Bulgaria risks becoming EU cautionary tale

Analysis in the International Herald Tribune
By Stephen Castle, IHT
Monday, October 27, 2008

BRUSSELS: When Bulgaria joined the European Union last year, this was supposed to mark the start of an ambitious drive to modernize the former Soviet bloc country and bring it finally into the European political mainstream.

Twenty-two months later, the Bulgarian government has only a few weeks to avert the loss of millions of euros in European subsidies - and an unprecedented sanction from Brussels.

At stake for Bulgaria is almost half a billion euros of aid that was frozen in July after a scathing report from the European Commission concluded that the money was vulnerable to fraud and mismanagement. European officials are due in Sofia this week to conduct an audit and, if this goes badly, Bulgaria will lose €220 million, or $277 million, of the frozen aid because of a deadline that expires next month.

Sluggish Bulgarian progress on combating irregularities and its lack of convictions in cases involving high-level corruption have become a stark reminder of the difficulties of integrating fragile, ex-Communist nations.

With relations poor between the EU and Russia after Moscow's military action in Georgia, Europe wants to improve ties with countries on its eastern flank. Offering them a path to membership might be an obvious strategy.

But EU countries have pulled back from making such promises. At a summit with Ukraine last month, for example, the EU pledged closer ties, but avoided any commitment to offering Kiev a clear path toward membership in the bloc.

Bulgarian and Romanian accession illustrates why officials are erring on the side of caution.

One of the unstated reasons for admitting Bulgaria and Romania in 2007 was to keep them out of Moscow's growing sphere of influence. But that has come at a price.

Some €11 billion in subsidies are due to be paid between 2007-13, and officials are alarmed that much of it might be siphoned off by criminals.

Since July, the Bulgarian government has sought to give the impression that it is campaigning hard to redress weaknesses, identifying 101 new cases of suspected irregularities in agriculture funding.

Earlier this month, a Bulgarian businessman, Mario Nikolov, was one of a group of people who went on trial, accused of fraudulently obtaining EU agriculture subsidies. Nikolov's business empire was described in a leaked report from the EU fraud investigation unit, Olaf, as a "criminal company network."

Critics in the opposition, like Nickolay Mladenov, a center-right Bulgarian member of the European Parliament foreign affairs committee, remain unconvinced than the government has made proper reforms.

"People need to be convinced," Mladenov said, "not just in Brussels but in Bulgaria, that procedures have been put in place so that this does not happen again and that those responsible are arrested and put on trial. The problem is that this whole situation affects negatively projects that are not corrupt - initiatives that the country needs."

The spokesman for Olaf, Alessandro Buttice, appeared to agree Monday. "The performance of the judiciary is still questionable," Buttice said in a statement. "The dismissal of cases in court without convincing explanations is still frequent."

Commission officials are also concerned about Romania. Earlier this month, the European Commission president, José Manuel Barroso, urged the Romanian government "to treat the fight against high-level corruption as an issue of national importance."

Bulgarian and Romanian ministers argue that their countries face tougher scrutiny than nations that joined the EU in 2004 because the climate of public opinion has hardened against enlargement.

That idea was rejected by Mark Gray, a spokesman for the European Commission, who said that, while weaknesses had been identified in other nations, "these were the two countries where the EU felt that a specific mechanism was required" to deal with problems.

"Specific commitments were made by Bulgaria and Romania at the time of accession," Gray said, "and the EU is determined that these commitments must be honored."

Nicu Popescu, research fellow at the European Council on Foreign Relations, said that the problems in Romania and Bulgaria have given opponents of EU enlargement a new argument. "No one in the EU talks about Moldova or Ukraine joining the bloc in the near future," he added.

The case of Bulgaria and Romania - both given an accession date before they had made essential reforms - has already prompted the European Commission to take a sterner look at potential new members, including Croatia.

And the Croatians are facing their own challenges, as illustrated last week by the slaying of a prominent journalist, Ivo Pukanic, killed by a hidden explosive device. The EU is pressing Croatia to combat corruption and organized crime.

"What has happened in Romania and Bulgaria has changed the rules of the game," said Mladenov, the Bulgarian member of the European Parliament.