Strong ties to EU and Nato are key Financial_Times - 2004/11/16
When Simeon Saxe-Coburg, Bulgaria’s former king, swept to power at a general election in 2001, the agenda he set for his right-of-centre government was short but ambitious.

His priorities were to integrate Bulgaria permanently with western Europe via membership of Nato and the European Union and to curb emigration.

That Mr Saxe-Coburg, 67, a former Madrid-based financial consultant who became prime minister without any political experience, has delivered on his promises is a considerable feat.

Bulgaria won full Nato membership this year, following agreement to dismantle the communist-era medium-range SS20 missiles deployed when the country was one of Moscow’s closest allies.

Like other new and aspiring Nato members from the Balkans and east Europe, Bulgaria has been eager to demonstrate its troops’ ability in the field. Bulgarian soldiers are part of the peace-keeping forces in Kosovo, Bosnia and Afghanistan and a 500-strong contingent is serving with the US-led forces in Iraq.

The government is keen to cement ties with Washington by offering US troops stationed in Germany a permanent and less expensive base in Bulgaria.

Solomon Passy, foreign minister, says the missile deal proved a catalyst in winning admission to Nato. Similarly, the decision to shut two additional units at the Kozloduy nuclear plant on the Danube, in spite of strong popular opposition, broke a log jam in EU accession negotiations.

“These were both landmark decisions,” he says. “It mattered that we were willing to compromise.”

Bulgaria is set to join the EU on January 1 2007, together with neighbouring Romania, although both countries are subject to a safeguard clause providing for a one-year delay in accession if further reforms are not implemented.

With a balanced budget, falling interest rates and declining public debt - projected at 45 per cent of GDP this year - Bulgaria’s economic performance has outstripped many of the new central and east European member-states that joined the EU this year.

The unemployment rate fell below 12 per cent in September, down from 18 per cent three years ago. Lydia Shouleva, economy minister, says more women have joined the workforce and about 40 per cent of new jobs have gone to the long-term unemployed.

While an estimated 700,000 Bulgarians, about 8 per cent of the population, have moved abroad since the end of communism, the flow of migration has slowed and may be starting to reverse. Rising foreign investment has increased demand for skilled workers with experience abroad, especially in information technology and financial services.

Nikolay Vassilev, deputy prime minister, says there is much to do to upgrade the business environment for potential investors.

His priority has been infrastructure projects, including concession deals for redeveloping Varna and Burgas airports on the Black Sea coast, aimed at boosting cross-border trade and the fledgling tourism industry.

“We want to attract blue-chip international operations,” Mr Vassilev says.

In its latest progress report on Bulgaria, the European Commission said last month the economy would be able to “cope with competitive pressures and market forces within the union” but stressed the need to maintain momentum on reforms.

Mr Passy says the government intends to complete constitutional changes that are required for EU entry, such as permitting foreigners to own land, before the general election due by July.

This may be hard to achieve as constitutional amendments require a two-thirds majority in parliament.

Mr Saxe-Coburg’s party, the National Movement for Simeon II, a loose pro-business grouping, has lost its parliamentary majority through defections by individual MPs and the formation by younger deputies of a centre-right splinter group.

Though the NMS is still supported by the Movement for Rights and Freedoms, a party representing the country’s ethnic Turkish minority, prolonged bargaining with opposition factions can be necessary to obtain even a simple majority in the parliament.

After more than three years in power, the NMS’s approval rating is low. Opinion polls suggest the Bulgarian Socialist Party, out of office since the mid-1990s, will head the poll at next year’s election but would need at least two coalition partners to form a government.

Roumen Ovcharov, BSP deputy leader, says his party would be willing to form a coalition with Mr Saxe-Coburg, in order to consolidate reform ahead of EU entry. That would allow foreign-trained members of the prime minister’s team to continue driving the reform process in the critical early days of membership.

Milen Velchev, the finance minister and a former investment banker in London, says: “Enthusiasm for the EU runs high. People see membership as a passport to a new life.”

With rush-hour traffic jams in its cobbled streets and new boutique hotels, there are signs of a new affluence in Sofia. But it is far from being a chocolate-box east European capital.

In the past year, the city has seen dozens of street killings, attributed to a turf war between two criminal groups that operated as insurance companies in the turbulent early years of Bulgaria’s transition. But there have been few arrests and none of the alleged assassins has so far been convicted.

Boyko Borissov, the high-profile secretary general at the interior ministry, who co-operates closely with UK and US law-enforcement agencies, has had more success with cracking down on Bulgaria-based crime rings running international forgery and credit card fraud operations.

The European Commission report highlighted the need for reform of the judiciary in order to prosecute organised crime and corruption. But attempts to make judges and prosecutors more accountable are hampered by the protection afforded to senior members of the judiciary under the constitution.

This stems from legislators’ insistence on ring-fencing the independence of judges in the early post-communist years. Bulgarians say corruption among bureaucrats is declining, and paying bribes is no longer an inevitable part of having permits approved or ensuring medical services are delivered.

“A reliable recent study shows a significant decrease in cases of administrative corruption,” says Ognian Shentov, chairman of the Centre for the Study of Democracy, a Sofia-based think tank. “But more has to be done. The organised crime networks are too organised and too visible.”

Author: Theodor Troev

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