Protests Pressure Bulgarian Government

Views on BG | February 19, 2013, Tuesday // 10:52| Views: | Comments: 0
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Bulgaria: Protests Pressure Bulgarian Government Tens of thousands of people took to the streets over the weekend to protest electricity prices, raising pressure on the government, which until recently had managed to retain its popularity despite an austerity drive. Photo by Sofia Photo Agency

By Joe Parkinson

Wall Street Journal

Bulgaria's finance minister stepped down on Monday after tens of thousands of people took to the streets over the weekend to protest electricity prices, raising pressure on the government, which until recently had managed to retain its popularity despite an austerity drive.

Simeon Djankov, a former World Bank official who won the respect of financial markets for undertaking painful reforms but courted controversy in Bulgaria as a fiscal hawk, said he was resigning as finance minister, effective Sunday. Mr. Djankov, in a statement on the finance ministry's website, thanked "the experts in the Ministry of Finance with whose help Bulgaria has regained its financial health."

The government said on Monday, however, that Mr. Djankov had been relieved of his duties by Prime Minister Boyko Borisov. The prime minister proposed Tomislav Donchev, the minister responsible for European Union funds, for the post.

The news came a day after Bulgaria's largest demonstration in more than a decade as tens of thousands of protesters gathered Sunday in more than a dozen regions, paralyzing city centers and blocking highways. Venting their anger at high electricity bills, the protesters demanded the resignation of the cabinet and the renationalization of power distributors. Electricity prices are politically sensitive in the EU's poorest member state, where power bills bite off a large chunk of monthly incomes, especially during the winter.

The departure of Mr. Djankov—a self-confessed budget hawk with the lowest approval ratings in the cabinet—didn't immediately appear to appease protesters. On Monday night, several hundred people gathered outside the Council of Ministers' building in Sofia, the capital, to call for the government's ouster. Facing a line of riot police, the demonstrators chanted "mafia" and vowed to keep protesting until energy prices were reduced. Several who threw projectiles were escorted from the scene, prompting loud boos from the crowd.

Hewing to a tight fiscal policy and navigating the crisis without taking a foreign bailout, Bulgaria has stood as one of the EU's fiscal bright spots, comparing favorably with its regional peers Hungary and Romania, which have both needed international rescue packages and have been plagued by steeper recessions and political turmoil.

But the departure of Mr. Djankov, the government's most high-profile technocrat, likely foreshadows a shift toward more-populist economic policies ahead of national elections set for July, analysts said.

"Djankov was the figure who symbolized fiscal and financial discipline. The whole economic policy was based on these priorities," said Daniel Smilov, program director at the Center for Liberal Strategies, a Sofia-based think tank. "Now there is an expectation that some change in economic course is imminent and that may make some people nervous."

There were signs that Czech power company CEZ AS, which has been the focus of popular anger at rising energy prices, could be in the cross-hairs of a more populist policy. Bulgaria's Energy, Economy and Tourism Ministry said on its website on Sunday that the national energy regulator was considering whether to revoke CEZ's license due to allegations that the company violated public-procurement rules.

CEZ, which insists it hasn't breached regulations, got 9.9% of its 2011 revenue from Bulgaria, making it the company's second-largest market after the Czech Republic.

Bulgarian opposition leaders on Monday sought to build pressure on Mr. Borisov, stressing that Mr. Djankov's removal wouldn't alleviate public anger.

"This move means Borisov is panicking...The change is not enough, we need a new government and new rules," Ivan Kostov, a former prime minister and leader of the rightist party Democrats for a Strong Bulgaria, was quoted as saying by Bulgarian state media.

On the periphery of the euro zone, but overwhelmingly dependent on the bloc's larger economies for growth, Bulgaria won admiration from Brussels by reducing its budget deficit to 0.5% of gross domestic product last year from 2% in 2011. The economy managed a 0.5% expansion in the fourth quarter from a year earlier, marking its 10th successive quarter of growth.

But opinion polls in recent months have showed a precipitous decline in the ruling party's ratings after three years of austerity policies, corruption scandals that have snared cabinet ministers, and a lack of significant results in fighting crime and graft.

A lead of 15 percentage points last year over its nearest rival, the Bulgarian Socialist Party, has evaporated in recent months, placing GERB level with the Socialists, according to recent polls. That electoral arithmetic would make it difficult for Mr. Borisov to form a single-party government at national elections and could prompt the prime minister to call a snap poll in the spring, analysts say.

On the streets of Sofia on Monday, residents appeared polarized on the news. Boiana Stoyanov, a 34-year-old hotel manager, said Mr. Djankov had been made a "scapegoat" and that his ouster showed the coming election campaign "will be dirty."

Tsvetan Tcherneva, a retiree who demonstrated in Sofia on Sunday, said he was surprised Mr. Djankov had lasted so long. "He brought American ideas and took an ax to pensions and to state wages. The government is in serious trouble now," Mr. Tcherneva said.

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Tags: Bulgaria, finance minister, Simeon Djankov, Boyko Borisov, protests, CEZ
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