FIRST fingers were wagged, then wrists were slapped. Now the pocket money is being stopped. The European Union had already frozen some €1 billion ($1.6 billion) in funds overseen by Bulgarian politicians whom it no longer trusts. Now, in a report to be published on Wednesday July 23rd, the EU says that Bulgaria may have to forfeit large chunks of that money altogether. At issue are hundreds of millions of euros allocated to programmes predating Bulgaria’s accession to the EU in January 2007. These were designed to get the country ready for the rigours of life within the EU.
Most vulnerable is some €250m in long-unspent funding within a programme known as Phare, that will vanish back to Brussels if it is not spent by November this year. But the total amount of forfeited funds could be as high as €782m, according to a Bulgarian diplomat. That may be enough to muster some reaction even in a Bulgarian administration that has so far missed no opportunity to disappoint EU officials and European neighbours who want the country to catch up on 50 years of missed development under communist rule.
The report says in caustic terms that there is no political will to deal with fraud and corruption in handling EU funds. It highlights close links between leading public figures and companies that have benefited from tenders for EU-financed projects. It concludes: “Bulgaria…has to ensure that the generous support it receives from the EU actually reaches its citizens and is not siphoned off by corrupt officials, operating together with organised crime.”
The EU’s anti-fraud agency, OLAF, has complained loudly and crossly about the near-total lack of co-operation from its Bulgarian counterparts. The agency was especially concerned that high-level political protection was leading to the diversion of €36m allocated to an agricultural modernisation programme known as Sapard. A letter from OLAF to a Bulgarian official, quoted in the Dnevnik newspaper this week, suggests: “There are powerful forces in the Bulgarian government and/or…state institutions who are not interested in punishing anyone around [two names withheld for legal reasons]”. The Commission’s report, obtained by The Economist, complains that OLAF has been faced with instances of “breaches of confidentiality…There is a strong suspicion of the involvement of organised crime”.
The Commission will publish a separate report on the Bulgarian justice system which is expected also to be highly critical. Not one of dozens of gangland killings since 2001 has been solved; nor has any senior official been successfully prosecuted. The kidnapping of the president of a leading football club and then his wife, within the past two months, have highlighted Bulgaria’s lawlessness and the apparent helplessness of the authorities.
EU officials say icily that the most noticeable Bulgarian response to its dreadful public image has been to hire an expensive international PR company, rather than to change things at home.
The Bulgarian government did sack one of its most controversial figures in April: Rumen Petkov, an interior minister known to have had meetings with organised-crime bosses (he insists that he was trying to stop the contract killings). Although formally out of office, he remains responsible for his party’s funding, and is an important string-puller in the ruling coalition. Bulgaria has also established a new national-security agency, with staff vetted by the EU, to handle cases of high-level corruption in the state administration. But the EU has criticised this for a lack of accountability.
The Commission will also publish a report next Wednesday, on Bulgaria’s neighbour, Romania. It joined the EU at the same time as Bulgaria and has also been taken to task for its failure to deal with high-level corruption. The EU is expected to be highly critical, but is unlikely to include specific measures of the kind directed at Bulgaria.
Nobody in Bulgaria can claim to be surprised. Before the country joined the EU its wholesale failure to tackle high-level corruption was the subject of repeated public warnings. Having gained membership, those efforts became even feebler. The Commission had said repeatedly that if things did not improve it would cut off money—up to €11 billion in the 2007-2013 budget period—needed to modernise decrepit communist-era infrastructure and improve dire public services. The Commission will withdraw its accreditation to two payment agencies, one in the finance ministry and another in the regional development ministry, which were handling Phare funds. That is the simplest step in bureaucratic and legal terms. But it may not be the last.
Apart from withdrawing yet more funds, the EU could also delay Bulgaria’s accession to the Schengen visa-free travel zone, planned for 2011-12. Its biggest weapon is a safeguard clause under which Bulgarian court decisions would no longer be automatically recognised in other member states. That remains in the locker, for now.