The European Commission will not recommend opening EU membership talks with Macedonia in its annual progress report next week because of political problems in the former Yugoslav republic, an EU source said on Tuesday.
The decision means Skopje is unlikely to begin the talks before 2009 at the earliest, dashing government hopes of starting next year, diplomats said.
"They lost a lot of time this year when (the main ethnic Albanian party) was out of parliament. They still need to work better on political dialogue to have a climate conducive for reforms," the source said, speaking on condition of anonymity.
The EU officially made Macedonia a candidate for membership in 2005, four years after an accord between the majority Macedonian and minority Albanian communities, brokered by the EU and NATO, pulled the country back from the brink of civil war.
But Brussels insisted on progress on the rule of law, the rights of the Albanian minority and fighting organised crime and corruption before entry talks could start.
EU officials lament the absence of dialogue with the Albanian community, the politicisation of the civil service and the blockage of key judicial reforms.
Diplomats said Slovenia, another former Yugoslav republic which takes over the EU's rotating presidency in January, was keen to advance Macedonia's bid but had concluded it would be counter-productive to ask the Commission for an interim report in mid-2008.
"If such a report were negative, it would be a very bad signal. We obviously need the candidate countries to do their homework. We can't do it for them," one diplomat said.
Instead, Slovenia will try to bring the Western Balkans countries closer to the EU by other means such as a proposed European Research Area, the diplomat said.
Macedonia's leading newspaper, Dnevnik, quoted the draft European Commission report as saying that parliament had been disrupted by a quarrel between the government and the opposition party representing the country's large ethnic Albanian minority.
"Several laws are still blocked, especially judicial reform," Dnevnik quoted the report as saying.
"Corruption is widespread and a serious problem," it quoted the report as saying, underlining the difficult relationship between Macedonia's president and prime minister.
The report also criticised mass sackings of civil servants after a change of government in 2006, saying "there has to be a separation between the political and administrative level."
Dnevnik said the report urged Macedonia and Greece to renew efforts to resolve their dispute over the country's name.
Athens has opposed the use of the name "Macedonia" ever since Skopje seceded from Yugoslavia in 1991, forcing the international community to recognise the country under the title "The Former Yugoslav Republic of Macedonia".
Macedonia is also the name of Greece's northern province and Athens considers its use a sign of territorial ambition. The neighbours have been involved in UN-led talks for a compromise since 1993, with little progress.