Frustration at slow progress in EU Financial_Times - 2009/6/18
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Kerin Hope and Theodor Troev report on the disenchantment that has set in ahead of parliamentary poll
Several thousand middle-aged Bulgarians rallied in Sofia on Tuesday outside the office of Sergey Stanishev, the prime minister, carrying banners declaring: "No more poverty and humiliation" and: "Give us back our money."
The protest, organised by the country's largest trade union, highlighted voters' concerns over low salaries and pervasive corruption ahead of parliamentary elections on July 5.
Since Bulgaria joined the European Union in 2007, per capita income has risen from about 33 per cent to 38 per cent of the EU-27 average. Yet the country remains the union's poorest member-state with monthly salaries averaging less than 350, in spite of large recent inflows of foreign investment and sizeable remittances from an estimated 1.2m Bulgarians working abroad.
Though Bulgaria managed to stay out of the Balkan wars during the 1990s, its economic and political transformation was painful. Political infighting, the takeover of manufacturing by shady business groups, and a banking collapse brought the country to the brink of disaster in 1997.
The turnround in the past decade has been impressive in many ways.
More than 70 per cent of exports go to the EU; small and medium-sized companies make specialised parts for Germany's auto industry; and, in spite of over-development on the Black Sea coast, Bulgaria's unspoiled countryside offers a haven for second-home buyers from northern Europe.
In the run-up to accession, hopes were high that Bulgaria would catch up with the EU's successful central European member-states within a few years. Officials in Sofia cited the country's strong background,
even under communism, in foreign language education, IT and engineering, together with the emergence during transition of a skilled pro-European middle class.
Yet the realities of EU membership so far have disappointed Bulgarians. Because of its failure to curb high-level corruption and organised crime, the Socialist-led government has lost access to large flows of funding from Brussels to upgrade infrastructure, modernise agriculture and improve competitiveness.
Simeon Diankov, a senior World Bank economist and policy adviser to the right-of-centre opposition Gerb party, says:
"The level of corruption here is mind-boggling. I have worked for the Bank in more than 90 countries and I have never seen anything like it."
The European Commission suspended 487m of aid to Bulgaria last July. Although about 115m of that amount was recently released, Bulgaria is still struggling to clean up public procurement procedures and convict officials accused of corruption.
If the Commission's next progress report, due to be published shortly after the elections, is negative, as expected, Bulgaria could lose several hundred million euros for good. Further sanctions could include the
non-recognition of Bulgarian court decisions by other member-states and even suspension of some membership rights.
Graft is so widespread in the judicial system, and in business and political life, that the Commission has to continue using financial leverage to achieve reform, says Ognian Shentov, head of the Centre for the Study of Democracy in Sofia. "This is a situation that won't be resolved quickly. Financial taps will be turned on and off in line with progress made," he says.
Meglena Plugchieva, deputy prime minister, still hopes Bulgaria will receive 1bn this year from Brussels for infrastructure projects co-financed by the gov-
ernment that will create new jobs.
As recession takes hold, the official unemployment rate has risen from less than 6 per cent to just over 7 per cent of the workforce. But this figure does not include long-term employment among older workers or among the large Roma community, says Dimitar Brankov, deputy president of the Bulgarian Industrial Association. "The jobless rate is certainly in double digits," he says.
Voters expressed their discontent at the European elections earlier this month, although turn-out was low at 38 per cent. The Socialists and their partners in a grand coalition, the right-wing National Movement for Stability and Progress, and the Movement for Rights and Freedoms, representing Bulgaria's large ethnic Turkish minority, all did badly.
But there is no guarantee that the July 5 election will bring significant change. Gerb, a new party founded by Boyko Borissov, the populist mayor of Sofia, is ahead of the Socialists, according to opinion polls, having beaten Mr Stanishev into second place in the European vote by a four-point margin.
Mr Borissov, a karate expert and former senior interior ministry official, campaigns on an anti-corruption platform. He has also warned that Bulgaria will have to follow the example of its neighbours, Serbia and Romania and seek assistance from the International Monetary Fund in order to ride out the recession. But Gerb is not likely to win enough seats to be able to govern only with the NMSP and the Blue Coalition, a fractious alliance of small conservative parties.
Mr Borissov has ruled out cooperation with both the Socialists or the MRF. Ahmed Dogan, the veteran MRF leader and Bulgaria's most skilful politician, says that if coalition talks fail, a group of technocrats should form a temporary "crisis-management" government to steer the country through the recession - a compromise that long-suffering Bulgarian voters are not likely to welcome.

Author: Kerin Hope, Theodor Troev

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