The European Union has lost faith in the ability of Bulgarian authorities to push ahead with reforms and was considering sanctions, ranging from freezing the 6.7 billion euro worth of structural funding the country is set to receive until 2013 to suspending some of its rights in the bloc, Bulgarian-language Kapital weekly reported on May 10.

Under article 7 of the Treaty of Nice, in case of "a serious and persistent breach of fundamental rights", the Council of the EU may, by a qualified majority of four fifths and co-ordinating with the European Parliament, suspend certain of the rights of the country concerned, including the right to vote in the Council of the EU.

In Bulgaria's case, the fundamental rights being breached would be the rule of law, undermined by Bulgaria's slow progress in reforming its judiciary, as highlighted by the scores of unsolved public murders in recent years, the weekly said.

Although Bulgarian politicians are acting unconcerned, the measure is already being discussed in some European capitals, according to Kapital.

For now, however, financial sanctions appeared more likely, with the idea of freezing structural funding to  Bulgaria gaining support across the EU, one German diplomat told the weekly.

Among the countries lobbying most actively for freeze funding until Sofia can prove that the money will end up where it is supposed to, rather than with organised crime, are Britain Germany, the Netherlands, Austria, Sweden and Finland, the same source said.

The EU could do so preventively, even without proven cases of embezzlement, given that the money has only been allocated and is yet to be spent, Kapital said. The European Commission has already frozen funding under all EU pre-accession aid programmes in recent months on suspicions of fraud and embezzlement.

Not only did Bulgaria fail to make sufficient progress with reform, its politicians routinely ignored criticism from Brussels, according to Kapital.

In Romania, the structural problems in government are much worse, but the behaviour of Bulgarian politicians in the EU was exceptionally presumptuous and disrespectful. They believe themselves untouchable and that nothing can happen to them regardless of what they do, which is why Bulgaria will suffer the consequences, not Romania," the weekly quoted one British diplomat as saying.