Bulgaria: Despite Recent Economic Growth, Elections Still Mask Massive Corruption

The center right GERB (Citizens for European Development of Bulgaria) party of Bulgaria, won the general parliamentary election held on March 26^th.

This will permit the leadership of the party to form another government, since the previous administration resigned last November. This had triggered the snap election that took place last weekend.

This is Bulgaria’s third election in four years. Analysts remain skeptical, that the electoral results regardless of their final outcome, will be able to make much headway in the widespread and deeply rooted corruption.

Transparency International ranks Bulgaria, with a population of just over 7 million, as the most internally corrupt country in the European Union.

It is important to note that the overall population, is declining by about three quarters of a percent annually.

Despite an uptick in economic growth in the last two years, the country remains the poorest member state in the European Union.

In fact, Bulgaria now has one of the fastest growing economies in the region at over 3%. Yet unemployment remains above 10%, where it has been since the Great Recession of 2008 and 2009. The economy shrank 5.5% in 2009 alone.

Inflation which was moderate in the last decade, has been replaced with, deflation since 2013.

The country is currently under the authority of a caretaker governance. Prime Minister Boiko Borisov from the GERB party, resigned last fall. This occurred after the GERB party’s candidate lost a presidential election to the Socialist backed Rumen Radev, a former air force general.

The Prime Minister has turned the presidential race into a referendum on his own leadership. The electorate disenchanted on the slow progress with corruption and the controversial reforms in education as well as health care, voted for the Socialist Radev.

Mr. Borisov had been Prime Minister since 2014. He had come to office after a banking crisis and a wave of anti-corruption protests.

The size of the GDP (Gross Domestic Product) by 2015 had dropped to where it was in 2010, that is just above $50 billion USD (United States Dollar). It had been as high as $57.42 billion USD as recent as 2011.

As is the case in a number of nations in the region, the population of Bulgaria is divided between those who favor stronger ties with the European Union and others, who would rather strengthen relationships with Russia.

It is the struggle between the segment of the population that wants to be part of Western Europe and those who would rather remain in Eastern Europe.

Bulgaria joined the European Union in 2007. The economic prosperity expected by many, simply failed to materialize. GDP per capita is near $7,600 USD. In Purchasing Power Parity (PPP), it is equal to just over $17,000 USD.

The Socialists in Bulgaria had promised if they won the election, steps would be taken in foreign policy, to move the country closer to Russia. The new government would subsequently oppose the continuation of European Union sanctions against Russia.

The sanctions were put in place, as a result of the Russian take over and the consequent annexation of Crimea in 2014 and the ongoing military interference in eastern Ukraine.

This change in direction would be made, even if that meant upsetting the nation’s European partners.

Bulgaria has historical cultural and political ties with Russia, that can be traced back for centuries.

The Socialists came in second place in Sundays election, at 27.2% of the vote. The party managed to double their share of the electorate since 2014, but still failed to overcome the more Western orientated GERB.

The Socialist platform highlighted an increase in pensions and wages. The leadership opposes the recent free trade agreement, the European Union made with Canada. Kornelia Ninova the Socialist Party leader, wants to replace the country’s 10% flat income tax system, with a progressive-rate schedule.

She is also in favor of a Russian backed undertaking to build the second nuclear power plant in the country.

Ms. Ninova has conceded the election for now, but will be ready to attempt her own political coalition in the 240 member National Assembly, if GERB fails at the task.

Borisov who is likely to become Prime Minister of Bulgaria again, will need to create another coalition government. His party only won 32.65% of the electorate, just under a third. During the election campaign he pledged to work with the United Patriots nationalist alliance, which is expected to garner near 9.07% of the final vote.

The United Patriots have built their popularity, on the negative emotion that is stirring among the citizenry, concerning the flow of migrants. These new arrivals coming from Africa, Asia and the Middle East are not seen as beneficial to Bulgarian society.

Although most of the newcomers are trying to get to Western Europe and will not remain in Bulgaria, their presence has created anxiety and fear among the native population.

United Patriots supporters, took the additional step of blocking the border crossings with Turkey. This was being done in an effort, to stop bus loads of Bulgarian ethnic Turks, from voting in the recent election.

Borisov was also willing to include the small Reformist Bloc grouping, if they were successful enough to cross the needed 4% of the electorate threshold, needed to gain representation in parliament. If the party fails to enter the legislature which now appears likely, Borisov will need a new coalition partner.

The Populist Will party will enter the next parliamentary session as well with 4.15% of the total vote. This newly arisen party is led by businessman Vesselin Mareshki. He is espousing far stronger immigration controls and closer ties to Russia.

They only other party that has sufficient electoral strength is the MRF (Movement for Rights and Freedoms) ethnic Turk party, which came in 4^th place at 8.99% of the vote.

If Borisov is able to form a new governing coalition, he is likely to continue the restrained fiscal policies that support the Bulgarian lev to that of the Euro. Due to these efforts the Bulgarian currency is the strongest and most stable currency in Eastern Europe.

Bulgaria is becoming increasingly difficult to govern. The country’s legislature is fracturing even further. There were more than 20 different political parties running in the recent election. They represent a wide array of different opinions and viewpoints.

New parties have arisen in response to the general sluggishness in reforms. Yes, Bulgaria and the right wing New Republic are two examples of this.

Yes, Bulgaria ran on a platform to fight corruption and further reforms in education and health. Their leader Hristo Ivanov, was a former justice minister in Borisov’s government. He resigned in 2015, when the legislature refused to implement a draft of justice reform.

Yes, Bulgaria which models itself on the Save Romania Union, represents a new young educated class. Their goal is to duplicate the political status of nations further to the West. They often cite Germany as the best example.

Although these new political parties offer new hope for the electorate, they lack sufficient electoral strength to truly change the political dynamic. Yes, Bulgaria at just 2.88% of the vote, failed to garner sufficient electoral strength this go around, to qualify for representation in the parliament.

Progress on corruption will remain challenging. Widespread bribery at all political levels, makes the problem endemic. Numerous examples of likely nepotism abound in both government and industry. The oligarchic power structure has remained mostly in place, despite a number of reforms.

Transparency International has reported that half of all Bulgarians, still believe that the government is doing a poor job in fighting corruption.

The leadership of the European Union has been relentlessly critical of this fact. This public awareness has mattered little over the past decade.

Still, Bulgaria has attracted substantial foreign investment. The World Bank ranks Bulgaria higher than most other Eastern European countries, in their Ease Of Doing Business Survey.

In the Economic Freedom of the World Index, Bulgaria outranks Belgium, Hungary, Poland, Portugal and Spain.

Bulgaria also has the lowest corporate and personal taxes in the European Union and the second lowest public debt of all member states at just 27.8% of GDP.

The problem of corruption does continue to plague the country in reaching its true growth potential. It also certainly hurts the image of the country, in attracting more foreign investment. The issue will proceed to trouble any new government coalition,even if economic growth rates remain relatively strong in the years ahead.