Exceptional Times

Economic News

22 Jul 2010
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As ordinary Bulgarians hold their breath over who will rule the country next, the best way to describe the current political climate in a phrase would be, "Don't speak too soon." However, political uncertainty in the country could have major economic ramifications should the EU decide to delay Bulgarian membership until 2008.



In the past week, Bulgaria has seen a new prime minister, Sergey Stanishev, 39, of the Bulgarian Socialist Party (BSP) come to power for all of five hours, after his party failed to form a majority government, Bulgarian daily Sofia Morning News reported.



With all the wrangling going on between Bulgaria's law-makers, political analysts are beginning to express doubts as to whether Bulgaria is now able to meet its EU reform target for 2005. Some analysts say it is not looking likely with all the political instability that has been plaguing the National Assembly.



With a vote of 120-119, Stanishev stepped into the role as Bulgaria's newly elected prime minister for the shortest time ever witnessed in the history of Bulgarian politics. However, failure to get support from the former ruling centre-right National Movement for Simeon II (NMSII), led by the former king, Simeon Saxe-Coburg, brought a swift end to the socialist prime ministry.



The first blow came on July 17, when the NMSII decided to reject the socialists' overtures. "We will not take part in a government with the ex-communist BSP," said outgoing prime minister Saxe-Coburg, following a party meeting in Sofia. The decision not to support a three-way coalition government forced the newly elected prime minister to form a minority government. Stanishev accused the centre-right parties of not acting in the interests of the country and of putting their own political agenda first.



"The blame will fall on the NMSII, who refused to take part in a government of national unity," Stanishev told reporters at a press conference.



The BSP won the most votes in the June 25 elections, taking 82 seats in parliament compared to the NMSII's 54. The BSP then formed a minority government with the support of the Turkish-minority party, the Movement for Rights and Freedoms (MRF), which held 34 seats in the 240-seat legislature. However, this two-party government was five seats short of an absolute majority.



Lashing his political opponents, Stanishev said, "We do not want to rule the country at all costs." Adding that, "It would be impossible to form any government without the socialists and the MRF represented in it."



Admitted failure by the socialists has handed over the problem of forming a new government to the centre-right parties, with the return of the exploratory mandate to President Georgi Parvanov, which many analysts say has practically "cleared the way for the king's party and the right-wing to receive the mandate next." Stanishev will remain at the helm of the BSP.



The President, who himself came from the ranks of the BSP, has confirmed his readiness to hand over "as soon as tomorrow" the mandate to the runner-up in the June 25 elections, the NMSII.



Former premier Ivan Kostov (Democrats for a Strong Bulgaria), Nadezhda Mihaylova (Union of Democratic Forces), Krassimir Karakachanov (Bulgarian National Union) and Anelia Mingova (head of the NMSII's parliamentary group) met President Parvanov late on Thursday. The opposition parties have not nominated anyone for prime minister as yet.



Delays in the political arena could well halt the passage of key legislation required for the EU reform process, which could result in accession to the Union being delayed from 2007 until 2008.



There is much to do should Bulgaria get back on track with its EU target; namely, to get judicial reforms moving in the right direction, along with fine-tuning elements of its International Monetary Fund (IMF) programme. In fact, the IMF was recently quoted as saying that Bulgaria needed to speed up its negotiations on a new cabinet in order to complete negotiations on the next precautionary stand-by agreement with the Fund.



The IMF's resident representative, Frank Rozwadowski, was recently quoted in one Bulgarian daily as saying, "The economic situation is grave, so it's imperative to vote on a new cabinet soon."



What does accession mean? The European Commission presented a report in the spring of 2004 which laid out a common framework for both Bulgaria and Romania in the areas of agriculture, finance and budgetary provisions. Article 32 states that: "Without prejudice to future policy decisions, the overall commitment appropriations for structural actions to be made available for Bulgaria over the three-year period 2007-2009 shall be as follows: For 2007 - 539m euros, 2008 - 759m euros, 2009 - 1.002bn euros."



Although Bulgaria's economy is looking robust, it would surely benefit greatly from such EU support as it begins to open up to the European internal market. The sectors that look set to benefit the most from accession include imports/exports, the financial markets and agriculture.



Whether Bulgaria enters the EU is not under debate; however, the golden question still remains: Will the political process pick up enough speed to catch the 2007 train into the European bloc or, as many analysts predict, will Bulgaria's date with EU membership be delayed until 2008?

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