The EU's newest member Croatia faces possible sanctions for changes it made to the bloc's arrest warrant regime, which enabled it to refuse to extradite a former spy to Germany.

A European Commission spokeswoman said Monday the EU executive will meet next week to consider action against Croatia for amending the implementation of the European Union warrant system just three days before joining on July 1.

"This is certainly an urgent matter which needs to be discussed with a view to taking a decision," said a spokeswoman for EU Justice Commissioner Viviane Reding.

Reding told Croatian media last week that making "a unilateral change to one of the most important EU laws a few days before accession" was not just a breach of law, but a "breach of trust."

"This must be corrected at once or the relations between Croatia and the rest of the union could be burdened for years," Reding told Croatian news website Danas, saying the country risked possible sanctions such as a suspension of EU funding.

Reding had written to Zagreb seeking clarification of the government's position but the spokeswoman confirmed that there had been no reply by last Friday's deadline.

At the heart of the row is Croatia's refusal to extradite a former top spy wanted by Germany, a case many suspect prompted Chancellor Angela Merkel to snub celebrations to mark Zagreb's entry into the EU.

Croatia has confirmed that it received a European arrest warrant for Josip Perkovic but said it cannot act on it since the crime he is suspected of was committed before 2002.

The Croatian parliament's June adoption of a law making the European arrest warrant valid only for crimes committed after August 2002 in effect let 68-year-old Perkovic, a former Yugoslav secret service agent, off the hook.

He is suspected of involvement in the murder of Croatian dissident Stjepan Djurekovic in Germany in 1983.

Perkovic headed Croatia's military intelligence services after the country proclaimed independence from the former Yugoslavia in 1991.

He was also deputy defence minister during the country's 1991-1995 independence war.