Analysis

Winnipeg Free Press - PRINT EDITION

Poor Bulgaria no longer aspires to be like Greece

By: The Economist

Posted: 07/10/2012 1:00 AM | Comments: 0

According to Ivan Krastev, a Bulgarian analyst, optimistic forecasters had the high hope 20 years ago that Bulgaria might become like Greece -- that is to say, "moderately democratic, but moderately corrupt."

Now, he says, they hope Greece may become like Bulgaria: poor, but financially disciplined and not making too big a mess for others.

So far Bulgaria has weathered the economic and euro crisis. Unemployment has crept up to 12 per cent, but that is half the levels in Greece and Serbia. More than a million Bulgarians are thought to live abroad, working especially in Spain and Greece. Some have lost their jobs and come home, but the value of remittances sent back through banks has actually risen. In 2008, the official figure for remittances was 694 million euros, and last year it was 774 million euros.

Bulgaria's GDP grew by a modest 1.7 per cent in 2011 and is expected to slow this year. A recent study suggests as much as 30 per cent of the economy is unrecorded. Bulgarians are also miserable: A poll by the Open Society Institute found more than two-thirds of them expect the economy to stay the same or deteriorate in the next 12 months, and fully 56.7 per cent find the situation in the country "unbearable."

Bulgaria is the poorest country in the European Union. The average wage is 3.50 euros an hour and the average monthly salary is only 360 euros.

As 10 per cent of Bulgarian exports go to Greece and Greek banks hold 40 per cent of all Bulgarian loans, it is hardly surprising that Bulgarians are on edge. What makes them especially nervous, businessman Vassil Vassiliev says, is their past experience that whatever happens in western Europe "comes here a year or two later."

Vassiliev sends organized groups of workers to other EU countries, especially for seasonal work. He worries that political pressure on companies to replace his workers with the domestic unemployed could affect his business and thus Bulgaria's economy. Vassiliev thinks the country needs a plan to steer away from excessive dependence on the eurozone.

In one area, the market is already changing. The crash of 2008 left huge numbers of unsold vacation apartments along the Black Sea coast. When the builders went bust, many of these ended up in the hands of banks. Since then, middle-class Russians have been buying them, says Tzvetelina Borislavova, a banker who was left with thousands of flats.

Many Bulgarians who do not like the government of Boyko Borisov, the populist prime minister who once lived with Borislavova, fret about fraying democracy. Parliament has become a "rubber stamp," complains analyst Borislav Tsekov, echoing a belief that business lobbies secure laws favourable to themselves.

Several thousand people took to the streets recently to protest a law on forests that had been welcomed by builders of ski resorts. The government is backtracking.

Perhaps most worrying is the state of the media. Mainstream newspapers are owned by banks or powerful companies. There is little investigative reporting: Advertising by the government and by state-owned companies is a big source of revenue for newspapers. Because of that, editor Valeri Tsenkov says, self-censorship is the order of the day.

Nikolay Mladenov, Bulgaria's foreign minister, disagrees, saying what he finds most annoying is "the continual decline in the quality of journalism." He does not see a link with self-censorship.

Republished from the Winnipeg Free Press print edition July 10, 2012 A7

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