Bulgaria Loses EU Money

Published: 27 November 2008

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Bulgaria lost €220 million in European Union (EU) funds Tuesday for failing to crack down on corruption and graft, in an unprecedented punishment that serves as a warning to current and future EU members about the penalties for not eradicating corruption. “I regret this decision because Bulgaria is an economic success story; it’s a very committed and constructive member state,” said EU enlargement commissioner Olli Rehn. “But we have to play by the book and we have to respect the rules of financial management and therefore there is for the moment no other option.” 

The EU executive arm, the European Commission, had frozen €500 million in road and farm aid to Bulgaria in July, after several reports outlined aid-related corruption, mismanagement and fraud in the country, which along with Romania became the EU’s newest members in January 2007.

Sofia had taken some steps since the funding freeze – for example, prosecutors are investigating about 80 embezzlement cases – but no senior official has been punished for corruption. Rehn said that recent reviews have revealed further irregularities with EU funds.

The EC has yet to rule on the additional €340 million in EU road, regional development and farming subsidies frozez in July, which could also be lost.

Mixed Reaction in Sofia

The decision was a blow to Bulgarian officials, who had recently expressed confidence that the EC would unfreeze the money. One political party, in coalition with the Socialist-led government, pronounced the measure “too severe.”

A government official called the decision a “disappointment,” but promised that Sofia would continue to fight corruption. The decision is unexpected and a disappointment for Bulgaria and its administration,” said Bulgaria’s EU fund management deputy Meglena Plugchieva. “The Bulgarian authorities will nevertheless continue working at the same accelerated rates and strictly implement the European rules and procedures to guarantee the correct and transparent use of all European funds.”

Right-wing opposition party Democrats for a Strong Bulgaria said the measure was justified and called for the entire cabinet to resign. 

And business owners are angry. “I cannot imagine a worse Christmas present for the Bulgarian economy,” said Ivo Prokopiev, head of the country’s Confederation of Employers and Industrialists.

--Beth Kampschror