Between the Estonian and the Greek Path

Why Bulgaria is lagging behind even on the eve of its membership.

It might amuse Estonians that we, Bulgarians, often refer to the “Estonian way” as an exemplary “model for reform”. At the same time, this also says something about Bulgaria, because every model, regardless of its validity, offers a mirror image of reality; in this case, it gives an indication of the pace of reforms in Bulgaria. The Bulgarian promoters of the Estonian model claim that its key components are economic liberalism, effective administration and expeditious and effective reforms. Many Bulgarians think that these processes happened as if by themselves, without any visible efforts from the Estonians. In the case of Bulgaria, the mirror image reflects the economic stagnation and overregulation, chaotic public administration and the lack of any real reforms.
No matter how distorted the mirror image is, it can serve as a reference point. According to a popular anecdote, Bulgaria is actually doing quite well, because many things have been pushed through despite the active opposition of the political class. As any anecdote, it is exaggerated, but it still suggests that the accusation of lack of political will for carrying out reforms in Bulgaria is not completely unjustified.
2007 or 2008
In May this year, Bulgaria got a cold shower after years of slow, but nevertheless upward movement in the right direction. The European Commission was so harsh that the Bulgarian government was struck with panic and the Prime Minister even begged in an interview “not to humiliate us”. This embarrassing statement was provoked by threats to postpone the accession of Bulgaria to the EU for one year – from 1 January 2007 to 1 January 2008.
In 2004, a new instrument of conditionality was introduced for Bulgaria and Romania – the adjournment clause. At first, the authorities in Sofia declared that the instrument was aimed at Turkey and that the two Danubian countries won’t be treated differently from the ten other countries of the fifth round of enlargement.
However, things turned out rather differently. As a Scandinavian, the new Enlargement Commissioner, Olli Rehn, persistently scrutinised the fulfilment of every single commitment, which was quite unlike the political approach his predecessor, Günter Verheugen, had adopted. Commissioner Rehn even declared he was not offended by the accusations of Nordic-Calvinist conspiracy, which Romanian politicians had made two years ago.
Despite the raised voices, the accession will definitely take place on the agreed date – 1 January 2007 – for a number of reasons. The most important one is the bureaucratic interest. Whatever we might think, when Eurocrats are set on doing something, they will always deliver. In addition, an eventual postponement would cause more trouble than it would solve, including in connection with the distribution of funds. The postponement for a few months, from May to September, would delay the employment of Bulgarian citizens by the European institutions, which would lead to administrative problems.
Although European Commission officials claim that it would not be a problem to delete (for one year) the two countries from the EU budget 2007-2013, this is not exactly the case.
Immediately, the question of pre-accession aid arises – should the provision of aid be continued or not, should the resources allocated in the EU budget be redistributed, etc. Given the sluggishness of the inter-institutional system, it could take at least half a year to find answers to all these questions, i.e. half of the punishment period could be spent on discussing its consequences. The opponents of postponement often claim that nothing can be done in a year, which would make it all pointless. That is why its proponents insist that the accession process should be frozen for a longer period.
In fact, the adjournment system was developed in order to urge the government of Romania and to a lesser extent the government of Bulgaria to persist in their reform efforts. The instrument was never meant to be implemented. It is likely that it will be made effective for the next round of enlargement and that the respective period will not be limited to a year. In the case of Turkey, the period might be much longer.
Turkey and the Western Balkans constitute another incentive for the European Commission to cross Bulgaria and Romania off its to-do list, so that it would be able to concentrate on more complex tasks. Now, the priorities of the EU are mixed – the issue of Turkey has evoked anti-enlargement sentiments in France and Germany, having a larger impact on Bulgaria and Romania than on the ten acceding countries in 2004.
What further proves the claim that the whole point of the adjournment clause was to send a signal is its enforcement mechanism – in the case of Bulgaria, all the member states have to unanimously agree to enforce it; in the case of Romania, the decision must be adopted by a qualified majority. In 2004, out of the two, Romania was considered to be the laggard as regards the reforms, which would have made the postponement of its accession easier. Given the fact that at least four countries have promised Bulgaria to vote against the postponement, it is clear that there will be no postponement.
And yet, why?
The European Commission’s criticisms mostly concern the fight against corruption and organised crime as well as the effectiveness of the judicial and administrative systems. Differently from the ten other countries, these have become major issues, although they are not part of the negotiations. In fact, the EU admits that the negotiations – the famous 31 chapters – are not an ideal solution because they only scratch the tip of the iceberg, when negotiations are held with countries that have problems with basic structures of a normally functioning state. But Brussels does not have anything better to offer. The so-called peer reviews turned out to be fundamentally inadequate. The 31 chapters offer at least a practical basis – the adoption and the implementation of the acquis with all its conditions – but they cannot be used in the case of, for example, the fight against crime.
This has led to some awkward moments: the EU criticises Bulgaria for its crime rates, but in fact, the rate of violent crimes in Brussels is a few times higher than in Sofia. Of course, it is difficult to assess the effectiveness of police work. The European Parliament‘s rapporteur for Bulgaria, Geoffrey van Orden, even dared to mock his German colleagues (the staunchest critics of Bulgaria), saying that the general crime rate in Germany was much higher than in Bulgaria.
The monitoring of the judicial system entails similar problems. The experts of the European Commission said in 2005 that the judiciary and the prosecution lacked transparency and accountability – an opinion largely shared by the Bulgarian society as a whole. As a result, certain constitutional amendments were adopted to address the issue, but they were not quite effective. Just a month later, in another peer review, these amendments were described as intervening in the independence of the judiciary. This meant that the amendments necessitated by the EU had to be amended – again because of the EU.
All of the above does not suggest that there are no problems in these areas. On the contrary, there are problems, evident problems. In fact, out of the 150 professional murders, only a few are solved and even those perpetrators were found with the help of the Netherlands. The police lack the capacity to deal with more complicated forms of economic crime, which is further proved by the fact that there has been only one court case concerning money laundering. The law enforcement agencies are completely incompetent at solving these kinds of crimes, especially serious crimes and high-level economic crime. Only a month ago, the suspected murderers of former Prime Minister, Andrey Lukanov, were acquitted due to procedural mistakes – the police had abducted the two immediate perpetrators from Rostov-on-Don with the semi-legal help of the Ukrainian police. And this is not the most symbolic case. There was another case where bomb attack suspects were released, because the police was unable to prove that the explosive materials found on them was not meant for illegal fishing, as the suspects claimed. As far as financial crimes are concerned, the defence lawyers of suspects are able to prolong their cases endlessly, which makes them pointless. A recent study by the Centre for Liberal Strategies showed that almost no judgements of acquittal were issued in Bulgaria – even less acquittals than in Turkmenistan, where judges have to resign if they acquit someone. The reason here is not that Bulgaria’s legislation is totalitarian, but that court cases are protracted, which renders judges unable to pass judgement.
It is often said that the police catches criminals, but courts let them go. It could also be said that the police is unable to submit evidence that can stand in court. There was a case where the police failed to complete its investigations, because a typist had not transcribed the recorded tapes correctly; there was another case where the court released two arrested persons with 650 kg amphetamine who had claimed that it was for personal use only! Unfortunately, the truth lies somewhere in between, which means that both institutions – the police and the judiciary – are to blame and both of them need radical reforms. And this should have been done 10-15 years ago.
There are many reasons that have led to the current problems
In Bulgaria, organised crime fares significantly better than in other East European countries. The principal reason for this is the slow pace of reforms. 1992 is the year when the first privatization deal was struck, but the process of privatization actually started two years later. It took another two years for a major privatization campaign to get under way, because the Socialist Party came into power. The first wave of mass privatization was in 1996, when every Bulgarian got one voucher for a certain amount of money that corresponded to his share in the national economy. The result – instead of a mass privatization – was a mass legalisation of capital. In the meantime, for six years after the beginning of political changes the common practice in state-owned companies was to privatize their profits and to nationalize their losses. Thus a privileged “caste” close to the governing elite of the day could successfully raise its start-up capital at the expense of an economic collapse. The fact that the beginning of political reforms coincided with the process of “political cleansing” led to the use of some brutal political methods by the temporary “business elite”. All this became clear by the end of 1996, when an economic crisis unfolded in Bulgaria, leading to hyperinflation.
This system brought the business elite into a close alliance with the political leadership of the day, in effect blocking any possible reforms aimed to limit its influence. For example, after numerous amendments to the Political Parties Financing Act, it is now public knowledge how much money parties receive, but the names of the donors are still classified and the donations in kind are not publicised at all. Thus, in reality, the political-economic elite is hidden from the society. The same goes for the tax declarations of public figures – all attempts to increase their transparency have failed for the sixth year in a row.
This explains why the European Commission, quite justifiably, does not care much about the reports of the Ministry of Internal Affairs concerning the number of policemen fired for corruption, but demands that effective counter-corruption measures were implemented at a higher level. The new action plan of the Bulgarian government, which aims to assure to the EU that the government is enthusiastic about reforms, includes the necessary amendments, but there are still doubts as to the results.
The above high-level anti-reform coalition allowed for mass corruption and crime at a lower level. The law enforcement agencies did not bother to investigate a case, if it was not backed politically. There was a notorious case concerning a Turkish businessman of Bulgarian origin, Fuat Guven, who managed two petrol stations in a duty free zone at the border, selling fuel without paying any taxes for 15 years. According to the conservative Access Institute, he should have paid taxes for an estimated 60 million euros in 2004 alone. The police is not interested in investigating such cases, because something always turns up to hinder their investigation. This undermines police standards and there are fewer and fewer civil servants who are willing to take on cases that might cost them their jobs. They prefer to focus on petty crime instead. As a result, almost one hundred per cent of ordinary murders and zero per cent of contract killings are solved.
The structure of the law enforcement agencies also contributes to the low quality of investigation. Various police institutions are the successors of former national security agencies. It is odd that the National Organization for the Fight Against Organised Crime originates from the former political police.
Moreover, the embargo imposed on ex-Yugoslavia by the United Nations contributed seriously to the growing crime rates in Bulgaria. Though it is often referred to as its principal reason, it is, in fact, merely an excuse. If we follow the same logic, the Baltic states should have had rampant corruption and high crime rates just because they border Russia, which undoubtedly offers great opportunities for smuggling. However, if there were no embargo, organized crime would have had difficulties accumulating the capital that made them powerful as quickly as they did. If you transported a fuel tank across the border, you usually got up to 1500% of profit. By the way, this is the reason why it took so long for organized crime in Bulgaria to engage in the drugs business.
The historical reasons behind the retardation
The collapse of the Bulgarian economy was much more severe than in other East European countries. Even Romania, in a tragic situation as a result of Ceausescu’s policies, was better off, because its foreign debt was smaller. Bulgaria suspended its foreign debt payments in the middle of 1990, because the then ruling Socialist government (ex-Communists) thought that the money thus saved would help them to imitate a good government and to stay in power. This, of course, did not happen and Bulgaria was wiped off of the world’s financial map until 1994, when an agreement for debt management was signed.
These kinds of tricks continued for some years to come – the suspension of the privatization process and huge financial subsidies ruined the financial system of the country, leading to a severe economic crisis at the end of 1996 and at the beginning of 1997. Thus, when the first opinion of the European Commission was published in 1997, Bulgaria looked like a failed state. The political crisis brought the right-wing opposition to power. It adopted the proper course of action, but it nevertheless did not manage to solve the problems in the judiciary and the police.
The political catastrophe that happened during the last years when the Communists were in power – the Bulgarian Turks were forced to use Slavic names – left a difficult legacy for Bulgaria. The visa-free arrangement with all the EU member states was repealed in 1988 and it was not until 2001 that all the Schengen restrictions were lifted. As a result, it took a long time to start trade relations with the EU – diplomatic relations were established in 1988, but only the USSR and Bulgaria from the eastern bloc did not sign trade agreements with the EU. One reason for this could have been the pressure from Moscow, which might have foreseen the disintegration of the Socialist bloc. Another reason could have been the reluctance of Brussels, as it wanted to punish Bulgaria for the forced changing of the names of the Turks.
If we look at the results achieved after 1990, the conclusion would be that Bulgaria is lagging two or three years behind the leading countries in Central and Eastern Europe. Moreover, there is the unpleasant fact that the Baltic states, which started their reforms at a later stage with the parallel task of state building, are ahead of Bulgaria and Romania.
Has any progress been made? Yes, enormous progress
For the tenth year in a row, the economic growth rate is between five and six per cent. Although the distribution of income is not even, the standard of living is gradually rising. In 2005, the standard of living was for the first time higher than in 1989, which was the last year of socialism in Bulgaria.
More importantly, progress has been made even in most problematic areas. The crime rate is falling steadily, having peaked in 1993-1994. The smuggling of goods decreased after the establishment of big European supermarket chains in Bulgaria. The same applies to some specific activities of the Bulgarian mafia, which are now performed by legal companies. After years of play acting, there are also some signs of real reforms in the judiciary.
The key issue as to the nature of Bulgaria’s EU membership – whether to choose the Estonian or the Greek path – remains unsolved. These two corners of Europe represent two completely different ways to fulfil the role of an EU member.
At least geographically, Bulgaria is closer to Greece”¦

Chronology

8 August 1988
Diplomatic relations were established between Bulgaria and the European Economic Community.
1 November 1990
The Convention on Trade, Business and Economic Relations entered into force. It envisaged the gradual elimination of the quantitative limitations on Bulgarian imports to the Community and the making of mutual concessions in the field of trade in agricultural products.
22 December 1990
The Bulgarian Parliament adopted a decision whereby the willingness of the Republic of Bulgaria to become a member of the European Community was expressed. The signing of the Europe Agreement with the European Community was regarded as a step towards this ultimate goal.
8 March 1993
The Europe Agreement for Bulgaria and the Provisional Agreement on Trade and Related Matters were signed. The Europe Agreement provided a framework for the development of a profound political dialogue and for the establishment of a free trade zone, covering the trade between Bulgaria and the European Community.
14 April 1994
The Government of the Republic of Bulgaria adopted a declaration confirming the willingness of the country to become a member of the European Union.
1 February 1995
The Europe Agreement for Bulgaria entered into force.
25 September 1995
The EU Council of Ministers of Justice and Home Affairs approved a list of the countries (Regulation No. 2317/ 95), the citizens of which had to have a visa for crossing the external borders of the Union. Bulgaria was included in the list.
December 1995
The Bulgarian Government adopted a decision to apply for EU membership. On 14 December, the Bulgarian Parliament adopted a resolution to apply officially for EU membership.
16 July 1997
The opinion on Bulgaria’s application for membership was published within Agenda 2000. According to the opinion, Bulgaria was a candidate country that was not adequately prepared to start negotiations for accession.
12-13 December 1997
The European Council in Luxemburg decided to start negotiations for accession with Hungary, Poland, Estonia, the Czech Republic and Cyprus. In addition, the Council decided to accelerate the preparations for negotiations with Bulgaria, Latvia, Slovakia and Rumania by starting a screening of the legislation.
29 November 1999
The memorandum on decommissioning the units of the Kozloduy Nuclear Power Plant was signed with the EC.
10 December 1999
The European Council in Helsinki decided to start negotiations with Bulgaria, Latvia, Lithuania, Slovakia, Romania and Malta.
15 February 2000
The first meeting of the Intergovernmental Conference on Bulgaria’s accession was held, launching the negotiations for EU membership.
1 December 2000
The Council of Ministers of Justice and Home Affairs decided to exclude Bulgaria from the Schengen visa list.
9 October 2002
The European Commission’s regular reports were published, recommending the accession of ten new member states. Bulgaria was recognized to be a “functioning market economy”. The European Commission expressed its support for Bulgaria’s accession to the EU in 2007.
12-13 December 2002
The European Council in Copenhagen expressed its support for Bulgaria and Romania in their efforts to achieve the objective of membership in 2007, adopting roadmaps for the two countries.
15 June 2004
The accession negotiations on all 31 chapters were provisionally closed.
17 December 2004
The European Council confirmed the conclusion of accession negotiations with Bulgaria and stated that it looked forward to welcoming Bulgaria as a member state in January 2007.
13 April 2005
The European Parliament gave its assent to the Accession Treaty. The report on Bulgaria was passed by 534 votes in favor, 88 against and 69 abstentions.
25 April 2005
The Accession Treaty was signed in Luxembourg.
1 January 2007
Bulgaria will join the EU.