This week, finally, and for the first time in EU history, has the EU taken the bold step (according to EU standards) to freeze Structural Funds payments to a country on grounds of rampant corruption. The laggard identified, named and shamed was Bulgaria.

Altogether 560 million Euros have been withheld, which are a relatively small amount compared to the altogether €11 billion earmarked for Bulgaria in regional aid and farm subsidies until 2013, of which probably a good share may end up to bolster the lifestyle of the Bulgarian Mafia and their corrupt or neglecting backers within the political and administrative system.

It is an important sign that the EU is willing to finally walk the talk in the 13th successive year the European Court of Auditors refused to sign off on the EU’s overall accounts because they found, among others, that a significant part of regional spending is not properly accounted for, or in the Court’s words is “affected by a material level of error of legality and/or regularity” (which does not mean fraud, but which is just the tip of the iceberg, because they can only take samples and, as far as I understand, they don’t look at quality delivered or cost-effectiveness).

So, for the first time, a member of the 27-union bloc will completely forfeit money that it cannot be trusted to spend properly, reflecting concern among officials, diplomats and fraud investigators over the ability of the Bulgarian authorities to prevent billions of Euros in European grants being siphoned off by organized crime.

The sad thing about this is not the taxpayer’s money lost but the fact that the people of Bulgaria (and Romania and other countries) badly need this development and deserve better than a corrupt government at home and an EU apparatus that has no other means to control whether expenditure goes to crooks (because of subsidiarity) except by freezing the funds.

If all that money would be well spent then one glorious day the poor Romanian boy wouldn’t have to sit in front of my local Delhaize Supermarket day after day in rain or shine and sell the homeless magazine nobody reads but could stay back home with his family and friends, where society would give him a real opportunity. I know this sounds pathetic, but I can introduce you to him. It just sickens me to think about the opportunity lost and the lives affected by this. We need to understand, this is about people after all and their future in a United Europe.

It has to be said that the problem is partly systemic and structual. I have pointed to this some years ago in an article for the Open Society Institute . And it is by far not confined to Bulgaria only, which has been singled out now. The prospect of billions in EU subsidies and the sheer scale and complexity of the system only encourages criminals to diversify from activities such as cigarette smuggling or trafficking into the equally lucrative (and less penalized) white collar crime of siphoning off EU money. But sadly enough it also seems to encourage administrative and political insiders to seek their share, and not only through fraud but through influencing funding decisions to support projects that often do not make economic sense, which is even more troubling.

This seems to be only the symptom of a deeper crisis. We should perhaps start thinking about a complete redesign of regional aids instead of the typical EU approach of incremental and slow reform.

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