Ticking Clocks

Economic News

22 Jul 2010
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A week after Bulgaria's general elections, the pressure for a deal on forming a new government has been cranking up with claims that failure to agree a new cabinet rapidly may delay the country's European Union accession. Meanwhile, the markets are waiting too, as the most indecisive balloting in years takes its toll on investors' nerves.



The election on June 25 gave the Bulgarian Socialist Party (BSP)-led Coalition for Bulgaria - which includes some seven other smaller parties - 34.2% of the vote, enough for 82 seats in the 240-seat parliament. The ruling National Movement for Simeon II (NMSII) came in second with 21.9% of the vote and 52 seats, while the ethnic-Turkish Movement for Rights and Freedoms (MRF) gained 13.7% and 33 seats. The surprise card in the election was the ultra-right Attack Party, whose 9% of the vote gave it some 22 seats.



Also taking parliamentary places were three centre-right parties - the United Democratic Forces (UDF) with 8.4% and 20 seats, the Democrats for a Strong Bulgaria (DSB) with 7% and 17 seats, and the Bulgarian People's Union (BPU) with 5.7% and 14 seats.



This seven-way split leaves a major conundrum for the country's politicians. Whereas prior to the election many had predicted the BSP would be able to gain power in coalition with the MSF, who were expected to drop their current coalition partner, the NMSII, in order to stay in government, the numbers still do not tally. Likewise, the NMSII itself would face a tough job building a coalition to keep the BSP out.



The socialists and many observers blamed the BSP's unexpectedly poor showing on the success of the Attack Party's extremist, anti-ethnic minority campaign, which drew many voters disillusioned with the NMSII's economic reforms away to the right, rather than left.



So, this week has seen a string of meetings between the parties to try and sort out a new ruling coalition.



However, this has not been made easy by a number of definitive refusals by certain parties to work with each other, or by disputes over who would take the prime ministerial portfolio.



The BSP's leader, Sergey Stanishev, has already ruled out any negotiations with Attack, while the UDF, DSB and BPU have ruled out talks with the BSP.



This left many speculating that the only feasible government might consist of a grand union of the left and right - a BSP-NMSII coalition.



"The only stable government coalition might be formed between the 'reds' and the 'yellows' [NMSII]," Gallup political analyst Andrey Raychev told SEEurope.net on June 30.



However, this possibility is also in trouble, as NMSII leader and current prime minister Simeon Saxe-Coburg insists that he must be prime minister, despite being the junior partner in any such alliance.



Yet, "We insist that in the formation of a coalition government, the role of leader should be taken by the political party that won the election," Stanishev retorted to reporters on June 30.



Meanwhile, as in many previous elections, the MRF once again has a key role. On June 30, the MRF and BSP leaderships met for talks that ended with a statement that the MRF had agreed that any future coalition should be led by the party which won the largest number of votes, suggesting some level of agreement between the two. However, MRF leader Ahmed Dogan also told reporters that he thought the future government should be a coalition of the BSP, NMSII, and his own party. The following day, the MRF entered talks with NMSII, who were then due into talks with the BSP as OBG was going to press.



One other possibility would be a grand coalition of the centre right, in alliance with MRF, which would also have enough seats for a majority. Yet there is much bad blood between these groups, with such an arrangement likely to be difficult to pull off with any stability, many pundits say.



Meanwhile, the possibility of lengthy negotiations has led to a number of warning shots over the effect of delays on the country's EU accession path.



Bulgaria was under pressure in any case to pass some 20 laws by September, all aimed at bringing it more into line with EU requirements, if it was to keep on time for accession in 2007. These laws include a contested new penal code that will need careful handling. With a clause now built into the accession agreement allowing a one-year postponement - and recent concern in some quarters of the EU that enlargement should be halted or delayed - "the clock is ticking", as European Commission Spokeswoman for Enlargement Krisztina Nagy told reporters on June 30.



The following day, the DSB's Dimitar Abadjiev also warned that membership was likely to be delayed a year, blaming much of this on the NMSII. "What we can see now is a result of a political instability," he said, adding that this had been created by Saxe-Coburg's efforts to change the Bulgarian political landscape.



The BSP has meanwhile said it will make parliament sit all summer, if necessary, in order to pass the outstanding laws. Indeed, when it comes to meeting EU requirements there is wide consensus amongst Bulgarian parties, raising the hope that whatever government finally emerges from the fray, it is likely to follow much the same course as before. This thought has reassured many market watchers, with the current impasse not affecting markets particularly badly.



What is perhaps more dangerous is the possibility of a series of unstable coalitions in the lead up to 2007, with the disruption to the legislative programme that is likely to cause. In November this year, the EU decides if Bulgaria is ready or not for accession, or whether the one-year delay will have to be invoked. That decision may also, of course, be made according to wider political concerns within the bloc beyond Bulgaria's control. But meeting the local end of the bargain is nonetheless crucial if Sofia's long march towards Brussels is not to be made even longer.

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