BRUSSELS — The EU executive delivered a harsh verdict on Romania's respect for democratic values and threatened tighter policing to ensure respect for the rule of law, in a report seen by AFP on Tuesday.

"A well functioning, independent judicial system, and respect for democratic institutions are indispensable for mutual trust within the European Union," says the 22-page draft European Commission report.

"The Commission considers that recent steps by the Romanian government raise serious concerns about the respect of these fundamental principles."

"At a time when serious concerns are raised with regard to respect for rule of law and independence of the judiciary," the commission will Wednesday recommend that Bucharest remain under EU watch.

The commission and Prime Minister Victor Ponta have been involved in days of tense exchange over the centre-left government's controversial bid earlier this month to impeach conservative President Traian Basescu and its changes by decree to the powers of the constitutional court.

The row over the fate of Basescu -- who has been suspended pending a referendum on his impeachment -- and over the powers of the constitutional court have thrown Romania into its worst crisis since it emerged from communist dictatorship just over two decades ago.

Both Romania and Bulgaria, after being deemed to need to make more progress in judicial reform and the fight against corruption, were placed on a special EU programme in the run-up to joining the bloc in 2007.

Romania had hoped the so-called Cooperation and Verification Mechanism (CVM) -- involving experts to advise and to police reforms in the two countries in these areas -- would be lifted after five years, enabling it to join Europe's travel-free Schengen area.

But the draft report, which an EU source said was written Monday morning, said "a further report under the CVM" would be issued before the end of the year.

The new report will look at whether the commission's concerns "regarding the rule of law and the independence of the judiciary have been addressed and whether the democratic checks and balances have been restored."

Romania's interim President Crin Antonescu took issue with the report, saying in Bucharest: "Putting the new government on notice to halt pressure on the justice system is an exaggeration, to put it politely."

Speaking to Romanian television, he said he did not question the role of the CVM, but added: "But when they start laying out a legislative approach, what orders a government can or cannot give, what an interim president can do, it's clear that they are going beyond the remit of the European Commission."

Ponta went to Brussels last week for talks with EU officials, who handed the young premier a "to-do" list, setting out 11 areas in which Romania, which joined the EU in 2007, must fall in line with the bloc's basic values.

There has since been an exchange of letters aimed at reaching a compromise.

In a statement Tuesday, the commission said Ponta had "given further written commitments on the 11 points of concern" adding to points made in a letter sent by the premier on Monday.

"These additional commitments mean that, if implemented as announced, all the requirements" outlined by Commission president Jose Manuel Barroso in talks on July 12 "have been met, or will be met."

"Effective and speedy implementation will therefore be crucial," a commission statement added.