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SOFIA | In the Balkans, everything is shared, luck as well as misfortune. So you’d better pray for your neighbor. And in this part of Europe failure is more infectious than success.
Events in February proved that fact quite clearly when, months after the new Bulgarian government made adopting the euro a top priority, it had to take a step back because of the misfortunes of neighboring Greece.
Bulgaria joined the EU on 1 January 2007, and since then many Bulgarians (including me in this column) have spoken of a post-enlargement hangover, asking where the next frontier should be. EU and NATO – these were achieved. Where to now? Of course, improving the quality of life is the obvious answer. But countries also need a dream, something to motivate society and government. A national purpose was lacking to give Bulgarians the push they always seem to need to carry out even something as prosaic as economic and judicial reforms.
The center-right government of Prime Minister Boyko Borisov, which came to power last summer, needed several months to come up with an answer. By winter they had it: the euro. Bulgaria should make all possible sacrifices in order to enter the euro zone, preached the deputy prime minister and finance minister, Simeon Dyankov, a former World Bank official. And he acted accordingly, cutting expenses, keeping the deficit low, even delaying payments to private companies that had already fulfilled their obligations to the state. The Bulgarian establishment had learned a lesson from the EU and NATO accessions: we will tighten our belts and suffer some losses, but in the end we will win our national game. Just give us one.
Bulgaria had some preparation to face this challenge. Thirteen years of pegging its currency to the euro and, before that, the deutsche mark taught Bulgarian politicians fiscal discipline. One of the positive side effects of the economic crisis was lower inflation. During his World Bank tenure, Dyankov had become expert at tightening budgets and minimizing state expenses in countries from Colombia to Georgia. And despite the claims of skeptics on the left and right that during a crisis the state should spend rather than cut, the goal looked almost doable until …
… until Greece imploded. Its public debt soared, with a deficit far above the euro zone’s 3 percent limit, and its credit rating became the lowest in the EU. Strikes erupted while the government prepared a rescue plan and Brussels watched in despair. Greek politicians admitted that the state had cheated with statistics – both before and after adopting the euro. In short, there was hardly a worse moment for another Balkan country to apply for the euro zone.
Bulgarians got the message. “Due to the problems of Greece our bid to join the euro looks unrealistic in the next two to three years,” Borisov said two weeks ago. And what about Dyankov? “He is still optimistic,” added the prime minister with a smile. “He even thinks we could strengthen the euro zone. But let’s be frank: The odds are against us.”
Bulgaria and Greece are different countries with different economies. Each should be judged on its merits – that is one of the rules of Brussels. But the outside world thinks in relative terms: if the so-called PIGS (Portugal, Italy, Greece, and Spain) have similar problems big enough to shake the euro, why should Bulgaria be in a position to strengthen it?
It has happened so often, this linking of problems. Bulgaria and Romania, for example, were bound together during the EU accession process. They were a strange pair, indeed, neither happy to be stuck with the other. In the beginning, Bulgaria claimed Romania lagged behind and hindered the Bulgarian effort. Then, shortly before 2007, things changed and Romania began claiming the same about Bulgaria. Neither had really bothered to study the other; the neighbor was just good for a scapegoat. Our EU hardships are not our own, each claimed. The lazy neighbor was to blame.
The problem is that sometimes life justifies prejudice. A decade and a half ago war and embargo tarnished the image of the whole peninsula: it didn’t matter if you were fighting or not, everyone suffered from the bad publicity, the ascent of mafias, and a lack of investor interest. These days the Western Balkans are also moving toward the EU as a group. This encourages regional integration as well as regional blame. The process is partly connected to the structural logic of Brussels institutions: it is much easier to integrate groups than individual countries.
Let’s be frank: inside the union Greece was often, albeit delicately, accused of mismanagement and misuse of EU funds. Greek intellectuals admitted that the lavish subsidies did not always reach their target. European money indeed changed Greece, but everyone agrees it could have done much more.
To some extent the Greek experience comforted Bulgarians and Romanians. It showed that a country could be a European Union member and still be Orthodox, Balkan, and imperfect. But Greece’s moment of truth was yet to come.
And when it did, this winter, it was not only about the euro. Greece’s troubles blockaded Bulgaria, literally. Protesting Greek farmers blocked Bulgarian border crossings with their tractors, demanding more subsidies. Thus the free movement of people and goods was nearly shut down. Truck drivers waited days to go to Thessaloniki or Athens. Bulgarian businesses registered millions of euros in losses. Sofia threatened to go to court in Luxembourg, triggering a Balkan-EU precedent. Borisov went to the border to negotiate with the protesters face to face. The farmers opened the checkpoint but soon blocked it again.
Bulgarian public opinion was split. Some were furious, wondering why the protesters decided to close only the Bulgarian border. Others were impressed with the courage of Greek farmers to defend their rights – something Bulgarian workers lacked during transition. But the predominant mood was anxiety. Something was evidently rotten in Greece, and Bulgaria – full of Greek banks, investors, restaurants, tourists, even habits – took note.
Fear is an infectious Balkan disease. In a region where people copy one another’s songs, their meals, and their political protests, panic easily crosses borders in any direction.
Yet there are some positive consequences to all this. Many commentators thought the Bulgarian bid to join the euro zone was premature. They suggested Bulgaria should bail out businesses instead of tightening fiscal belts. Maybe the time has come for Sofia to concentrate on the efficiency of its economy and on the quality of its imports. The world still does not know a particularly Bulgarian product. Perhaps the time has come to search for it inside the potential of Bulgarian business.
And what about a national goal? There are still some at hand – entering the Schengen security area for example. But the euro still counts; it could be transformed from a short-term into a long-term goal. Or why not develop a political vision for a green-oriented, high-tech economy? Given the present circumstances, it does not look very plausible, but this is what dreams are made of, after all.
As long as no more neighbors implode.