Bulgaria loses EU money

Published: 24 July 2008

By Beth Kampschror

For failure to do much about organized crime or corruption, Bulgaria has been punished with the suspension of €500 million in assistance funds from the European Union (EU).

This is the first time the EU has cut off assistance to a member. The freeze affects aid for farmers, road-building and large building projects, and the EU also banned two Bulgarian government agencies from handling EU funds. The freeze will last until “sound financial management structures are in place,” the EU said in a statement.

Reports on the progress of Bulgaria and Romania 18 months after their admission to the EU criticized both for inertia in making reforms and bringing down mobsters and corrupt politicians. No penalties were imposed on Romania.

But the European Commission reported that Bulgaria is home to corruption, organized crime, severe spending irregularities and alleged vote-buying.

The Commission had already frozen farm and road money earlier this year, citing fraud concerns. A local newspaper revealed in January that the head of the country’s road agency Veselin Georgiev had given contracts worth hundreds of millions of Euros to his brother’s company. The next month, Bulgarian authorities and Europe’s anti-fraud agency OLAF broke up a crime ring that had siphoned off €7.5 million of farm aid given in 2005 and 2006, before Bulgaria had been admitted into the EU.

Bulgarian Prime Minister Sergei Stanishev said, “There is a discrepancy between the political will, which is a fact, and the achievement of concrete results. The truth is Bulgaria is learning how to manage EU funds.”

The opposition has proposed a no-confidence vote of the Socialist-led government, the sixth since it took office in 2005.

Bulgarian citizens seem to welcome the measures, reported AFP. “If EU subsidies have to go into bottomless pockets, let Brussels axe them,” hairdresser Boyka Naydenova told reporters.  A recent poll showed that almost 40 percent of Bulgarians approved of the EU’s financial sanctions.