Cause and Effect in European Politics and Law

Bulgaria Needs a Roadmap for Euro Area Membership

Adelina Marini, April 22, 2014

To 30% of Bulgarian citizens, nothing has changed in the first seven years of Bulgaria's EU membership. 23 per cent believe that Bulgaria has sustained losses from the membership, while 36% believe that, on the contrary, the country has gained. This is a significant drop in comparison to the first years of EU membership, when almost 70% of the Bulgarians supported it. And this is not all. The data of a G Consulting opinion poll, ordered by the delegation of Bulgarian socialists to the European Parliament after the idea of MEP Ivailo Kalfin, show that to 57% of respondents Bulgaria is moving toward worse. Only 13 per cent see an improvement, while to 26% there is no change at all. The poll was one of the main topics of a Google+ hangout with Mr Kalfin, Kalin Manolov, a journalist from Bulgaria on Air TV station, a known libertarian and supporter of a looser European Union, and Ivo Indzhov, a political analyst from the Institute for Modern Politics, who defines himself as a euro-realist and a supporter of changes in the EU [the attached video is in Bulgarian language only]. Moderator of the debate was euinside.

Why does Bulgarians' support for the EU fall?

The rest of the data in the poll explains things to some extent, MEP Ivailo Kalfin said. People expect one thing from the Union, but get something else. The overall expectations are the EU to ensure jobs, to increase incomes, pensions and to resolve social problems, to make Bulgarians richer, he added. The data in the poll show that 63% of the respondents believe the EU should have an obligatory, though minimal, commitment for social spending in order to reduce the disparities in incomes and social standards among the member states. 28% are of the opinion that the EU money for social policy should be distributed at national level. Ivailo Kalfin recalled, however, that social policies are a responsibility of the member states.

Kalin Manolov pointed out that both national and European politicians are to blame for this decline because it was them who generated excessive expectations from the EU for years. They promised rivers of butter and honey, but this never happened. Similar opinion shared Ivo Indzhov, the political analyst, who said that the cooling off of European enthusiasm among Bulgarians was due to a very large extent to the emerging of "informed euro-optimism which borders with realism". However, this is not euro-scepticism. In the past years, there has been a lot of talk about the EU, especially since the beginning of the crisis, he added, about the fate of the euro, about what is going on in Greece and Spain. Moreover, information does not come, as usually, from media, but thanks to the free movement of people. Many Bulgarians have relatives and friends in some of the most affected by the crisis countries and it is through them that they get information about the developments in the EU, the political analyst noted.

People have already understood that the EU us not at all only flowers and roses, but a lot of work, taking responsibilities and duties. Mr Indzhov emphasised that the famous Bulgarian pessimism as an explanation of the falling support for the EU should not at all be ignored. Bulgarians should readjust their perceptions about the EU and start seeing it as providing opportunities not as resolving problems nor replacing governments. Something we have often heard from Brussels when painful Bulgarian issues are concerned.

Bulgaria - a satellite or an active member of the EU?

All participants in the online video debate agreed that Bulgaria is rather a satellite of the EU than an active member state. Bulgaria is not even a satellite nor is it an appendage, it is rather carrying out a Russian mission in the EU, Kalin Manolov said and offered as proof the formal Bulgarian position which is against EU sanctions against Russia because of fears they will have a negative impact on Bulgarian business. "We are an appendage to the EU - both in and out of Union", the journalist concluded. Ivo Indzhov firmly disagreed with this position. According to him, too much importance is rendered to the Bulgaria-Russia relations for EU membership. The problem is, he said, that on the essential debates about European integration the last Bulgarian governments are really weak, they are outside the debate, in the periphery and just simulate activity on a number of issues that lead to accelerated European integration in the euro area, the political analyst explained. The fact that Bulgaria is outside the eurozone and is passive, practically, leads to self-isolation, he added.

Ivo Indzhov outlined this as the biggest problem. It is not clear what is the Bulgarian position in terms of the financial transactions tax, banking supervision, the stability mechanism, eurobonds. Regarding financial transaction tax there was no agreement in the Council which is why some countries opted for an enhanced cooperation procedure which allows a group of countries to introduce a certain decision only among themselves. 11 member states agreed to introduce such a tax. Those are Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia. The procedure, however, is still not over. Regarding banking supervision and therefore the resolution mechanism, the Bulgarian government has decided to keep the country out for the time being.

Ivo Indzhov said media are one of the main culprits for the decline of European enthusiasm in Bulgaria because they neither write professionally on EU issues nor do they press the Bulgarian politicians to formulate positions on key European dossiers. Ivailo Kalfin, who was a deputy prime minister and minister of foreign affairs at the time when Bulgaria joined the EU, also recalled that since the previous government there has been no Bulgarian initiative that has the ambition to turn into a European policy. He, too, rejected the thesis that this has anything to do with the relations with Russia and recalled that in several countries in the EU the parliaments adopted positions against economic sanctions against Russia, while the Bulgarian parliament proved incapable to do even that. Kalin Manolov is of the opinion, though, that Bulgaria's European future goes through a discussion about the relations with Russia and its economic and political influence.

In the euro area or outside?

On the occasion of the intensive debate in the EU about the need for deeper integration in the euro area and the danger that is stemming from it which is the eurozone to set itself apart as an authentic or "genuine" European Union, Ivailo Kalfin explained that this is a very realistic possibility, but he was not sure whether we should call it a danger. Currently, there is no possibility for fiscal transfers, the central budget is too small, the member states that share a common currency have different budget policies and this is the main problem. The big question is whether the euro area will be a closed community or it will be open for non-members. In the same vein, it is very important Bulgaria to answer the question will it participate in the EU or will it drop out in its periphery. Currently, the position the government is defending in Brussels is to resist deepening of integration. We cannot resist something that is beyond us, the MEP underscored and warned of something which is very dangerous.

If there is resistance within the European institutions, the member states resort to intergovernmental agreements which practically represents a by-pass of the EU. This is what happened with the fiscal compact and recently this approach was used to reach an agreement on the second pillar of the banking union - the mechanism for banking resolution. To Bulgaria, it is much more important decisions to be taken at EU level so that we can take part in them, too, Mr Kalfin said. The formula Bulgaria should follow is the one Poland applied for the banking union - everything that is being done mandatory for the euro area to be open for non-members, too. Bulgaria should decide whether and when to join the single currency after it makes a deep analysis of the benefits. Depending on how will a narrower union work, Bulgaria should seek a place in it. The problem is, though, the former foreign minister pointed out, that Bulgaria is probably the only EU member state which does not plan in the long-term and lives by the day.

Bulgaria should prepare itself for membership in the euro area, Ivo Indzhov was convinced. The country should adopt a roadmap for an accelerated European integration, to follow all developments and politicies that are being offered and to subject them to public debate. Currently, there is no such debate neither in Parliament nor in media and that is why public opinion cannot have a say on them. The Bulgarian EU policy is conducted by national governments and by parliament. They are the big debtors in this case. Kalin Manolov believes, though, that the EU integration is one side of the coin. There is another path, as well, and it is a looser union of the type United Kingdom is promoting. A return from Maastricht to Rome, Mr Manolov said, recalling that with the Maastricht treaty the single currency was created thus enhancing the federal outlines of the Union. According to him, Bulgaria should seek a coalition with the other former communist countries which should stop the EU go toward something we have already survived - euro-socialism.

The crisis in the EU is a crisis of the social state, he said, and the EU cannot continue on this path. This thesis caused a heated dispute among the participants because both Ivailo Kalfin and Ivo Indzhov disagreed that the EU is going toward euro-socialism. On the contrary, the political analyst said, the EU is neo-liberal. In this vein, quite interesting are the data from the G Consulting opinion poll which show that 34% of the Bulgarians want a more social, fair and solidarity Union, which means the EU to be responsible much more than now about redistribution of goods, about business regulation and about harmonisation of legislation in Europe. Harmonisation of taxes and social regulation in the member states. This, practically, means that one third of the respondents want more Europe.

41% want the EU to combine liberal and social vision, which means the Union to ensure individual freedoms and economic initiative but in the same time to take care for a fairer redistribution of goods in society and for the protection of socially weaker people. In other words, this is a group which seeks a combination of more Europe, a more social Union and libertarianism. 17% are, in fact, libertarians who want a more liberal EU, which means that individual freedom is the most important cultural value of the Europeans. Free nations defend the right of private property and a free market economy in Europe without borders, which allows for free exchange of goods, services and ideas. There should be competition at all levels and adherence to the standards of production, the cost factor and especially the size of wages.

Kalin Manolov recommended when talking about future integration policies to talk about damages, too, not only benefits. It is best to do a thorough SWOT analysis to see how much we will benefit from euro area membership and how much we will lose. At this stage, there is no need to hurry with such a decision because Bulgaria is already strongly attached to the euro because of the currency board and the national currency being pegged to the euro. Manolov was deeply convinced that Bulgaria will lose more from euro area membership than it will gain because of the harmonisation of tax basis. In conclusion, he recommended the Bulgarians to stop relying on any bigger "brother" but on themselves. Ivo Indzhov recommended the Bulgarian politicians to take bigger responsibility in the process of European integration which does not mean Bulgarians to live on their own because in today's globalised and interdependent world, there is no way Bulgarians can do on their own.

The discussion ended with unanimity that the rule of law is one of the biggest hurdles before Bulgaria's development and this website proposed a special poll to be conducted to see how much rule of law the Bulgarians are inclined to support. This will help us see if Bulgaria is closer to the north-west perception of rule of law or the south-peripheral one which is much looser and permissive.