BUISNESS CENTRAL EUROPE: REALITY BITES

Views on BG | July 12, 2001, Thursday // 00:00

by Rob Whitford
It wasn't quite a landslide, but it certainly caused an earthquake. In last month's Bulgarian elections, a movement founded less than three months ago by exiled former king Simeon II won 120 of the 240 seats in parliament. It was a huge vote of no-confidence in the former right-wing government and its left-wing opposition. But the question is whether Simeon's government can possibly live up to the expectations.
The trouble with earthquakes, after all, is that things need putting in order afterwards. The victorious ex-king has several tasks ahead, in a country only tenuously on the road to economic recovery. As BCE went to press, he had yet to form a coalition, find a prime minister or name a cabinet. That in itself will take some time, and will determine the road ahead.

Simeon himself seems unwilling to become premier, perhaps because it would dent his moral authority. That leaves the field open for several contenders, each with a fair amount of baggage. And Simeon may wield power from the sidelines or even go for the presidency, if he can meet residency requirements. Huge questions also surrounded rumours of a coalition with the former ruling United Democratic Forces, which threatened to split over the issue. Given the disparate nature of Simeon's own hastily assembled movement, such a link-up might make for a complicated government.

But despite all the unknowns, a closer look at the make-up of Simeon's supporters might give some hints for the future. Amid all the media, showbiz and sporting personalities are some serious businessmen with some serious ideas. The core of Simeon's economic team is made up of Bulgarians in their early thirties who have prospered abroad. They include Nikolai Vasilev, vice-president of Lazards in London, and Milen Velchev, vice-president of Merill Lynch, both of whom may end up as ministers.

If so, then the economy may be in good hands. True, being a high-flier in an investment bank isn't quite the same as running a Bulgarian ministry. But these young things are genuine enthusiasts for the market economy and clean capitalism. And their economic programme has a certain coherence. It's all free-market stuff, designed to ease some of the pains of doing business in Bulgaria.

They will reduce licensing requirements to cut the notorious paperwork. They will exempt reinvested profits and capital gains from tax, and cut taxes in general while reducing the budget deficit to zero. And to help boost investment further they will push the fledgling capital market for all it's worth and provide zero-interest micro-credits to aspiring entrepreneurs. What's more, they now say they will maintain the currency board that has underpinned Bulgaria's financial stability for the past four years.

It's all sound stuff, but it's ambitious. And voter expectations are sky-high, encouraged by Simeon's populist campaign promises. What's more, it may not just be voters who are expecting a payback. Take a peek at some of the other businessmen who have climbed aboard the Simeon bandwagon, and they include a fair sprinkling of the people who have made Bulgarian capitalism less clean than it might be. Simeon will need to keep a tight rein on things if he's to keep his much-vaunted moral authority.

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