Bulgaria's plan to adopt the euro overshadowed by political instability, corruption

Bulgaria, arguably one of the oldest nations in Europe that never changed its original name, is now ditching its national currency, the Bulgarian lev, in favor of the euro, the common European fiat denominator.

This significant change in its history is not happening without turmoil. Political unrest, caused in part by price spikes and tax hikes, is marking the new beginning which, to some Bulgarians, looks like an end.

What’s happening in Bulgaria?

Mass protests this winter, the largest in many years, mainly over corruption and a planned increase in social security and tax payments, but also against stinging inflation, brought Bulgaria’s government down this month, which is likely to result in another political stalemate.

The coalition cabinet of Prime Minister Rosen Zhelyazkov resigned, with the leading political force behind it, the center-right and conservative Citizens for European Development of Bulgaria (GERB) party, led by former Premier Boyko Borisov, unwilling to be the target of public discontent.

With protestors clashing with police on the streets of the capital Sofia, GERB wasn’t ready to hold long enough to reap the political benefits of bringing the country into the Eurozone, the fulfillment of many campaign promises.

Bulgaria is now preparing for its eighth election in five years. None of the previous votes produced meaningful stability. Will the first “euro” one do it?

The Bulgarian society has repeatedly risen against the oligarchic model the country is run by, best personified by the leader of the DPS – New Beginning coalition, Delyan Peevski, although he is not the only figure of this kind.

The latter was formed after a split in the Movement for Rights and Freedoms (DPS), the party representing mainly the interests of the Turkish minority, following a leadership dispute.

So far, Bulgarian citizens have been unable to curb the power of the oligarchs whose reign is at least partially sustained by the distribution of European funds.

The latest protests initially united opposing segments of the political spectrum – euro believers and euro skeptics, pro-Western liberals and pro-Russian nationalists.

Earlier this year, Bulgarian President Rumen Radev submitted a request for a referendum to the National Assembly, mainly on the timing of the Eurozone accession, citing the lack of consensus in the society as well as proper preparation on the part of the government for the adoption of the euro in 2026.

The move was backed by the pro-Russian “Revival” party and other populist formations on the right. However, it was turned down by the Speaker of the Bulgarian parliament, Nataliya Kiselova, as unconstitutional, a position backed by members of the ruling majority, including the Bulgarian Socialist Party, as well as the opposition and pro-European liberal PP-DB alliance.

Brussels says the euro will benefit Bulgaria

The Eurozone membership is mandated by Bulgaria’s Treaty on the Accession to the European Union and, despite the latest jolts, the country will become the 21st nation, out of 27 EU member states, to adopt the bloc’s common currency on January 1.

Successive Bulgarian governments have pushed to join the club, and supporters insist this will “boost the economy, reinforce ties to the West and protect against Russia’s influence,” Euractiv noted in a report on Sunday. It recalled some of European Commission President Ursula von der Leyen’s statements made when the executive body concluded Bulgaria was ready for it.

“The euro is a tangible symbol of European strength and unity,” she stated at the time, insisting that joining the euro area would strengthen Bulgaria’s economy by deepening ties with Eurozone partners, attracting foreign investment, providing access to finance, creating jobs, and supporting real incomes.

But is this how Bulgarians view it?

According to a recent poll conducted by Eurobarometer, almost half of Bulgarian citizens, 49% to be exact, oppose the adoption of the euro, for various reasons. A few of them were highlighted in a report by Politico before the weekend. The opinions expressed by ordinary Bulgarians interviewed by the publication represent a mix of fears and hopes.

Proponents view the accession to the Eurozone as a logical next move for Bulgaria, whose currency is already pegged to the euro anyway.

Among the positives they list are new opportunities for easier travel, more business, economic growth, and deeper political and cultural integration with Europe.

20-year-old Natali Ilieva, a student of political science was quoted as stating:

Opponents are worried about turbulent times ahead, rising living costs due to high inflation and widespread speculation. They often refer to the not so good experiences of other Eastern European nations who joined the Eurozone earlier.

Croatia, Slovakia, and Greece all saw prices increase significantly after adopting the euro. Many Bulgarians also expect their economy to be burdened by the trillions of debt accumulated in the Eurozone.

Their feelings were best summarized by Petya Spasova, a 55-year-old doctor in the capital city, who is simply unsure this is the right moment to join. Citing political instability in the country and the serious challenges facing the euro itself, she commented:

“If you ask me, the Eurozone is on the verge of collapse, and now we have decided to join? I don’t think it’s a good idea,” chimed in Yana Tankovska, 47, a jewelry artist from Sofia. “There isn’t a single person who isn’t complaining about rising costs,” she stressed.

Christine Lagarde, the president of the European Central Bank (ECB), predicted earlier that the euro would have a “modest” impact on prices, giving earlier transitions as an example. She claimed the uptick was in the range between 0.2 and 0.4 percentage points.

However, in the run-up to its euro accession, Bulgarians saw real estate prices double in a couple of years. According to the National Statistical Institute, annual inflation stood at 5.2% in November, but for most consumers in the country, it feels more like 50%.

The official rate of increase in food prices is double that of the Eurozone average. The Bulgarian authorities have tried but not really managed to tame it.

The ruling elite and mainstream media have been trying to convince the public that this is largely due to perceived or “personal” inflation that depends on what items are added to the basket.

A reporter from a major national TV channel recently talked about having “my inflation,” “your inflation” and “average inflation.” To better express what she meant, she put it this way: “Cooking oil went up 100% … but I, for example, don’t use oil at all.” Speaking to an anchor, she went on:

And she is right. Diapers are not everyone’s concern as after more than 30 years of EU integration, Bulgaria has one of the lowest birth rates. Its population is among the oldest in the world, after losing nearly 3 million people due to low fertility, emigration and shorter life expectancy. Many in the country would still like to see these indicators change for the better, hopefully with the euro.

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