgaria on Wednesday (July 23rd). [File]

The European Commission (EC) on Wednesday (July 23rd) froze nearly 500m euros in aid to Bulgaria, citing weaknesses in the country's control systems and cases of fraud and irregularity. It also withdrew the accreditation of two government agencies charged with implementing funds under the PHARE pre-accession programme.

An EC report on the management of EU funds in Bulgaria, released Wednesday in Brussels, said "critical weakness in administrative and judicial capacity" did not allow the country "to reap the full benefits" of foreign aid.

"The lack of accountability and transparency in public procurement when tendering EU funds is a grave problem," the unprecedented document read.

Withdrawing the agencies' accreditation effectively immobilises about 250m euros meant to improve Bulgarian institutions. In addition, 115m euros for infrastructure and 121m euros for rural development were suspended, EC spokesman Mark Gray said.

Since it joined the EU with Romania 18 months ago, Bulgaria has seen more than 800m euros held back by sceptical EU officials.

"As soon as Bulgaria has taken the necessary corrective measures ... the Commission is prepared to reverse" the withdrawal of the agencies' accreditation, the EC said.

If Bulgaria fails to satisfy the EC before December, it will irrevocably lose 556m euros, Reuters quoted officials as saying.

The EC also released two other reports faulting Bulgaria and Romania's progress in judicial reform and the fight against corruption.

Reuters said the studies contained the harshest criticism the EC has ever levelled at a member state.

"The fight against high-level corruption and organised crime is not producing enough results," Johannes Laitenberger, the head of the EC press office, said.

According to the EC, Bulgaria provides unreliable statistics. It also criticised the country for failing to freeze illegally earned financial assets and to regulate political party financing.

The EC urged Bulgaria to take immediate steps to strengthen law enforcement and the judiciary. Sofia, it said, must increase transparency and contain conflicts of interest.

"A clear strategy and an unequivocal commitment ... to reform the system are needed," the report said, adding Bulgaria must "deal convincingly with alleged connections between part of the political class, business and organised crime".

Prime Minister Sergei Stanishev called the reports objective and said the government would address the shortcomings. "I will require concrete measures," he said.

Just a few hours before the reports' release, the five right-wing opposition parties in parliament filed a new no-confidence motion, citing "grand corruption", incompetence and noncompliance with EU regulations.

The governing coalition enjoys a comfortable parliamentary majority and is widely expected to survive its sixth no-confidence vote.