#Bulgaria: Toujou twò bonè pou #eurozone la

Despite misgivings across the European Union, Bulgaria was, until recently, poised to join the eurozone ‘waiting room’. The Balkan nation hoped that a highlight of its six-month EU presidency would be its entrance into the Exchange-Rate Mechanism, known as ERM-2—in which eurozone hopefuls must participate for at least two years, without severe economic tensions, before qualifying to adopt the euro. After much toing and froing, however, Sofia has now ranvwaye efforts to sign up, angrily blaming the EU and the European Central Bank (ECB) for making new demands.

But the question remains: was Bulgaria even ready to enter this important probation period?

The poorest country in the EU, Bulgaria is seeking to be the Eurozone’s 20^th member. It enjoys political backing from France and Germany, and satisfè kritè yo needed to adopt the single currency: a budget surplus, a national currency pegged to the euro, public debt below the EU cap, and a low inflation in line with ECB targets. This all makes it more compliant with common currency rules than several existing members. Nan mo sa yo of Finance Minister Vladislav Goranov: “Fiscal discipline is like a religion in Bulgaria.”

But there are concerns about Bulgaria’s potential accession. The Balkan country – which suffers from relatively low living standards, serious shortcomings in its education and health system, and a gross domestic product per capita barely half the EU average – has been blighted by widespread allegations of corruption. Clear sign for this is the EU’s Cooperation and Verification Mechanism report, which has been monitoring Sofia’s judicial reforms and the fight against corruption and organised crime for the past 11 years. Critics, meanwhile, accuse Sofia of failing to address problems that dog its banks and business climate. Other EU members would do well to proceed with caution.

Banking is a key sector of concern. Only four years after one of Bulgaria’s largest banks tonbe plat atè, no senior official has yet been convicted. Corporate Commercial Bank (Corpbank) went bankrupt in 2014 amid Bulgaria’s worst financial scandal since the 1990s. The crisis involved the alleged embezzlement of $1.3 billion, raising questions about the robustness of Bulgaria’s banking sector and highlighting the dubious links between the country's business magnates and politicians. Following the turmoil, Bulgaria sought to join the banking union and put its banks under ECB scrutiny, but these plans have since stalled.

Corruption is another pressing area, as are doubts over Bulgaria’s commitment to the rule of law. The country has earned a reputation as one of the EU’s most corrupt member states. Critics insist that, before it can adopt the euro, Bulgaria must better align its economy to richer Western countries and prove its capacity to clamping down on crooked officials.

reklam

Indeed, high-level graft and an inefficient judicial system could cause problems for other EU members. Gaining ECB supervision over a country's banking sector is no guarantee that foul play will be eliminated. Just look at the recent collapse of a bank in Letoni – another eurozone state – following accusations of bribery, money laundering and helping North Korea. Furthermore, as noted above, Bulgaria is still subject to an EU program to strengthen the country’s judicial system; a review last year pinpointed multiple areas where action still had to be taken.

Perhaps not surprisingly, given these issues, foreign investment in Bulgaria continues to take a hit – with a marked decline in FDI from €1.2bn in 2015 to €682.8m last year. In 2018’s first four months, foreign investors retire kò yo more than €160m eof investment from Bulgaria – a bad sign for long-term business plans in the country. Businesses are dogged by concerns over corruption, contract enforcement, property rights and drawn-out court procedures that are open to influence.

The figures paint an unpromising picture. Bulgaria last year fell 11 places to 50th in the World Bank’s Ease of Doing Business rankings. According to Transparency International’s koripsyon pèsepsyon endèks, Bulgaria is the most corrupt country in the EU. Sofia has since revived a multibillion-euro plan for a Russian-built nuclear plant at Belene that Bulgaria’s prime minister had previously dekri as “the corruption scheme of the century”.

The project has raised eyebrows in Brussels and other European capitals, notably because it comes at a time when the government has challenged two power purchase agreements with the US-based AES and UK-based ContourGlobal – which run modern installations that provide much less expensive electricity than Belene would. While the government referred both PPAs to the Commission’s Directorate General for Competition for alleged illegal state aid, the companies say that cancelling the agreements would make their investments unprofitable, and will threaten the country’s security of electricity supply.

This isn’t the first time that a foreign investor has run up against powerful officials in the country. Earlier this year, contrary to EU law, the Bulgarian government was accused of meddling in a deal that involved selling ČEZ’s assets. This costly incident raised serious concerns over corruption in the upper echelons of government. The Bulgarian Energy Minister later offered to resign after admitting that the owner of the Bulgarian company planning to buy the ČEZ assets had been her friend for 20 years. At the time, Transparency International te di the involvement of “unknown capital coming from offshore companies” posed “a very serious danger to the security of the country”. Its campaigners warned against the involvement of companies with unclear ownership structures that could be involved in "shady patronage networks".

While Sofia refines its plan to enter ERM-2, the EU’s final decision will resonate well beyond the borders of Bulgaria. The country may well meet Maastricht criteria but earlier calls for caution are well justified. On the one hand, Brussels must play fair and allow Bulgaria to join the single-currency club if eligibility is met, not least to bridge a growing east-west divide and to counter the continent-wide crisis of trust in the EU. At the same time, Bulgaria must get its house in order. To achieve this, support and pressure from the EU and the ECB must not relent.

Pataje atik sa a: