Bulgaria and Romania need to work harder on fighting corruption and organized crime, and step up the pace of reforms says the European Commission, which has decided to monitor the two states for at least another year.
Bucharest (pictured) and Sofia still have a long way to go
European Commission spokesman Johannes Laitenberger said supervising the European Union's two youngest members is a system that produces results - just not all the necessary ones.
"We have seen that a number of things have been done, other things need to be done, and so the focus is not on changing the architecture, but on completing the house," he said.
But getting the house in order is proving tricky.
When the two former communist states joined the European Union in 2007, other member states were particularly concerned about the level of corruption in both countries, and the political power wielded by violent criminal gangs operating in Bulgaria.
The EU executive says there are 21 areas in which Bulgaria needs to better its performance, and 16 for Romania - including the implementation of anti-corruption laws, and boosting the independent power of judges.
Decision is a blow to reputation abroad
The EU froze millions of euros in funding last year. Since then, the commission says Bulgaria has taken steps to clean up its act.
The reports come as a blow to both countries, which are suffering from the public perception they were let in to the EU club too early.
Many Croatians are losing enthusiasm for EU accession
That sentiment is felt more acutely in EU candidate countries where accession talks have stalled, like Croatia and Turkey.
Analysts say Croatians have been losing enthusiasm for the enlargement process since Slovenia started blocking Croatia's membership talks over a territorial dispute in the Adriatic.
Croatian journalist and political analyst Stojan de Prato says Croatians feel let down.
"We do feel we have been in the enlargement process all too long…. at the moment, it seems we will blocked forever, no-one is doing anything," he said.
There is a growing sense of alienation in other western Balkan countries too, that feel either neglected or unfairly treated by the EU.
A recent decision to exclude Bosnia from an EU visa liberalization program had some accusing Brussels of holding double standards.
And Iceland's decision this month to join the EU led commentators to wonder if it was jumping the queue.
De Prato says Iceland is not the problem.
"Iceland was the first country to recognize the independence of Croatia, so everyone has good feelings about Iceland in Croatia - everybody would be happy if Iceland joins," he said. "But with Romania and Bulgaria, the reaction was, you want them? And you don't want us? Come on!"
But the commission will not be drawn into a public discussion over whether Romania and Bulgaria were accepted into the EU too soon.
Commission officials insist, that under their close supervision, both countries will deliver on their promise to reform.
Author: Nina-Maria Potts, Brussels
Editor: Susan Houlton