Bulgaria on the Brink

Radio Free Europe

by Robert Coalson

Following days of sometimes violent protests against austerity measures and reports of corruption in Bulgaria, the government stepped down this week, triggering a political crisis in the European Union's poorest member state.

Amid protesters shouting "Mafia!" and burning their utility bills on February 20, one demonstrator expressed his frustration. "How much longer do we have to endure this? Let's wake up and be Bulgarians! Long live mother Bulgaria!" he told Reuters.

The protests -- the worst since the country's financial meltdown in 1997 -- were triggered by high utility bills combined with corruption scandals, including one involving the government's nominee to head the state electricity regulatory commission, the agency that determines electricity rates.

Bulgarians are frustrated that the austerity budgets they have lived under now for years have yet to pay off and they're increasingly feeling squeezed by rising prices in a stagnant economy. But the crisis there differs from the antiausterity crises that have swept other EU members, such as Portugal, Spain, and Greece.

But this week's demonstrations were not triggered by new austerity measures and all of Bulgaria's governments have followed austerity programs since the 1997 crisis, says Daniel Smilov, a program director for the Center for Liberal Strategies in Sofia. In fact, Bulgaria hasn't introduced a whole package of new austerity measures since 2008 or 2009," he says. "The thing is that we have lived, in fact, under very strict fiscal and financial rules since about 1997."

As a result, Bulgaria has had minimal budget deficits and foreign borrowing for more than a decade. When the 2007-08 global financial crisis hit, Sofia was in a position to weather the storm without an international bailout, despite its close economic and financial ties with ailing Greece.

Suffering For What?

Despite not being in the eurozone, Bulgaria has voluntarily signed on to the EU's Fiscal Compact.

Like most former Soviet bloc countries, Bulgarians have far more trust and confidence in European institutions -- particularly the European Union -- than they do in their own politicians. There has been no significant decline in Bulgaria's enthusiasm for the EU in recent months.

However, Dimitar Bechev, head of the Sofia office of the European Council on Foreign Relations (ECFR), says the benefits of these policies have not trickled down. "Fundamentally it is about poverty," he says. "Although Bulgaria has been fiscally stable and has posted good financial figures, at the micro level, at the level of the household, incomes have stagnated and people haven't experienced the benefits of stability."

Analyst Smilov sees a sort of "austerity fatigue" brought on by Bulgaria's changing economic circumstances. In the period before the global economic crisis, Bulgaria experienced satisfactory levels of economic growth and foreign investment. Bulgarians were relatively poor, but the economy was stable.

However, that has changed over the last few years. "Since 2009-10, Bulgaria entered into a period in which, in fact, growth is almost zero and the economy is almost stagnating," Smilov says. "This puts a lot of pressure on people in terms of lowering their income, freezing their income. And also they start to feel, of course, the pressure of rising living costs."

Who Will Fill The Vacuum?

Now the country enters an uncertain period. A new general election will be called, most likely for late April or early May. In the meantime, a caretaker government will be installed and outgoing Prime Minister Boyko Borisov has said he will not participate in it.

Smilov, however, thinks the general nature of public political frustration in Bulgaria makes the election unpredictable. "The public protests were against the government, but also they showed some sort of frustration and disappointment with the political system as a whole," he says. "So, you could say that people are not happy with all existing political parties, and this makes predictions of the results a little bit difficult."

It is likely the vote will result in a deeply fragmented parliament that will have great difficulty forming a government, the ECFR's Bechev adds. "You might be expecting that the opposition will do marginally better because the momentum is from their side. [But] those people who protested are not necessarily Socialist Party voters," he says. "So it is a very tight race and there are many possible coalitions."

The country's political crisis could drag on for months.

As Borisov said when he stepped down on February 20, "the people gave us power and today we are returning it."

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