Going for VAT Hikes in the Balkans. Or Love Thy Neighbor in Time of Crisis

Novinite Insider » EDITORIAL | Author: Ivan Dikov |July 12, 2010, Monday // 18:54| Views: | Comments: 38
  • Send to Kindle
Bulgaria: Going for VAT Hikes in the Balkans. Or Love Thy Neighbor in Time of Crisis

If one is to give it some serious thought, the global economic and financial crisis has actually been rather beneficial for Bulgaria so far...

And it could become extremely beneficial if some smart policies have been/are adopted. What is more, by mid 2010, the effects of the economic crisis on Bulgaria's two fellow EU neighbors Romania and Greece is suggesting new important lessons for the country.

The crisis did put an end to several years of record economic activity in Bulgaria – with foreign direct investments reaching the record EUR 9 B in 2007, and the pretty decent EUR 6 B in 2008.

The years 2006-2008 were a period of “great” “job security”, in a way, because Bulgarians – especially the pool of unskilled laborers, did not have to worry about employment. They could, literally, just go to the nearest bustling construction site, toil for 10-11 hours there, and get paid BGN 50 in cash in the evening - a good deal if you are not the kind of person who worries about the blatant lack of labor safety, insurance, social security and health benefits.

This period has been over for 1-2 years now as the crisis wiped out Bulgaria's pre-2009 economic growth. Which is probably something that one should not fret about given that, in addition to the proper foreign investors, it was also fueled to some extent by speculators – and some exciting money laundering schemes, and was focused on a limited number of sectors – construction, finances, tourism, and trade.

The fact of the matter is that the economic and financial crisis did save much of the Bulgarian environment – and therefore the potential of its tourism sector – by making investors freeze or abandon a number of resort construction projects located in or near protected areas.

The crisis helped tame Bulgaria's previously raging current account deficit, and even led to an improvement of the country's trade balance – the country's foreign trade gap is now closing not so much because of the modest growth of the Bulgarian exports but because of the collapse of imports previously driven by the now shattered domestic consumption.

Another probably mostly positive effect of the crisis was halting what was emerging as the need to “import” thousands of foreign laborers from countries such as Vietnam. Basically, by mid 2008 when Bulgaria's Socialist-led government even went to Vietnam in order to “procure” migrant workers, the Bulgarian economy was getting close to reaching “full employment”.

Not that importing immigrants would have been a bad thing in itself – as every self-respecting industrialized Western nation seems to be doing it. It is just that in terms of its administration, legislation, and societal attitudes Bulgaria seems to be woefully ill-equipped to handle a substantial immigrant inflow, and it probably has the lowest capacity of all EU member states to absorb, that is, to accept, relatively large numbers of foreigners that look different and speak languages very different from its own.

So by the fall of 2008 the Bulgarian economy was really overheated – to the extent that an economy run and staffed by Bulgarians can be overheated – that is, since, unfortunately, we don't rank very high in terms of labor productivity.

With all that now gone, the Bulgarian companies and authorities should really (have) seize(d) the crisis as a golden chance to try to find the road for sustainable growth, i.e. to identify the priority sectors and economic models, invest heavily in training and education, figure out how to utilize best Bulgaria's limited potential in the research and development sectors – and also to prepare in terms of legislation, infrastructure, and mentality for the future advent of the foreign workers from Vietnam or elsewhere – that is bound to happen as soon as the economy starts taking off again – as a result of the demographic crisis.

It is probably too early to say how much Bulgarian companies and institutions have managed to take advantage of the positive aspects of the crisis yet – but my guess is – probably not as much as they should (have).

The present economic and financial situations in Bulgaria's two EU neighbors Greece and Romania raise some interesting questions in this respect. Not least because figuring the best way to integrate Bulgaria's economy and border regions with those of its neighboring EU states would make a lot of sense in terms of preparing for the “post-crisis world.”

It certainly is a good idea for Bulgaria to look at its other neighbors as well – Serbia and Macedonia as well as Turkey with the vast and vastly unexplored market of its 20-million megalopolis Istanbul sitting right next door. But the opportunities presented by being able to bridge Romania and Greece – both fellow EU member states with larger economic potential than Bulgaria – are certainly crucial even as both Greece and Romania are struggling financially.

The rationale for that seems clear. To mention a few simple facts, there were one million Romanian tourists in Bulgaria only last year. 30% of the Bulgarian banking sector is Greek-owned, and Greece is the third largest foreign investor in Bulgaria in the last 15 years – surpassing Germany, the UK, France, the US, to name a few.

Yet, in Bulgaria (and probably in Romania and Greece as well) there has been little appreciation and thought of mutually beneficial policies for proper EU-type economic integration – of the kind that has spurred prosperity in Western Europe, and has made a war between the two parts comprising Franco-Germany unimaginable in the past 60 years.

A good test for that are the two general sets of attitudes in Bulgaria towards the economic troubles of its two EU neighbors – Greece, whose finances are now scrutinized by the EU and the entire world, and Romania, which has had to succumb to pressure by the International Monetary Fund in order to get some bailout money into its economy.

The first set of attitudes in Bulgaria has been underlined by the fact that its EU neighbors had to up their value-added tax rates (from 19% to 23% in Greece, and from 19% to 24% in Romania) while for the time being, despite much heating debating, the Bulgarian government is evading going for a VAT hike. The argument here goes that the Greeks don't deserve aid from the EU after cooking their financial data, and that we are doing better than both of our neighbors and should not care for them.

Needless to say, this has been some pretty ridiculous gloating in Sofia since not only aren't we doing better than Greece and Romania but if our neighbors are crumbling, we will not just miss benefits, but there are chances are our economy will suffer badly as well.

The second types of attitudes in Bulgaria have to do with hopes to profit from the plight and misery of the Greeks and Romanians. This goes primarily for the border regions – in the Bulgarian Southwest and along the Danube where thousands of Greek and Romanian shoppers have been flocking to buy groceries and fill up their gas tanks.

This sentiment has gone as far as a huge headline in a major Bulgarian daily newspaper saying, “The Macedonians Are Stealing Our Greeks”, referring to the fact that in their quest to save a few bucks some households from Northern Greece started shopping in Macedonia, which is competing for the Greek buyers with Southwest Bulgaria.

A leading Romanian journalist and economic analyst has suggested that because of the tax hikes in his country, a large number of Romanian companies will relocate to the Bulgarian Danube city of Ruse “which is only 60 km away from Bucharest.”

Clearly, this “hey-there-is-our-time-to-profit-big-from-the-troubles-of-our neighbors” attitude is about as ridiculous as the “gloating” one. Because, sure, a few isolated pockets on Bulgarian territory might strike it rich for a few months from foreign shoppers. But without real sustainable growth reforms in Bulgaria – including the integration of our border regions with the border regions of our EU neighbors – the much dreamed-of economic prosperity will keep being nothing but a distant prospect. Not until we have the roads, the tunnels, the bridges, and the mutual understanding that one country's prosperity is the chance for another to become prosperous as well, and that one country's economic troubles are most likely to drag down the neighboring economy as well – a simple concept still lost to many in the Balkans.

So when the VAT goes up in Romania and Greece, Bulgarians should probably be as concerned as if it were going up in Bulgaria instead of being happy that some grocery store in Petrich or Ruse has made a few extra bucks from struggling foreign families.

Editorial » Be a reporter: Write and send your article
Tags: Greek banks, Romanian tourists, Romanians, Greeks, Greek shoppers, danube, Southwest Bulgaria, Petrich, Ruse, reforms, Istanbul, turkey, macedonia, Serbia, Balkans, EU, economic crisis, financial crisis, global economic crisis, greece, Romania, VAT hike, VAT, FDI, Foreign investors, construction, tourism, finance, IMF, IMF loan, bailout
Expats.bg All Are Welcome! Join Now!
Advertisement
Advertisement
Please, log in to post a comment.
» To the forumComments (38)
#38
CJB - 19 Jul 2010 // 01:03:24

Are you talking to me, Sea Slug?

What happened to the Sea Slug school of economics? I thought you were going to "explain" BG's trade with Greece for us all?

But of course, all a Sea Slug living in a hollowed out skull can do is make echoes. When that doesn't happen, and someone forces Sea Slug to use its tiny brain, just rage is about all he can manage. Poor little Sea Slug!

#37
NellieotAmerica - 18 Jul 2010 // 19:09:23

Fester

You said to Uchak: "Frankly I don't know and I don't care. You are obviously much better connected in these circles. LOL"

Uchie Koochie is not gay, he put the moves on WW a couple of years ago. lol

#36
DrFaust - 18 Jul 2010 // 18:59:22

Nazi vermin,

which part of the following sentence don't you understand:

PISS OFF!

#35
CJB - 18 Jul 2010 // 17:54:30

"Nazi troll,

which part of the following sentence don't you understand:

PISS OFF!"

Are you talking to me, Sea Slug?

What happened to the Sea Slug school of economics? I thought you were going to "explain" BG's trade with Greece for us all?

But of course, all a Sea Slug living in a hollowed out skull can do is make echoes. When that doesn't happen, and someone forces Sea Slug to use its tiny brain, just rage is about all he can manage. Poor little Sea Slug!

#34
DrFaust - 18 Jul 2010 // 14:48:52

uchak,

"dr faust, i am sure you are all over the gay scandal in the German national football team..
which players do you think are gay?

I think Podolski, Mesut Ozil, and Keissling"

Frankly I don't know and I don't care. You are obviously much better connected in these circles. LOL

#33
DrFaust - 18 Jul 2010 // 14:46:43

Nazi troll,

which part of the following sentence don't you understand:

PISS OFF!

#32
NellieotAmerica - 17 Jul 2010 // 17:04:38

Bill

"But then I'm old enough to remember when the sequence was love, engagement, marriage, sex, children in that order. That has become not only archaic but also the subject of ridicule today."

Most people still do it in that order. The Hollywood elite and the Leftie Eurotrash ridicule it, but they are the minority of the world population. The rest of the 8 billion people in the world still mate and breed the old-fashioned way. lol

#31
Bill - 17 Jul 2010 // 17:00:45

Nellie:

Sure they can, and a few major athletes have been gay. Joe Namath and Greg Louganis come to mind offhand, but I'm sure there have been others.

However, at Podolski's age, I don't think that likely. Unless I'm very much out of toouch, which could be likely, it's not in the German nature for someone his age to go for female sex without fully enjoying it. Most of the time, it's not until the girlfriend's pregnant that they consider marriage, but they can live together for years, and in a few cases (like Johnny Depp, Brad Pitt) they can live together, have children and never consider marriage an option.

But then I'm old enough to remember when the sequence was love, engagement, marriage, sex, children in that order. That has become not only archaic but also the subject of ridicule today.

#30
NellieotAmerica - 17 Jul 2010 // 16:49:26

Bill

"My point was that Uchak accused Podolski of being gay, and I know he has a girlfriend and has fathered a child."

Gay men can have sex with women, but they fall in love with men. The former governor of NJ Jim McGreevy was married twice and has two children. After his homosexuality was outed by his gay lover, he resigned and is now living with another man.

#29
NellieotAmerica - 17 Jul 2010 // 16:40:50

Uchak

"which players do you think are gay?

I think Podolski, Mesut Ozil, and Keissling"

Mesut Ozil is Turkish, so he may as well be gay. At least then he wouldn't breed any Turkish vermin. As far as I am concerned, you can never have too many gay Muslims. The more gay Muslims you have, the less they will breed. Homosexuality is nature's way of removing bad genes out of the human gene pool.

#28
WickedWitch - 16 Jul 2010 // 18:38:28

"So what? Someone's sex life is nobody else's business."

Unless that nobody is Bill, of course.

#27
Hayawani - 16 Jul 2010 // 18:04:52

Bill,

Sit down and read slowly.

"So what? Someone's sex life is nobody else's business."

I did not bring up anybody's sex life. I only corrected your wrong assumption of somebody's sex life. It was so much "nobody else's business" that you felt you had to add your wealth of knowledge and experience on the subject. Hypocrite!!

#26
Bill - 16 Jul 2010 // 17:55:18

Hayawani:

"Only that the possibility still exists."

So what? Someone's sex life is nobody else's business.

#25
Hayawani - 16 Jul 2010 // 17:51:58

Bill,

You are a senile old cnut! I have accused no-one of being gay. I repeat, no-one! All I have stated is that it is not impossible to be gay, married and a father at the same time, You claimed that a player was a father and had a girlfriend so he can't be gay. That just isn't true. N.B. This is not me accusing him of being gay. Only that the possibility still exists.

#24
Bill - 16 Jul 2010 // 17:44:35

Hayawani:

This is Google's lead article on the subjted:

Wednesday, 14 July 2010

Michael Becker Says That The Reason Germany Lost To Spain Is Because of Its Gay Players
One of these soccer players is gay. (HINT: He wears #24).

BERLIN - Michael Becker, who is the manager of the German National Team Captain Michael Ballack, has stated that the reason that Germany lost to Spain is because of the gay players on the German team.

Becker said that the German gays spend too much time worrying about their hair, shirts, shorts, shoes, and lipstick, and not enough time about kicking the damn friggin ball through the net.

He went on to say that the Spaniards have no gay players on their team and that is why they won the FIFA World Cup Championship beating the Netherlands 1-0.

Becker angrily said that if Germany does not get rid of its gay players and get rid of them soon, the team will get to the point where a soccer team from the tiny African country of Lower Zambola will kick their arse's 4-0.

Michael Ballack was asked if he agreed with Becker's statement.

"Well...personally I think that Lower Zambola could end up beating us 5-0 meself."

He then said that he is not against gays, although he does think that most German transvestites look kind of silly as most are over 6 feet 2 inches tall and have bodies that look like California redwood trees.

Ballack said that personally he does not care if someone wants to be gay, or bisexual, transgender, transsexual, bigender, or semi transgay, just as long as they do not try and give him an erotic hug, a sensuous kiss, or try and play with his 7-inch wiener.

SIDENOTE: The German government plans on conducting an extensive investigation into the allegations that Germany lost to Spain because of the gay players. If the facts do show this to be the case then the German government will have no recourse but to arrest the gay players, give them a fair trail, and then incarcerate them in Berlin's Sashay Swish Swish Prison, which is the only gay prison in the entire country.

Make Abel Rodriguez's day - rate this story with the stars, they're just down there!

The story above is a satire or parody. It is entirely fictitious.

PLEASE NOTE THE LAST LINE.

Bulgaria news Novinite.com (Sofia News Agency - www.sofianewsagency.com) is unique with being a real time news provider in English that informs its readers about the latest Bulgarian news. The editorial staff also publishes a daily online newspaper "Sofia Morning News." Novinite.com (Sofia News Agency - www.sofianewsagency.com) and Sofia Morning News publish the latest economic, political and cultural news that take place in Bulgaria. Foreign media analysis on Bulgaria and World News in Brief are also part of the web site and the online newspaper. News Bulgaria