BUCHAREST AND SOFIA URGED TO ENACT REFORMS

By George Parker in Brussels, FINANCIAL TIMES.

Bulgaria and Romania are expected to escape European Union sanctions this month in spite of their failure to crack down on corruption and organised crime since joining the club in January.

But José Manuel Barroso, European Commission president, warned yesterday that the "credibility" of both countries was at stake and urged them to make the reforms to meet the Union's most basic membership requirement: the rule of law. Mr Barroso is expected to announce on June 27 that although both countries have made progress, neither has done enough to stamp out endemic corruption.

A continued failure by the two countries to clean up their political and judicial systems could affect the EU's appetite to extend its borders further into the Balkans.

Political turmoil in Romania has knocked the reform process off track, while in Bulgaria no big figure has yet been convicted for corruption or organised crime.

Mr Barroso said the Commission would produce a "robust" report on the progress of both countries.

Although no final decisions have been taken, several well-placed Brussels officials say Bulgaria and Romania will be told to speed up reforms but sanctions will be kept in reserve.

The two countries joined the Union on January 1 under unprecedented scrutiny. Bulgaria was set six "benchmarks" for reform, including the fight against corruption and organised crime, while Romania faced four, mainly relating to corruption.

But lawyers in Brussels have concluded that sanctions - namely non-recognition of court rulings in either country - could hit innocent parties living or doing business there. Withholding of EU funds to protect against the risk of fraud is deemed legally difficult.
Yesterday Mr Barroso met Calin Tariceanu, Romanian prime minister, and in effect admitted the pressure most likely to lead to reform would come not from Brussels but from citizens, business and other EU members.

"The real issue here is the credibility of the two countries concerned," he said. Citizens wanted assurances that "a fair judicial system exists", while businesses wanted to know the rule of law and democratic accountability were enshrined.

Mr Barroso said membership requirements for new candidates, particularly in the western Balkans, were being toughened up, but added: "The decisions to take in Romania and Bulgaria were the right ones."

Mr Tariceanu said his country was making pro-gress in tackling those issues and explained what Romania was doing to en-sure that hundreds of millions of euros in EU aid was spent correctly. "We are waiting with confidence for the Commission to produce its report."

Copyright The Financial Times Limited 2007