In its report the commission describes organised crime and corruption in Bulgaria as “deeply rooted problems” and the country’s judicial reform progress as “limited”. The frozen aid amounts to €486 million (US $754 million) . Although it avoids financial sanctions, the report on Romania is similarly critical and notes that, “70 cases of suspected fraud involving EU funds had been opened between June 2007 and March 2008” (International Herald Tribune, IHT). According to Reuters, the EU toned down the harsher wording of earlier drafts and chose not to include “a threat to delay Bulgaria's entry into the euro single currency zone and the Schengen area of passport-free travel.”

Commission President Jose Manuel Barroso called the reports "a reality check -- they show that both the Bulgarian and Romanian governments need to step up their efforts on judicial reform, corruption and in the case of Bulgaria organised crime," reports Reuters.

Bulgarian Prime Minister, Sergei Stanishev, responded by acknowledging that there are “grounds for criticism,” while asserting that Bulgaria has the political will to go ahead with reforms, reports Sofia Echo .

According to the Economist, foreign criticism of government reforms is welcomed by Bulgarians and the “EU’s popularity has rocketed, whereas the government’s negative rating is now as high as 73%.” The Financial Times writes that: “Bulgarians, who face employment restrictions in many EU states, are impatient for the country to be admitted to the Schengen area so that the restrictions on work and travel will be eased.”

The Bulgarian Minister of Economy and Energy, Petar Dimitrov, has warned that if there is a withdrawal of foreign investors from the country it “could cost Sofia more than the frozen EU funding”, reports Balkan Insight.

The reports have potential far reaching implications as some observers believe the reports send “an unmistakable signal to [EU] candidate countries such as Croatia, Serbia and Turkey about the need to crack down on corruption and to reform their penal codes” (Guardian). Bulgaria and Romania were admitted into the EU in 2007, “despite serious doubts about their readiness,” writes IHT.

To read TI’s press release on the European Commission’s decision please click here.