This spring, after Bulgaria recalled Meglena Plugchieva from her ambassadorship in Berlin to clean up widespread corruption and misuse of European Union funds, she warned fellow ministers they must act to prevent the loss of massive funding from Brussels.

But Ms. Plugchieva also vowed to stand up to Western criticism that singles out her nation's ills. "Bulgaria is not the cradle of corruption," she said. "Germany also has its corruption-related scandals."

The "double standard" defense, though, wasn't enough to deter a stinging financial slap delivered last month by a European Commission angry after millions of euros in development assistance had been siphoned off and a string of high-profile corruption and murder investigations resulted in no convictions.

Bulgaria's case was putting the credibility of EU enlargement at stake: Brussels needed to send a message to those arguing against further expansion and to candidates banging on the door, including Croatia, Serbia, Albania, and Turkey. Just last month, EU officials warned Croatia that its failure to crack down on organized crime and corruption jeopardizes its chance to join the EU next year.

"Brussels needed to get serious, to show they're not just taking a country's word for fighting corruption," says Katinka Barysch, deputy director of the Center for European Reform in London. "If they can't do that with Bulgaria, how are you going to do that with the countries still queuing outside?"

In late November, Brussels slapped Sofia with an unprecedented penalty, withdrawing €220 million ($315 million) in development assistance – less than the initial threat of €500 million, but still a huge sum for the poorest EU member.

"This is not the most pleasant day of my life," said EU Enlargement Commissioner Olli Rehn, announcing the verdict. "As they say, the man's gotta do what the man's gotta do."

From the start, the accession of both Bulgaria and Romania to the EU raised eyebrows. During the postcommunist transition of the early 1990s, the Central European states of Poland, Hungary, and the Czech Republic swallowed bitter pills of democratic, free-market reforms. Romania and Bulgaria, meanwhile, started at a lower level of development and reforms were slowed by foot dragging, experts say.

As the economy worsened here, so, too, did corruption, says John Heck, who runs an EU-funded, anticorruption project in Sofia. The problems are ingrained deeply into modern Bulgarian society, he says, "Integrity – if you look in the Bulgarian dictionary, you won't find the term."

Although critics argued that Romania and Bulgaria would be allowed into the EU too soon, strategic benefits won out. Many Bulgarians were also eager to join, so Brussels dangled a carrot and stick to pressure authorities into complying with EU laws and standards. Still, enforcement lagged and corruption continued.

When Bulgaria and Romania were finally admitted to the EU in January 2007, they became the first to enter with strings attached: They were given several months to clean up their legal systems and to develop methods of tracking EU funding. Promises were made, but deadlines were missed, prompting a growing litany of threats from Brussels.

Romania soon launched several high-profile public prosecutions against corruption, but Bulgarian efforts struck EU officials as disingenuous, says Irina Novakova, Brussels correspondent for Bulgaria's leading newspaper, Dnevnik.

The EU officials "see other new members react quickly to criticism, yet in Bulgaria a political umbrella prevents prosecutions," says Ms. Novakova. "Officials complain 'the Bulgarians come to Brussels, tell us to our face they'll solve things. But it always continues, like they think they can get away with anything.' "

In July, the EU antifraud office shamed Sofia when, for the first time ever, it revoked accreditation of two government agencies entrusted to handle EU funds.

Also in July, a European Commission report accused Bulgaria of failing to "translate words into deeds." The report noted modest progress in judicial reform and the curbing of low-level corruption, but it went on to identify a smorgasbord of sleaze, including alleged vote-buying during 2007 elections, shady financing of political parties, money laundering, and the failure to seize financial assets of purported gangsters.

The final straw was an investigation of 35 EU-funded projects in Bulgaria – it found financial irregularities in all but one.

Brussels then announced it would freeze €500 million ($700 million) in aid and give Sofia until late November to show significant strides.

Enter Meglena Plugchieva, whom one local newspaper dubbed "Iron Meggy." After 15 years as a forestry inspector, followed by stints as a parliamentarian and deputy minister of agriculture, Plugchieva earned respect in Western circles as Bulgaria's emissary to Germany. The Frankfurter Allgemeine Zeitung hailed her appointment as Bulgaria's "guardian of virtue."

Some progress was marked over the summer: the Interior Minister was forced to resign, several new investigations were launched to find stolen EU funds, and 10 parliamentarians were stripped of immunity from prosecution. Bulgaria also talked of passing tougher conflict-of-interest laws and requiring top government officials to fully disclose property ownership and other business interests. Once again, though, in the end there were no prosecutions.

Lack of political will paralyzes the process, say observers, and Plugchieva herself often sits across the same table from colleagues suspected of criminal ties. Her hands are tied, without the power to fire anyone. Besides, outing a corrupt official can be a death sentence; several have been gunned down in mafia disputes already.

The next EU evaluation of Bulgaria is due in January. Another $15 billion in assistance that Bulgaria stands to receive from the EU over the next few years could be pulled. A greater humiliation, says Ruslan Stefanov, an analyst with the Center for Study of Democracy in Sofia, would be internal shunning: Brussels could bar Bulgaria from joining both the eurozone of shared European currency and the visa-free travel area known as the "Schengen."

Something has to give. Bulgarian lawmakers, up for reelection next year, find little sympathy at home. Opinion polls indicate greater support for Brussels than their own leaders.

"A friend of mine said, 'I feel schizophrenic, as if I'm two people: one is that as a Bulgarian, of course you should be offended by not getting the money,'" says Stefanov, the analyst. "At the same time, Bulgarians know Brussels is right, that they should stop the money."

Acknowledging the discontent, Plugchieva says serving the public outweighs pleasing Europe. "For many years, Bulgarian citizens have borne great costs of the transition, with little to show for it," she says. "It should be up to the government to make people here happy, not left to outsiders."