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Brussels has signaled aspiring EU members in the Balkans that they had best listen to EU demands to reform, possibly freezing $1.6 billion in funds meant for Bulgaria.

A European Commission (EC) report leaked to the media July 18 accuses Bulgaria of high-level corruption and proposes measures for freezing $1.6 billion of EU funds to the country. The report cites EU funds earmarked for Bulgarian agriculture and infrastructure development being “siphoned off by corrupt officials, operating together with organized crime.” The final report, most likely to be as scathing as the leaked one, will be officially adopted July 23.

The leaked report and the expected freezing of almost all EU funding for 2008 puts not only Bulgaria but also neighboring Romania and other Balkan countries seeking to join the European Union on notice. Brussels felt it was time to put its foot down on Europe’s most corruption-prone region. The move signifies a huge boost in EU credibility.

By actually withholding funds, and in this case a lot of them, Brussels is signaling to potential candidates in the Balkans and the rest of Europe that it means business: The European Union will not tolerate the persistence of old, opaque practices rooted in the communist era that mutated during the immediate post-communist mayhem that engulfed most Central European states and brought organized crime and politicians close together.