BUCHAREST (Reuters) - Justice reform has stagnated in Romania this year, and challenges to judicial independence remain a persistent source of concern, the European Commission said on Wednesday.

The European Union has monitored the justice systems of Romania and its neighbor Bulgaria since they joined the bloc a decade ago.

It has backed an unprecedented crackdown on high-level graft in Romania, which Transparency International ranks among the bloc’s most corrupt states. Romanian prosecutors have investigated hundreds of public officials, including a former prime minister.

This week, anti-corruption prosecutors opened an investigation into the leader of the ruling Social Democrat Party on suspicion of forming a “criminal group” to siphon off cash from state projects, some of them EU-funded.

“While progress in meeting some recommendations was advancing well ... the reform momentum in 2017 was lost overall,” said the Commission’s latest justice monitoring report, released on Wednesday.

“Challenges to and questioning judicial independence have also been a persistent source of concern.”

The ruling Social Democrats are preparing a judicial overhaul that the Commission, foreign diplomats, thousands of magistrates and Romania’s president have criticized as placing the justice system under political control.

Thousands of Romanians protested against the measures this month.

The overhaul, announced by the justice minister in August, is under debate in parliament and the Social Democrat Party has said it aims to approve it by the end of this parliamentary session.

The most contested changes include those to a judicial inspection unit which oversees magistrates’ conduct, and the way in which chief prosecutors are appointed.

Justice Minister Tudorel Toader said on Wednesday of the Commission report: “The report refers to legal solutions that are still at the start of parliamentary debate, that are not finalised.”

President Klaus Iohannis said in a statement he thought the report was “a serious warning signal the ruling coalition must take into account”.

“Affecting the independence of the judicial system and, in general, any pressure or attempt to politically control the judiciary will only return Romania to the past,” he said.

This spring, Romania saw its largest street protests in decades, against what demonstrators saw as attempts by the ruling coalition to weaken the crackdown on high-level corruption.

In May, European Commission President Jean-Claude Juncker said Romania should be able to persuade the EU to lift special monitoring of its justice system by the time it takes over the presidency of the EU Council in 2019.