Bulgaria, Romania may join EU in 2007 - source

BRUSSELS, Sep 5 (Reuters) The European Union's executive arm is likely to recommend this month letting Bulgaria and Romania join in next year rather than 2008, but propose tough conditions for their entry, an EU source said today.

The European Commission will make the recommendation on 26 this month and the 25 EU member states are likely to give the final green light next month for the bloc's second enlargement wave into ex-communist eastern Europe.

But the two Balkan countries may be excluded initially from some EU policies in areas where they are not fully prepared for membership, such as the fight against corruption and organised crime, which is a worry especially in Bulgaria.

''A serious option is to let the countries join the EU next year, but with safeguards,'' a Commission official said, asking not to be named.

The Commission's enlargement spokeswoman, Krisztina Nagy, said no decision has been made on when the two countries would join the bloc.

''We are in the final stage of preparing a report, but it is too early to draw any conclusions, so any speculation is premature,'' Nagy said.

European Commission President Jose Manuel Barroso was to discuss the terms of Bulgaria's accession with Bulgarian Prime Minister Sergey Stanishev in Strasbourg during a session of the European Parliament today.

Last week, Enlargement Commissioner Olli Rehn warned Sofia it still needed to make further progress in judiciary reform and fighting organised crime.

Under the accession treaty, which the Black Sea neighbours signed last year, either country could be delayed by a year from next year if it is deemed not ready to join, or excluded for some time from some EU policies in which it was unprepared.

FINANCIAL SANCTIONS? The Financial Times said today that Bulgaria will come under tougher EU scrutiny than Romania for its shortcomings in handling corruption and organised crime and could face financial sanctions.

The official was not able to confirm whether financial sanctions, such as denying generous EU aid for some time, were being considered.

Another Commission source told Reuters the amount of EU aid is fixed by the accession treaty and it is difficult to strip countries.

However aid could be withheld if the countries' payments agencies to distribute farm subsidies are deemed not ready.

Applying safeguards could mean, for example, that court rulings of a new member state are not fully valid in the bloc, or the country is excluded from the EU's common border policy, or cannot export some kinds of food.

In May, the Commission postponed its final recommendation on the timing of Bulgaria's and Romania's entry to exert pressure on them to implement last minute reforms.

But Bulgaria has failed to pass some constitutional changes on fighting crime sought by Rehn. Bulgarian Minister for Europe Meglena Kuneva said last week those amendments should be ready before 20 this month and passed by parliament within 2-3 months.

Bulgaria and Romania fear that if the Commission's report is too critical, it may complicate ratification of the accession treaty in member states whose parliaments have not yet done so, such as Germany.

REUTERS MS HS1709