Hot spots: Bulgaria.(member of European Union)

Last May, officials in Brussels warned Sofia that there were six problem areas where Bulgaria would have to hasten reforms if the nation expected to be given the green light for joining the Union, tentatively scheduled for next year. The EU Commission said they expected "immediate corrective action in these problematic sectors." If Brussels did not see sufficient progress by early September, it would issue another negative report by the September 26 deadline, which could provoke political backlash among EU members already feeling "enlargement fatigue"--the more troublesome for Bulgaria, as France, Germany, and the Netherlands had not yet ratified the accession treaty with Sofia.

The six areas requiring urgent action were (1) organized crime, which operates too freely for comfort--smuggling people, drugs, cigarettes and weapons; (2) corruption, as business and government laws are being enforced with less than zealous determination; (3) insufficient enforcement of anti-money-laundering regulations; (4) inadequate control over aid payments from the EU; (5) a lack of systems needed to administer EU farm subsidies; and (6) unsatisfactory efforts to prevent mad-cow disease.

The deadline came and went without Bulgaria measuring-up in all these areas. However, it appears doubtful that EU Enlargement Commissioner Olli Rehn and European Commission President Jose Manuel Barroso will recommend delaying Bulgaria's entry into the Union until 2008. More likely, they will suggest that Bulgaria be admitted with "safeguard measures," i.e., a threat of sanctions activated after the country has joined, unless EU monitors come to the conclusion that Bulgaria has "cleaned up its act."

Such sanctions could be severe: if Bulgaria fails to tackle crime and corruption in earnest, it could be excluded from EU legal cooperation and the Union could refuse to recognize the judgments of its courts. If fraud and financial mismanagement remain serious problems, the EU could suspend regional aid payments (up to EUR 15 billion of European money is earmarked for Bulgaria over the next seven years). Along with the recommendation that Bulgaria's entry not be postponed, Mr. Rehn's formal report may contain tough warnings for Prime Minister Sergey Stanishev and his government that Bulgaria will be under close scrutiny in coming months.

Much remains to be done. The continued existence of shady business groups, often linked to members of the former Communist intelligence services, has given the country a bad reputation. So have irregularities in the privatization process. But public opinion polls show consistently that most Bulgarians favor EU membership and EU business people have already embraced the country: the banking sector is now 85% controlled by foreign institutions; and private investors have been rushing to buy second homes on the Black Sea coast and in picturesque villages.

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