The European Commission warned Romania on Wednesday that it must stick to commitments on the rule of law, keeping pressure on the government in a dispute that has raised fears of political deadlock and financial disruption.

Prime Minister Victor Ponta is trying to impeach President Traian Basescu, and his methods have brought sharp criticism from Brussels, forcing him to backtrack after previously having ignored or tried to work around Constitutional Court rulings.

The European Union has accused the government of undermining the law, raising doubts over Romania's International Monetary Fund-led deal.

It has sent the country's currency, the leu, to record lows.
 
In a regular review on the rule of law and efforts to fight corruption, the Commission said there had been progress - including tackling high level corruption - but Ponta's government had raised concerns.

"Events in Romania have shaken our trust," Commission President Jose Manuel Barroso told reporters.

Ponta has said he will implement all Constitutional Court decisions and respect its ruling on what percentage of the population must participate for an impeachment referendum to be valid. It will be difficult for the government to secure a 50 percent turnout and that gives Basescu a good chance of surviving. 

But Barroso said the process had not yet ended and Romania had to implement its commitments.

"The trust of Romania's partners in the EU will only be won back through proof that the rule of law is above party interests, that all sides show full respect for judicial review including at constitutional level, and that the reforms are irreversible," the Commission report said.   

The Commission will maintain the monitoring, introduced to ensure Romania and its neighbour Bulgaria met EU standards after they joined the bloc in 2007. Romania views it as a stigma that, along with exclusion from the EU's passport-free Schengen zone over corruption concerns, makes it a second class member.

Ponta said the Commission report was "balanced" and that efforts to ensure an independent and efficient judiciary should  continue. 
  
PRESSURE    
Ponta, prime minister since May, has led a campaign against Basescu, who says the rush to oust him was triggered by government politicians' fears of corruption investigations after a string of high-profile convictions, including Adrian Nastase, a former prime minister and mentor to Ponta.  

He has sought to take some heat out of the EU dispute with the pledge to respect the powers of the Constitutional Court, which has ruled there must be a minimum turnout of at least half for a July 29 referendum on impeaching Basescu to be valid. 

Parliament will probably vote on bringing the law into line with that ruling later on Wednesday and Ponta said he and the government - which controls the legislature - support doing so. 

Opinion polls show most Romanians want to impeach Basescu, unpopular because of association with austerity and perceptions of cronyism and corruption among his political allies.

Ponta said the referendum would be held over only one day - the government had previously suggested it could be extended to ensure a higher turnout - but voting hours could be longer.

The uncertainty is keeping pressure on the leu, which slid 0.2 percent to trade close to an all-time low against the euro. It is also making it harder for the government to borrow.

The IMF has delayed its review of Romania's 5 billion euro deal by a week to avoid the referendum, and it will now run July 31-Aug 13.