Bulgaria Edges towards EU

Economic News

22 Jul 2010
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While the latest European Union report gave Bulgaria a string of good marks for progress, most were left in no doubt that there are still plenty of hurdles for the country to overcome before membership in 2007. Meanwhile, there were also concerns about the gap between the country's economy and those of its neighbours when it comes to EU accession.

The European Commission progress report, released November 5, was one of a series on all the Union's candidate countries. Stating that "Bulgaria is a functioning market economy," Bulgaria's report concluded that the country should be able to cope with exposure to the highly competitive market forces within the Union, provided it continues implementing its reform programme.

The "functioning market economy" status is a key one, gained as a result of both the implementation of a relatively liberalised trade regime, and the establishment of a coherent legal system to back it up. The report also highlighted the development and maintenance of financial mechanisms for establishing and preserving macroeconomic stability as a major factor determining market functionality. In addition, the elimination of trade barriers indicated the existence of a working liberal economy.

In their assessment, the Commission praised the country's efforts to modernise its bloated system of public administration. Much to the surprise of both local and foreign analysts, the country won applause for its gradual move towards a more transparent and orderly legislative process. Singled out for mention were the considerable efforts that had been made to facilitate better co-operation between the state and civil society through the use of a more developed consultative process and the promotion of a more decentralised governing structure.

At the same time, the report was quite critical in its appraisal of Bulgarian penal system, describing its prisons as "inadequate" in terms of even the most minimal of standards and noting that alarming levels of overcrowding had not been properly dealt with. Moreover, while the principle of habeas corpus, the foundation for any aspiring liberal democracy, is in theory ingrained within the framework of the Bulgarian constitution, the report draws attention to the fact that only half of the defendants facing criminal charges are provided with access to legal aid counsellors. In turn, if convicted, the accused is expected to pay for the costs of the whole proceedings - including the prosecutor's expenses. Thus, it comes as no surprise that the Commission report states that further enhancement of the legal-aid system should remain "a top priority".

Another point of concern raised by the authors of the report and a number of foreign officials, if only in sotto voce, is the prevalence of corruption within the Bulgarian economy. Those singled out as being particularly corrupt were customs officials, employees within the judicial system, members of the security forces and health care professionals. The pervasive influence of graft has helped foster a sense of disillusionment and helplessness amongst the Bulgarian populace, which, according to Alexander Stoyanov, the director of the polling-firm Vitosha Research, means "corruption is now tolerated by the local business community as simply another overhead cost, an effective mechanism for dealing with problems."

The report's final point of criticism focused on the government's failed attempts at curbing the trafficking of human beings, especially of women and children for the lurid purpose of sexual exploitation.

Nonetheless, overall, Bulgaria's progress towards EU accession is viewed positively, with pre-accession funding allotted specifically to Bulgaria expected to amount to a substantial EUR1.2bn over the next three years. Moreover, within hours of the public release of the Commissions' findings, the head of the Delegation of the European Commission to Bulgaria, Dimitris Kourkoulas, pronounced his general satisfaction with the effort Bulgaria has made thus far, asserting during a press conference that the "overall assessment was quite positive".

However, concerns then emerged in Sofia that Bulgaria's progress towards eventual membership might not be entirely in its own hands. In order for accession to take place by 2007, a common Accession Treaty that includes both Bulgaria and neighbouring Romania has to be signed towards the end of 2005. This is now a worry, as Romania failed to receive functioning market economy status in its progress report and is now lagging behind in the race for membership. Of the 31 chapters of the EU pre-accession process being negotiated with the EU by both countries, Bulgaria has provisionally closed 26, while Romania has closed only 20.

Bulgarian Foreign Minister Solomon Passy claimed that the EU's position on the subject of accession was therefore "inconsistent".

"On the one hand it claims it will judge the progress of the two countries separately," he continued, "and on the other hand it draws a shared policy for accession."

The same day the report was released, Jeffrey van Orden, Bulgaria's Rapporteur in the European Parliament, did not waste any time in demanding that Bulgaria's pre-accession negotiations be held separately from those with Romania. His argument was reinforced by EU liberal democrat deputy Graham Watson, who stressed that when comparing both nations, there was an obvious gap in their economic projections. However, Kourkoulas responded that in his opinion this gap was marginal and would in no way slow down the process itself.

Yet the gap between Bulgaria and the rest of the EU may be a bigger problem. While the report mentioned that improvements had been made in Bulgaria's labour market, it also highlighted the country's alarmingly low average per capita income, estimated at 25% of the EU norm.

Thus, the Commission report states that the overriding need to boost both income and productivity levels to European standards, "remains a major challenge for Bulgaria" and must be dealt with promptly. The former IMF Representative in Bulgaria, Piritta Sorsa, highlighted this point earlier this year when she said that even assuming Bulgaria was successful in achieving its projected goal of 5% annual GDP growth, it would take some 30 years for Bulgaria to catch up with the EU's lowest income earners.

Bulgaria's economic backwardness has led to an exodus of talented, university-educated members of the younger generation, who continue to flock to Western Europe in pursuit of work. This leaves behind an ever-increasing number of pensioners - or, in the words of Nick Davies, Managing Director of Ernst & Young, a virtual "demographic time bomb".

With many in the EU already wondering how the Union will accommodate the 10 new countries set to join in May 2004, the possibility remains that there will be delays for both Bulgaria and Romania. However, for Prime Minister Saxe-Coburg, EU accession represents a major opportunity. If he and his party can provide Bulgarians with what they want - a successful and rapid advance towards EU accession - he may yet have a chance at the next general election, set for 2005.

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